What we’ve been reading – the best millennial finance stories from the past fortnight

A round-up of the best stories of the last fortnight. Find out what is driving the drop in homeownership among middle class millennials, how millennial bankers are challenging perceptions of the industry and why, conversely, millennials might be doing better than they realise when it comes to saving.

The decline of homeownership among young adults

Research by the Institute for Fiscal Studies has revealed that young middle-class professionals are half as likely to own their own home as they were 20 years ago. It found that 25% of 27 year olds owned their own homes, compared with 33% of those born in the early 1980s and 43% of those born in the late 1970s at the same age. There has been a particular squeeze on those on median incomes for their age.

Millennials poorer than previous generations, data show

The FT has given a visual representation of how millennials are worse off than previous generations. And the true extent of the problem could be greater than this chart shows, as FT writer Sarah O’Connor explains in the piece:

“In fact, this chart understates how badly things have gone for millennials, because it shows incomes before housing costs. If you look at how much people have left to live on after they have paid for housing, millennials are now slightly worse off than the previous generation were at the same age.”

If you’re a millennial, study says, your money managing skills may not be as bad as you think

There’s hope yet for the future savings of millions. Millennials may be better at managing their finances than is commonly believed, according to the latest Better Money Habits Millennial report from Bank of America. The US-based study found that while nearly three quarters were still worried about money, more than half now had at least $15,000 worth of savings and one in six has saved over $100,000. Our hope is that millennials are finally making enough money to put some aside for the future.

Andrew Plepler, Global Head of Environmental, Social and Governance
at Bank of America says: “Millennials deserve more credit – both from themselves and
from others – for their mindfulness when it comes to money and their lives.
Let’s not forget, many millennials entered the workforce during the most severe
economic downturn since the Great Depression. However, they seem to have
weathered the storm quite admirably.”

Securing the financial future of the next generation

They might have more freedom than ever before. But as we mark 100 years of votes for women over 30, a study by the Chartered Insurance Institute found that today’s young women face a bleaker financial future than their mothers and grandmothers (not to mention their husbands). According to the research – drawn from Office for National Statistics data – women bear far more of society’s risks than men and this makes them more vulnerable to financial hardship.

According to Jane Portas, lead author of the report, “Greater support and a meeting of minds is required to help women to find solutions to risks in life. This includes new ways of educating and engaging, of making financial planning and insurance more relevant and accessible to the many, and there needs to be more emphasis on the “whole person”, recognising there is no one size fits all. And we need to be open to innovation of traditional insurance solutions, changes in policy, and new partnerships, to formulate lateral solutions to society’s risks.”

Ian Dembinski: How millennials are shaping the future of giving

In this piece, Ian Dembinski, head of Rathbone Private Office, looks at how the different traits of millennials compared with other generations could impact on the future of charitable giving. For instance, he explains that, rather than making one-off donations to a cause, millennials tend to be keen to establish greater emotional links with a charity, which can encourage them to put together a longer term giving strategy. However, he does consider whether their current generosity will tail off as more and more of them have children and start buying properties, with the drop-off in disposable income this can bring.

Dembinski also points how that millennials are often misunderstood: “Generation Y is sometimes referred to as “generation me”, but this title seems misplaced. In reality, millennials are pushing businesses to focus less on their own profits, and more on making a positive impact. The enormous rise in corporate philanthropy over the past five years is evidence of this shift, as businesses try to attract millennials through their own values and corporate governance.”


Millennial bankers’ message: “We’re nice people, not greedy, not unethical”

This piece looks at a growing movement among millennial bankers to change the perceptions of the industry. To do this, banker Asad Husain, his sister Zahra, a leveraged finance banker at Commerzbank and Sarah Laitung, formerly of JP Morgan, have set up “Humans in Finance”. This is modelled on Facebook blog “Humans of New York” and aims to humanise the industry.

According to Husain, who works for TD Securities: “There’s a lot of negativity around this industry. My sister and I both work in finance and we were questioned a lot about why we chose this career. Finance has got such a negative image: people categorise you as a ‘greedy finance worker’. We just want to create some positivity. To showcase that there are good people in this industry. People who care and who want to have a positive social impact. We want to change people’s mindsets about finance.”

Cross countries: international comparisons of intergenerational trends

Another report, this time from the Resolution Foundation, looks at how far the drop millennials are experiencing in their living standards compared with their parents at the same age is replicated other rich world countries. While it shows that millennials are struggling in other countries too, with the pace of growth of living standards slowing, the UK is the only country that has actually seen a reversal of standards.

According to Fahmida Rahman and Daniel Tomlinson, who co-authored the report, “With the partial exception of Spain, the UK is the only advanced economy in which large generation-on-generation progress on both household income and home ownership rates was a feature of the 20th century but has failed to materialise for younger generations so far in the 21st.”

The report also suggests that the homeownership issue is particularly stark in the UK – levels of homeownership haven’t fallen quite as drastically in places like the US, Australia and Spain.


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