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Financial Planning for Millennials

With the way our financial world is currently moving, financial planning for millennials is becoming more and more important.

The term “millennials” is used to describe the generation of people born between 1981 and 1996. Interestingly, older generations seem to speak of millennials using a particularly superior tone.

However, what generations that came before millennials struggle to realise, is that this generation is faced with a plethora of financial challenges that previous generations were lucky enough to avoid.

Financial planning for Millenials Johannesburg

This is not to say that previous generations did not face their own set of financial hurdles. However, before we look with judgement upon the lives of millennials, we must understand that often, they need to work that much harder in order to keep their heads above water.

Financial Challenges for Millennials

A large number of millennials entered the workforce after the financial crisis in 2008.

Generally speaking, the cost of living has increased exponentially since then and student loans are almost impossible to afford.

Unemployment rates have sky rocketed and the level of social, economic and political unrest is steadily rising.

These are all factors that negatively impact a millennial's opportunity to grow financially and is also why retirement planning for millennials is much harder than it may appear to be.

The following are additional challenges faced by millennials:

  • Rental rates are soaring
  • They have to save much longer to buy a house
  • Millennials need to save more in order to retire

Financial tips for Millennials

Financial planning can be quite a complex task which has many important factors to consider.

However, there are a number of effective strategies that millennials can put into place to make sure they start off on the best foot possible.

Reduce your debt

According to a survey conducted by Old Mutual which focused on millennials’ debt, 64% of them had a personal loan and a shocking 35% of their income was spent paying the interest on the debt.

The scary truth is that today's generation is often faced with more than just one type of debt.

Therefore, the priority should be to pay off whichever debt has the highest interest rate as quickly as possible.

Generally speaking, debts associated with assets are not the focus here, but rather student loans and personal loans to name a few.

Always spend less than you earn

We are in the age of consumption and around every corner we have someone (or even something) telling us that we need more than what we already have.

The aim is often to keep up with the Jones’ and this outlook is a one-way ticket to unmanageable debt.

There is a basic rule that can be applied. This is the 50-30-20 rule. Allocate 50% of your income to covering your monthly expenses, 30% towards daily cost of living, including entertainment and 20% should be saved or used to pay towards reducing debt.

Have a safety net

As life goes, one never knows when an unexpected expense will arise. What’s worse is that these surprise costs are usually quite high.

Unforeseen medical costs, vehicle breakdown, service or repair and sudden loss of income are just a few examples.

The fact is that these are a daunting reality, but if you have a cash buffer in a savings account which is easy to access, covering these costs becomes slightly less stressful.

There are some banks who offer low monthly costs with a substantial annual interest rate which can be earned.

Millennials should aim to have at least 3 months’ worth of their salary as a reserve.

Find a side hustle

This is an extremely familiar concept to millennials and for good reason. Although a stable monthly income is there to cover the relevant necessities, sometimes it’s simply not enough to progress financially.

Therefore, finding a part time freelance job of some sort to earn an extra bit of income can be a life-saving endeavour for millennials.

This income could be used as “money for jam” as they call it, or it could serve as your source for monthly saving while you continue to live off of your main monthly income.


Budgeting allows you to keep a close eye on your income, expenses, saving habits and unexpected expenditures.

It allows you to know exactly where your money is coming from and going to and is a useful tool when deciding how to adjust your spending.

You can set up a budgeting spreadsheet or you can download a budgeting app so you have immediate access to your information wherever you are.

Your budgeting plan is your best friend when saving for big expenses such as the purchasing of a home.

How to choose the right financial planner

There are many do’s and don’ts when it comes to choosing a financial planner, but as a millennial looking for a suitable financial advisor, there are certain criteria to look for:

  • Choose an advisor who can also be your coach – a financial advisor who can guide you with regards to career development is more valuable than one who will simply advise you on what to do with your money.
  • Look for an advisor who is more casual than formal – These advisors are easier to relate to and building a trusting relationship with him or her will be much easier.
  • Find someone who understands the millennial generation – An advisor does not need to be young of age in order to understand you better. Whatever the age, make sure that your advisor has a strong understanding of the daily struggles faced by millennials.

Why millennials need a financial planner

  • You need someone who can guide you to the right resources
  • You may have an inaccurate idea about your financial situation and a financial advisor can provide you with a proper assessment
  • A financial advisor can offer you an unbiased, objective outlook on your current financial position, while advising you on the best strategy to achieve your goals
  • Financial advisors can help you stay on track towards your goals

Olemera Financial Advisors in Johannesburg

At Olemera, we believe that a stable financial future is possible for anyone, including millennials. We have made it our goal to offer sound, practical and relevant financial planning for millennials from all walks of life.

We offer practical, sound and relevant financial planning for millennials. For more information about our financial services or to speak to one of our financial advisors, contact us.

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