The world is advancing at an exponential rate. The way we interact with consumers is fast, direct and extremely personalized. How we teach our children about money needs to change as well. As the newest generation matures, they will be faced with complexities and decisions that parents today never faced. With the addition of an unexpected event like COVID, financial literacy needs to be brought to the forefront of the discussion. Here are some of the trends that are affecting the next generation financially.
The way consumers shop has changed.
Cash is being used less and less and online shopping is now the preferred choice for many. More plastic and less cash lead to greater chances for this generation to use credit cards and accumulate debt. With the addition of COVID, this trend has only been accelerated as ecommerce will continue to surge. Contactless payments are now a standard, not just a feature.
Credit card companies are marketing geniuses
OK, maybe not geniuses but they sure are persistent. How is it every time you open the mail or click on a link, there's a credit card offer? Credit cards are making it easier than ever to get a card and rack up debt.
Social security decrease
Social security was a safety net for generations past and still provides a major source of income for current retirees. However, it is underfunded and many experts believe it's possible that it will run out in the future. Others believe that, at the very least, the amount available will decrease dramatically. Regardless, kids today shouldn't depend on this as a substantial source of retirement income in the future.
Complex options and decisions
Many of those in generations past had the luxury of a pension. They didn't have to manage their retirement investments and knew exactly how much they would receive in retirement. Today, many don't even know what a pension is, let alone have one. Most people have retirement plans, such as 401(k)s, which require being actively involved in managing their investments. With hundreds of options including stocks, mutual funds, index funds and target date funds. It's easy to become overwhelmed with the decisions and not always make the best choices.