“Don’t get mad, get informed” — Iona Bain’s motto from The Young Money blog is timely to say the least. Millennials like her have had a bad time of it in recent years. The 2008 financial crisis followed by the economic catastrophe of the coronavirus pandemic. Savings rates and home ownership alike have nose-dived. And it’s all disproportionately affected young people in financial terms.
With all that in mind, it seems perfectly reasonable for young people to feel that their only option is to bury their head in the sand. But in her new book Own it! Bain is determined to steer fellow millennials towards financial success.
Through education, empowerment, and myth-busting, she’s taking on the challenges of a generation and, instead, helping them to thrive.
Why have Millennials typically struggled financially?
It’s hard to know how to move forward without knowing a little about where you’re coming from. To help readers gain some context, the book begins by explaining exactly where these challenges have come from.
The financial crisis, for example, was especially disastrous for university and school leavers between 2007 and 2009. These people, the vast majority of them millennials, faced more competition for fewer jobs. The jobs that were available tended to be lower paid than they had been previously.
Those millennials that did manage to start saving some pennies were also let down, as interest rates crashed. Just when things were starting to look up, COVID-19 hit and they were slashed once again to a record low.
Meanwhile, the housing crisis meant that mortgages were much harder to come by for first-time buyers. Prices soared, but house-building reduced drastically, so it became much harder for young people to get onto the property ladder.
Starting with the basics
The book is overwhelmingly in favour of getting young people investing to take control of their future. But it’s careful not to encourage anyone to run before they can walk. Before delving into the what, how, and why of investing, Bain talks readers through the basics of personal finance.
Despite a careful explanation of the pitfalls of saving, readers are advised not to shun this completely. In fact, savings make up an important part of financial security. To begin with, an emergency fund to cover unexpected bills is vital. On top of this, any savings goals within the next 5 years should be in savings rather than investments. This keeps them easily accessible and mitigates the risk of losing money in the natural ebb and flow of investment returns.
Finally, the dreaded P word: pensions. What are they? Is it even worth having one nowadays? And aren’t they just propping up companies I’d rather not give my money to? All questions posed regularly by pension-shy millennials.
In characteristically reassuring style, Bain puts paid to each of these worries and more. It’s definitely worth having a pension, but it’s important to understand which one you’ve got and how to make the most of it.
For those enrolled in a workplace pension, don’t assume this is all done and dusted for you. It’s a great start, but if you can increase your monthly contributions to, say, 12% of your pre-tax earnings, you’ll ensure a much more comfortable retirement for yourself. If your company offers contribution matching as well, it’s a complete no-brainer.
How to start investing
One of the reasons millennials have had a tough ride recently is what Bain terms intra-generational inequality. Essentially, the millennials with access to the Bank of Mum and Dad have it significantly better than those who don’t. Not only is their starting line further forward due to extra funds in the bank, they also know more about how to create wealth.
In the second part of the book, she sets about changing that latter issue. These chapters leave no stone unturned, or rather, no term undefined. From what platforms to use to the truth about Bitcoin, it’s a crash course in investing for the uninitiated.
The key takeaway message from this section takes us back to Bain’s Young Money blog motto: “Get informed”. There is a lot of misinformation out there about investing. In particular, there’s a concerning trend of social media influencers tempting millennials into investing in risky funds. Instead of trying to take a quick and easy route, it’s vital to do your research and fully understand where your money is going. This is the only way you can truly own your financial future.
As Bain so insightfully puts it “You can either plod on, overworked and underpaid, waiting for others to change things for you. Or you can take charge of your money and decide your own destiny. I prefer option 2, don’t you?”
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