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 In previous generations, they would be fully independent grownups.
But these days, the cord cutting seems to be limited to televisions.
As millennials make big, life-changing purchases, such as buying
their first home, they do not want to go it alone, according to new
data from Ameriprise Financial.
When it comes to major purchases, millennials with investable assets
over $25,000 are more likely than older generations to rely on
advice from someone else. That person is often mom, dad, other
family members and older, more experienced people, in general.
And they will be spending more in 2016. A recent report from Merrill
Lynch found 61 percent of millennials expect to spend more this
coming year, compared with Generation X-ers, baby boomers and
seniors (26 percent).
Millennials are simply reacting to the world they grew up in. This
is, after all, the generation raised by helicopter parents. So why
change? After all, even Google has a take your parents to work day.
If Kim Kardashian can turn to her mother, or "Momager" as she is
often called, for advice, why not everyone else?
"While millennials may have a tendency to be more impulsive about
certain decisions, recent research leads me to believe that the
majority are really trying to learn from what their parents went
through and are using that knowledge to make informed financial
choices," says Marcy Keckler, vice president of financial advice
strategy at Ameriprise.
Millennials tread carefully when it comes to laying out the big
bucks. They also treat their money differently than previous
generations. They are three times more likely than other
generational groups to justify a large expense if it generates
lasting memories, according to Merrill Lynch. It is not about the
ownership, it is about the experience.
This is a generation that wants to have stuff but is wary of the
risks of ownership. So far, they prefer to lease cars, not buy them.
And they have no aversion to renting clothing for a big event.
Not all risk is bad, though, warns Keckler. It just has to be
appropriate. For example, many millennials are wary of stocks
because they saw their parents' savings get whacked after the
Internet bubble, taking more than a decade to recover.
"This generation is just starting to enter their strong earning
years, so they are moving past the point where the majority of their
spending is concentrated on essentials and paying down debt,"
Keckler says. "Now, millennials are focusing on their future and
looking at buying a new car, a home, and other big investments."
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AVOIDING EQUITIES
One thing some millennials are particularly wary of is investing in
stocks. Eleven percent stay out of the stock market when it becomes
volatile, and 14 percent are making investments guaranteed to never
lose money, according data from to Minneapolis, Minnesota-based
financial services company Ameriprise.
"They have not seen a massive bull market like we did in the 90"s,"
notes Cary Carbonaro, a certified financial planner and author of
"The Money Queen's Guide." "The 2000s were the lost decade. It was
the only time when you barely made money and only if you did
everything right."
While millennials pay attention to what mom and dad have to say,
Ameriprise found that they also want other advice from outside
sources. That can come from investment advisers as well as online
tools.
In addition to working with a financial planner, which is always a
good idea, Carbonaro recommends Khan Academy videos for young people
looking to get up to speed. At the very least, they will know the
questions to ask when they do go to a planner for advice. She says
many planners will work with young people starting out for as little
as $100 an hour.
But when it comes to the bottom line on money advice, the
millennials know, no one will ever have their back like mom and dad.
(Editing by Lauren Young and Alan Crosby)
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