Millennials and reaching financial freedom?

Results of the 2017/2018 Old Mutual Millennial survey shows that better educated, tech-savvy and optimistic millennials – South Africans born between 1982 and 2000 – are more likely to seek financial independence and personal fulfilment, compared to older generations. This is according to Elize Botha, Managing Director of Old Mutual Unit Trusts.

The Old Mutual Millennial survey was commissioned to better understand the financial behaviour of employed Millennials, versus older generations surveyed in the 2017 Old Mutual Saving and Investment Monitor.

It showed that 24% of millennials are currently invested in a unit trust – versus only 2% among older generations – with 57% of millennials saying they invested in a unit trust with the purpose of increasing their net worth (1st) and 47% saying they looked to invest to reach financial freedom (2nd). However, the survey also revealed that 35% of millennials – the first generation to reap the fruits of democracy – were saving money to pay back debt – this number was 13% for older South Africans.

Speaking at the same event, Mapalo Makhu, Personal Finance Coach and founder of financial coaching firm Woman & Finance, said that millennials are facing unique financial challenges that make them susceptible to debt. “Many first-generation middle-class South Africans, millennials are playing ‘asset catch up’ – purchasing appliances and motors vehicles on credit – while caring for financially dependent relatives (other than their children) which creates a tension between the expectations of family and dreams millennials have for their own financial future.”

Research also showed that millennials are more likely to save money – in order of priority – towards travel (37% versus 10%), their education (31% versus 4%), a motor car (32% versus 11%) or starting their own business (23% versus 3%) – than older generations.

“This shift in priorities speaks to the bigger differences in the way millennials and older generations view money and the unique challenges they face,” says Botha. “Complete financial freedom – and the flexibility it offers us to travel, or to be our own boss – comes when the income from your assets exceeds your expenses. Only by reducing debt in tandem with investing in investment vehicles which offer growth assets and returns can millennials hope to reach this goal.”

Makhu agrees and says that unless millennials address their high levels of debt, they’ll struggle to reach their goal of financial freedom and independence. “Whilst not everyone aspires to building financial wealth, becoming financially free is achievable for most people by applying simple principles in a disciplined approach.”

Botha explains the four pitfalls millennials face on their journey to reach financial freedom:


Debt, typically in the form of personal loans, is often used to buy things that will be consumed – like appliances, clothes, or items that tend to depreciate over time. The survey revealed that 64% of millennials – compared to 14% among older generations – had a personal loan and 35% (versus 13%) of their income was spent on servicing the interest on debt.


According to the research, an alarming 47% of millennials – nearly half – did not know what a unit trust was. Others, who said that they could further define the collective scheme investment vehicle, tended to have difficulty in articulating their understanding of it. However, almost 61% of millennials in the survey were saving money in a bank account, suggesting that millennials do not understand the difference between saving and investing.


The third pitfall is overspending – often utilising expensive credit – to buy the things we absolutely ‘need’ to appear successful. “What people don’t realise is that the real secret to financial freedom is to keep your living expenses as low as possible,” says Botha.


“Without a clear goal most people will find themselves spending rather than saving,” says Botha. “Every person is unique, and our relationship with money is often complex. An understanding of your intrinsic values is also essential to find the resolve to achieve financial freedom. When we’re working towards something that’s important to us, we’re often more willing to work harder to reach our goal.”

We created a consumer friendly PDF copy of this article with savings tips and advice which you can download and share with your clients.


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