Under Pressure
Reinventing your money story will set you free to live the life you really want at any age – but Gen Xers in particular should listen up.
When I tell internationally esteemed money educator Vanessa Stoykov off-hand that I recently quit my corporate media job in Sydney mid-pandemic, relocating to quieter Perth to buy my first investment property, work for myself and spend time with my ageing parents, she was all ears.
Like a lot of other millennials searching for a piece of financial freedom, I wanted to learn about tapping into the stock market, EFTs and cryptocurrencies. I was curious about getting into the ecommerce game with nothing more than a laptop, a smartphone, and some savings and skills accumulated from a decade of corporate work that was waning.
I added that being unmarried and childless in my 30s fresh out of a long-term relationship meant I was channelling my new-found independence into my finances rather than worrying about when I was going to find a new man.
She was gobsmacked. “That’s your generation. That’s exciting to me because things are changing. But for now, for my generation, someone needs to be helpful and say, OK, here are some choices and here’s how you could have it,” Vanessa says.
“You can have that divorce, you can have that house sale, you can have that travelling life, you can have that part-time work. It isn’t too late,” she adds.
“I feel like millennials have a much better hold on what they want from their life than my generation does. To have that clarity, to know how you want to live your life and to pick yourself up like that, it’s like, wow. We just didn’t have it. It’s not how we were raised.”
While U2’s I Still Haven’t Found What I’m Looking For could be Gen X’s anthem, millennials like me are rocking it out to I Don’t Care I Love It as we quickly creep up behind our 40-something-year-old brothers, sisters and colleagues with a fresh perspective on work, money and life.
It ain’t over ‘til it’s over
Here’s the thing, ‘70s and ‘80s babes, you did all the right things. You got a practical education that got you a stable job that you’re probably still in, and you put away 10 per cent of what you earned in the bank and another 10 per cent into super.
You likely had a white wedding in your 20s, raised a couple of kids and sent them to good schools, while paying a mortgage through gritted teeth, softening the routine monotony with the occasional family holiday.
Maybe you bought some company shares while you put your hard-earned cash away in savings and thought you were ahead of the game. But you weren’t to know artificial intelligence and Bitcoin and Instagram businesses were ever going to be things. Heck, a decade ago, not many of us did. None of us imagined a pandemic that would shake the corporate world and the economy, either.
“Get an education, get a good job, get a house, and settle. That’s been the message for Gen X.
We were taught to value security, a house, a job, that was it. That was the wealth message,” Vanessa explains.
“Get a house is still where we’re at. Property is going off, you can see that,” she says as we eye unfathomable rising house prices across the country.
As you celebrate a long marriage (or quite likely, a divorce, for some 50 per cent) and witness yet another birthday each year, you wonder where all the years went.
You nervously glance at your superannuation and question whether it’s going to be enough to sustain a retirement that couldn’t come quick enough as you work another day, another week, another year in the job you grew tired of years ago.
Add it up
“There’s a really pivotal point with Gen X now,” says Vanessa.
Reinvention is the New Retirement, a report by Griffith University and No More Practice (NMP) Education – an education portal founded by Vanessa to add to her plethora of financial education offerings – reveals unfavourable retirement outcomes for both Gen X and Gen Y.
“[T]he expectation has been that Gen Xers will largely self-fund their own retirements, but it is clear from our research that this financial trajectory is not looking good,” the report states. “The pension today covers only a third of what is considered a ‘comfortable lifestyle’ in retirement, and who knows where this will end up by the time the next generation is ready to retire.”
Projecting the current ASFA superannuation figures 20 years forward when many of Gen X and Y will be retired or retiring, a comfortable self-funded retirement is likely to require a savings balance of anywhere from $2 million to $4 million. If that figure makes you want to crawl under the covers, the study also shows as much as 94 per cent of our population won’t achieve a comfortable retirement at all.
Our “lucky country” status is under real threat. Jobs are at risk with rising tech and cheaper labour and we’re being told to prepare for the gig economy (hello, millennials!).
House prices are skyrocketing. Many of us are working hard to pay a mortgage and those who don’t have one either don’t want the burden or don’t have the deposit to afford one. Our lifestyles are expensive, and we’re racked to the eyeballs in debt as we continue to spend, spend, spend.
Starting to see why millennials are into the minimalist movement? (Well, with a side of avocado toast, $8 green smoothies and craft beers, of course.)
I’m still standing
While the pension was put in place more than a century ago to safeguard those coming out of an economic depression, it’s no longer practical to sustain our modern lifestyles as we live longer and technology advances.
Similarly, we can’t assume that putting away a sliver of our wage over 30 years or so in the workforce is going to get us through a retirement that’s looking like two or three decades long as most us will now live to 85 or even 95 years old. And that’s not counting the loss of work years – and superannuation – women lose out on from having children.
Where generations before made money with hard work and digging up resources, the economy of the future looks very different. If you’re relying on your low-interest savings accounts or the Government to soften the blow and look after you financially, you’re going to fall backwards.
The money educator explains that while Gen X followed what they thought was the wholesome yellow brick road, they’re now feeling stuck and hellbent to figure it out as they quickly approach retirement age. Many are in debt with minimal savings while falling short of what they need to live a comfortable retirement.
