Welcome to a new week and I want to believe that I am not the only one who is wondering how come we are already more than half way through the first quarter of 2021!
I pray that our plans, financial and otherwise, are coming along as we anticipate or even better than planned.
Last week, I followed a very interesting and educative social media (twitter) “war” of words and banter amongst members of Generation Y (popularly known as Millennials) and members of Generation Z.
As you can imagine, the banters have been varied and so woke. One common theme has been the money undertones of the jokes and yabs. From the “give away” generation (Gen Z) to the generation that “likes money too much” (Gen Y); both sides have had more than enough to say.
For those not sure of the categorization, please find below:
|Baby Boomers:||Born between 1946 and 1964||75 to 57 years|
|Gen X:||Born between 1965 and 1980||56 to 41 years|
|Gen Y (Millennials):||Born between 1981 and 1994||40 to 27 years|
|Gen Z:||Born between 1995 and 2015||26 to 6 years|
|Gen Alpha:||Born from 2015 and now||6 years and below|
These discussions reiterated the need for us to discuss the various financial planning needs of the members of Generation X, Y and Z.
- Members of this group are in their 40s to mid-50s and are on different spectrum of their career ladders. Those in the early to mid-40s are upwardly mobile while those in their late 40s and 50s tend to be at their peak or nearing retirement age.
- Gen Xers need to be candid about their financial health because this stage tends to represent a major part of the active wealth generation phase of our lives. As such, careful attention must be paid to one’s finances at this point.
- This means that financial literacy and knowledge acquisition is mandatory.
- Maximising one’s career is a key but understated activity that must also be considered when planning one’s options.
This week, a commentator on social media had mentioned how he and his wife had maximised their incomes by strategically changing jobs and negotiating higher salaries without having no side businesses or additional income streams. He also mentioned that they saved over 50% of their combined income.
I am not necessarily endorsing this option but pointing out what is possible if and when informed decisions are made.
- For Gen Xers, goal based investing should be the go to manner of investing given the various family based actions that must be undertaken at this stage of our lives – children’s education, buying a house etc.
- Another major focus here is on building passive income streams irrespective of your age as well as asset or wealth preservation. This is key, most especially for those nearing retirement i.e. those in their 50s.
- Finally, estate planning specifically will writing is an exercise those at this phase of their lives must pay particular attention to.
- It also does not hurt to ensure that you have not only a financial advisor but lawyer on retainership.
Generation Y (The Millennials):
- Millennials, like Gen Xers are also in working class phase of their lives – they are just younger and are mostly at the beginning. At times, some may even be further along on the career and wealth spectrum. Examples are the likes of Burna Boy, Davido and Wiz Kid. Not to worry, I am very aware these guys are complete outliers to use as examples.
- On the other hand, for many others even though working (employee or business owner); the aspiration is to be financially independent.
- This makes increasing and diversifying one’s source of income paramount for them. Interestingly, many Nigerian millennials are increasingly having portfolio careers.
A portfolio career is when you have various related or unrelated jobs as opposed having one job at a single organisation. For example, banker/actor, banker/photographer, lawyer/makeup artist, dentist/baker etc.
- For millennials, savings and investing must be prioritised especially for those who want to retire early or be financially independent earlier than most people.
This is important given that this is the active income generation stage for many of us and so needs to be maximised.
- Whilst the 3 gentlemen mentioned above may not have to necessarily juggle living expenses, this is a major issue for many millennials.
As such budgeting, and adhering to it, is a major task that must be undertaken. Alongside budgeting, expenses need to be monitored and managed intentionally; given that this is the age many marry and start having children.
Mind you, we must all learn to budget irrespective of our age and wealth status but it becomes more imperative as it is foundational to having any form of savings.
- Another critical financial planning move for millennials will be to commence planning for their children’s education as soon as possible. This can be achieved by commencing goal based investing just as a Gen Xer will do although not necessarily at the same scale.
- For the business owners in this category, having a Retirement Savings (Pension) Account is critical. Unlike employees who have these accounts mandatorily opened for them, many business owners tend to defer this.
- For those saddled with debt, it is advisable it is tackled in a disciplined manner in order to protect further earnings and savings.
- The reality of black tax is a concept that must be realistically addressed. It affects Gen Xers also but they due to age and maturity are mainly better at handling it.
- Finally, for millennials the emphasis should be on long term planning and discipline since they still have a longer time frame to build wealth than Gen Xers. As such, the earlier the journey starts, the better.
Generation Z (Gen Z):
- I found it extremely funny when a commentator on social media referred to them as the “give away” generation because of their love for freebies.
Although freebies are not necessarily a bad thing, real life unfortunately does not work like that. Apart from loving freebies, Gen Zers tend to like their independence and not hesitate in expressing this fact.
- As such, it is paramount that Gen Xers and Millennials as parents, wards and siblings to members of this generation take active interest and participate in teaching them to be financially savvy. This is very important since financial literacy is not taught in schools.
- We need to let Gen Zers know that managing money can be fun and to do this, we need to involve them when budgeting or even making purchases or major money decisions.
- We need to help them look for, or create, income making opportunities. For example, holidays should be used to teach teenagers income making skills – sewing, baking, photography, coding or hair making amongst others.
- It is also important to teach them how to spend wisely and cut unnecessary expenses as there is no point in earning early if spending isn’t controlled or monitored.
- Lastly, it is imperative that we remember that even though Gen Zers want independence; we are their means to achieving or attaining this independence.
As such, we can and must help them form their money habits. A good way to do this is, is by teaching them the benefits of delayed gratification and avoiding peer pressure that may make them spend unnecessarily to impress others. Remember, these eternal words – “train up a child in the way to go and when he is old, he will not depart from it.”
Please be reminded that the COVID-19 virus is still around in the country and that more importantly, only 1 million vaccines have been purchased for 200 million citizens.
As such, we must continue to take personal responsibility for ensuring our safety and that of our family members.
Here’s wishing us all a wonderful week ahead.