The state of our personal finances says a lot about us, our lives, and the times we live in. For young people now becoming financially independent for the first time in their lives, planning their finances is perhaps more complicated than it has ever been. What are the struggles and complexities they face? And how can cutting edge personal finance platforms enable them to better understand where they stand with their finances? Saving and investing is much more complex than one first imagines as it involves so many factors: how much we earn, our personality and behaviour, our personal goals, microeconomics, the macroeconomic environment we find ourselves in, and, indeed, our individual understanding of what money is and how it works. On top of all this, as we have all seen from the coronavirus pandemic and its impact on all of our lives, it is also difficult to plan ahead when black swan events can come along out of the blue and change all of our circumstances. Why is it so difficult for young people to plan their finances? Despite many young people now spending the best part of two decades at school and university, financial literacy is something that they are rarely taught. It’s all very well knowing who the kings and queens of England were in the Middle Ages but it might not get you far in life if you don’t understand the basic principles of budgeting and living within your means. Many young people, for example, do not understand how something as important to their lives as compound interest works. And with credit and debit cards as well as payday loans freely available it is easy to see how so many young financially illiterate people not only struggle to pay their bills on time but are also unable to manage their credits and debits, pay off their student loans, and put aside savings for tomorrow. Other headaches: seen and unseen For most young people, their parents will have managed (and most likely paid for) their financial matters for their whole life. Suddenly, they leave university or home to begin their working lives and they are responsible for countless financial affairs on a daily basis. It can be extremely overwhelming. To compound matters for young people, there are so many more headaches they face today in our increasingly complicated world. Unlike in their parents’ day, the cost of buying a property has become unaffordable for many of today’s young people. And, while, the majority of young people are putting off buying their first home until later in life, rent and bills are swallowing up a huge part of most of their incomes. With regular financial crises such as the crash of 2008 and the 2020 pandemic, any unexpected loss of income is particularly stark for those of us who are experiencing such a situation for the first time. Other headaches, seen and unseen, include mismanagement of income and expenses, unexpected financial burdens such as the birth of a child, tax rises, and the underperformance of investments when young people do finally take the plunge. And the list goes on. Money is changing Furthermore, the very nature of money is changing. With large scale distrust of the traditional big banks, many customers are turning to financial technology companies such as Revolut and Transferwise that offer banking services. The success of these companies comes from the development of cutting edge secure and easy-to-use mobile financial technology and the real benefits over the traditional banks such as converting multiple currencies at favourable rates and transferring money internationally without the usual bloated fees. And while cash is certainly not dead, more and more money is now digital with cryptocurrencies and APIs also shaping the future of money. The nature of money is not only changing but so is the concept. Help with finance for Millennials New personal finance platforms such as SPARQ are being created for Millennials to enable them to better understand where they stand with their finances. Platforms such as SPARQ provide the tools, knowledge, and experience to help young people face and overcome the kinds of problems they face every day as discussed in this article. A data-driven, gamified approach is being developed to create a culture of effective money management for its users. This approach was designed to appeal directly to Millennials. It is hoped that by fully engaging young people in this way, they will not only begin to understand and improve their personal finances but also enjoy the process of doing so.
