Millennials are ripping up the financial rulebook by choosing to go on holiday rather than save into a pension pot, says the Financial Times. Why are cash-strapped young people choosing sunshine breaks over savings accounts?
With low salaries and graduate debt, more 20-somethings – a generation often referred to as millennials – are feeling that poor pension plans and extortionate house prices mean they will never be able to afford a mortgage or fund a comfortable retirement anyway… so they might as well blow their extra cash on a holiday.
So far, so understandable. But if you are not yourself a millennial, why should you care?
By prioritising short-term spending over long-term saving, those aged between 18 and 35 are disrupting the economy on all fronts.
Millennials are noted for a lack of brand loyalty – and often accused of having unrealistic expectations when it comes to freebies. But forming the largest proportion of our workforce, the youngest working generation is the target market your business needs to be selling to – as they are shaping the future of the economy.
Generation Rent are quite used to not owning things, thanks to an average income 8% lower than it was in 2008, combined with student debts and high living costs. They are acclimatised to using digital streaming services such as Netflix and Spotify rather than purchasing media in physical forms, and are likely to use social media to find the best deals online rather than wandering into shops and purchasing on impulse.
Soaring house prices and staggering deposit requirements mean many millennials will be renting their accommodation for the foreseeable – with demand for private rental properties due to rise to 1.1 million over the next five years.
With no choice but to rent, poor accommodation standards have come under fire – with a survey by London law firm Osborne Clarke finding that 50% young people felt their landlords were not doing enough to maintain their property, and 1 in 5 having moved out because of their landlord’s “unacceptable actions”.
Holiday habits tell us a lot about this lost generation. Millennials are digital natives who grew up on the internet, and as such are choosing places to visit on holiday based on exotic foods, hipster retreats found online and the ever-important Instagram potential of their destination.
Rebecca Taylor, director at the Chartered Institute for Securities and Investments, predicts a 25-year-old today would need to save a staggering £800 per month in order to retire at 65 on a pension of £30,000 per year.
With a decline in the culture of clear post-graduation career paths to fund this pension plan, it’s no wonder some young professionals have taken to travelling the world, partaking in a ‘gap year’ or career sabbatical in order to travel to far-flung destinations in search of a less financially-driven way of life – a system which has ultimately shut them out.
If you or a young person you know is planning to explore the Amazon on the trip of a lifetime, or jet off to a far-flung corner of the world, it is important not to forego travel insurance in case of a holiday mishap. It doesn’t have to cost as much as you might fear either.
Get a travel insurance quote here.