Millennials Going Broke: Why Financial Illiteracy Is To Blame For Our Low Bank Accounts

by Umeshi Rajeendra

Whether it is New York City, Valencia, Sydney, London, Jakarta, Seoul, Lima, Quito, Nairobi or Sao Paulo, an increasingly high number of young adults are broke.

We often hear of our peers talk about it, and most of the time, we see no change. We could be victims of a bad economical era and just blame the system that caused such financial circumstances. Is there any point in doing so? Not really.

You could argue that we could fight the system.

Yes, anything is possible and we should strive to improve the system so the future citizens of this world will be better off than us, but we also have to realize that as much as we are technologically savvy, informatively skilled and most importantly, unpretentiously more confident than our previous generations, we are financially illiterate.

Sure, not all of us are, but most of us are.

Our financial ignorance is not only our fault, but also the fault of the education system that has not kept pace with the complexity of the financial market and the encumbering amount of debt post-graduation.

Do not get me wrong, there are a handful of Generation-Yers who have overcome this because either their families have trained them on how to manage money and be financially responsible, or they simply realize the value of saving now rather than later.

Many young adults, however, especially those in Western nations, have never received any formal training about being financially responsible no matter the situation. For some reason, they do not have the street smarts to figure it out on their own, either.

With a lack of understanding of the consequences of debt, an increasingly high expenditure on consumer goods and low savings, Generation-Y is stuck in a cycle of being broke, and our attitudes need changing.

We need to realize that we can control our debt, stick to our ambitions and become financially secure. Ultimately, it comes down to how we approach our situations. Instead, most of us continue to complain about the economic downsides and continue to act in ways that further hinder our financial situations.

It is time we wake up. There are several steps we can take. For us, financial planning means living our best possible lives while overcoming the rocky pathways that we encounter during our 20s and 30s.

Remember, it’s not just about saving, but also about long-term investment. Research how to create a spending plan by prioritizing your needs and wants; learn about stocks and invest in stocks when the time is right; learn about personal finance management and utilize any benefits you receive from your company, friends or family to the best you can.

There are several apps for financial planning and plenty of information about it online.

Many apps include features like a “cutback calculator,” which helps to cut off some of your bad spending habits; a “money stretcher,” which helps your cash liquidity; a "level money," which creates your estimated income based on your previous income history and automatically deducts your bills and a saving rate; and a "budget planner," which helps you plan out your finances for years at a time.

Make use of them. They are easy to use and save you tons of money in the long run.

High levels of debt, high levels of rent, low wages and a lack of financial knowledge makes it more difficult for Generation-Yers to achieve the lifestyles of which we dream. However, attaining such a lifestyle is not impossible.

The system that is in place will not change overnight, and your financial situation will not change overnight, either; it takes time and progress. Yet, you have to start somewhere, and the first thing with which you could start is a budget and plan for managing your finances.

Photo via Vice