“We’ve created a whole bunch of work for ourselves and so many people are in debt and their kids are in expensive schools and life has just become so heavy,” Vanessa says.
If you don’t have enough accumulating in your super – most of us don’t – you’re going to have to look outside the box. That means investing smartly and considering the gig economy. “Super is important because we are going to live so much longer, and if you don’t have the right amount you’ve got to hustle,” she says.
“But don’t hustle in something that you absolutely hate. There’s got to be a way to hustle in a way that you enjoy it, so that for the next 15 years of your life you’re not going to be stressed and unhappy.”
OK, tell me more, Vanessa.
I got you, babe
“Social conditioning is a big part of why Gen X won’t change,” she says. “If I could help this generation, it would be to show them options, that there is a different way,” Vanessa explains.
“You’ve got to ask yourself, what do you want? Listen to what you want,” she reiterates. “If you have clarity around what you want, you can get it. If you don’t think about it, you’re not going to have it,” she states point-blankly.
Vanessa wants her generation – particularly women who relied heavily on their father and husband for financial security – to understand a little more about how the share market works and start exploring what an NTF is.
She touches on how domestic violence and patriarchal control has been a factor for why some women for too long have remained stuck in old habits instead of taking a leap into the unknown, where freedom lies on the other side.
“There are a lot of generations of women who have put up with it for their kids,” she said. “The only way to get out of that is to control it yourself and have the independence, and that’s a long journey for some people who’ve been given no education opportunities.”
You don’t need to settle, and if you did, it’s not too late, she assures. “It’s OK to want something different, it’s not wrong,” Vanessa says.
“Younger women need to hear this. Whoever controls the money controls you. For a lot of young people there is a chance,” she says.
Want that divorce? To live in a different city? Start your own business? Sell your house or buy one? Live in a different country or travel when this pandemic is over? To finally take control of your finances instead of burying your head?
“For anyone at any age, there is a chance to get a handle on your finances. The first step toward changing your money situation is believing you can, and that you deserve a better future,” Vanessa explains.
“Worry, stress and fear around money are all things that keep us down; not believing we can change or that the future will be any better. Believe you are worth it and start the process of making long-term money decisions that benefit you,” she says.
“Every day is a new day to try again. No matter if it feels you are making no progress. Changing your life takes time and consistent effort. You can do it and you’re worth it.”
Money, money, money
There’s a big opportunity for Gen X and Gen Y in Australia as we eye down the biggest intergenerational wealth transfer in history. These generations will see a windfall $3.5 trillion handed down from our parents.
But what are we planning to do with that money? Are we going to do what our parents taught us, to put money in the bank and buy property? Many will be hasty to jump on real estate which has quickly boomed to unreachable status, even during the pandemic. Others are likely to put it in a savings account to accumulate interest. But is that really the smartest investment?
“I want this generation to learn about more than property,” Vanessa says.
“You won’t make anything on money in the bank because interest rates are at all-time lows so if you’re just leaving your money there, you’re going backwards.”
Modelling illustrates that meaningful, long-term investment of this pool of wealth could create an $11.5 trillion positive impact to the Australian economy – using projected returns of 5 per cent – which could significantly improve our economic opportunity and place us on the global stage. But that’s not going to happen if we put the money into low-yielding savings accounts in the bank.
“Successful reinvention will rest on creating significantly better financial capability amongst Gen X and Y through education to enable smart, long-term financial decision making,” the study states. It’s an “opportunity of reinvention; of mindset, of career and of our next economic chapter”.
Time after time
Born on the cusp of the ‘90s in the late ‘80s, I grew up in the age where our school library got new Macintosh computers, the trendy ones with the round coloured bubble at the back, upgraded from the black screen, floppy disk dinosaurs with the green font.
We learned how to type questions into the Yahoo! search bar or Ask Jeeves before Google was ever a thing – but we had no idea the impact the internet was going to have on our work and lives in the decades to come.
It wasn’t quite Instagram and Facebook, but we had MSN Messenger and Myspace giving us a head start into a world birthing a plethora of social media platforms and computer-based jobs practically run off the internet.
And as quickly as technology is changing, so has our outlook on work and life. Millennials jump from one job to another with as much thought as deciding whether we’ll be vegan or paleo this week.
We’re dropshipping on eBay for extra cash, buying cryptocurrency and investing in ETFs, and running the gig economy with side hustles and ecommerce businesses that we started from our iPhones and MacBooks. And some of us are making thousands every week doing so. While we’re checking our crypto balance from a smartphone in one hand, we’re getting our favourite cartoon tattooed on the other arm. Times have changed.
Gen Y and their Gen Z counterparts are quicker to take risky leaps without thinking too far ahead, whether it’s quitting a job that doesn’t quite align with their values or interests or deciding that having a marriage or children is an option you can opt out of.
Most millennials would say a share market portfolio is as accessible as internet banking and easy enough to learn about from YouTube or blogs, while investing in stocks and cryptocurrencies seems to make more sense than buying real estate these days. They’ll also tend to favour starting up a side hustle without much more than a laptop, a smartphone and a social media account over working 9-to-5.
While baby boomers and Gen X might question millennials’ motives in work and life, we seem to be adapting to a new way of working and living as quickly as the old ways appear to be crumbling. Once this pandemic is over, it’s going to be a whole new ball game, so what better time to get on – or off – the bus?
