Delayed milestones and financial trouble for young adults

Financial woes among younger investors mean delayed milestones

Delayed milestones for young Kiwi’s, but is it all bad news?

Ideal timing for a life milestone in one era will inevitably change in the next. In years gone by, wars, economic turmoil, and other events lead many individuals and families to delay or bring forward many of life’s plans. In the same vein, many of today’s younger adults are reaching milestones later than their parents’ generations – from leaving home to becoming parents themselves. Instead of blaming these trends on “irresponsible” young people (who may just be buried in student loans and coming out of a recession), it’s time to step back and evaluate what is leading young adults to delay major life milestones, and if it’s necessarily such a bad thing. Some might even argue that in a world of longer lifespans, rising costs of living, and economic challenges, that postponing traditional timelines for getting married, having children, or buying a home can improve the financial health of all generations.

Delaying adulthood

In the wake of the pandemic, a United States study by Bankrate has suggested as many as 57% of those aged 18 to 40 – often called Generation Z and Millennials – said they’d put off a major milestone due to the coronavirus pandemic. Older Americans seem to have fared better amid the pandemic – only 26% of those over 40 said they’d delayed a milestone in the last year, according to the same survey. NZ data is a little scarcer to come by, but it would likely be similar.

It’s not just major life milestones either, the most delayed financial benchmarks were buying a car, purchasing a home, pursuing career advancement and furthering education.

“It stands to reason that those who tend to be more financially fragile are those who are earlier not only in their careers but in the complex aspects of their personal financial lives,” said Mark Hamrick, senior economic analyst at Bankrate, adding that the youngest workers were also hardest hit by job loss during the pandemic – as was the case in New Zealand.

Information overload for investors

For those fortunate enough to remain employed over the last year, many people – including young investors – got involved with the stock market (“share market). The internet has revolutionised investing. Though having a good Google to discover the basics can quickly lead to younger investors becoming overwhelmed by the sheer amount of seemingly complex and quite contradictory advice on the internet. In fact, perhaps the most daunting challenge that modern investors face is the sheer speed and volume of information.

This was even worse than usual over the last 12 or so months, as the mainstream media and more informal social media channels have bombarded us with an anxiety-inducing array of information about the virus, the economy, national and international politics, and assorted other matters.

The good news

It’s important for those that have been hurt by the pandemic to remember they do have time to rebuild and that it doesn’t need to happen overnight. The pandemic was an unforeseen event that few were prepared to weather.

On reflection, there is some good news for those that were hit by Covid. As more people become vaccinated in New Zealand’s major trading partners, our prospects as a small trading nation improve. Of course, our isolated island nation has been isolated from the worst health impacts of the outbreak too.

This all may mean the road to a full recovery is closer than previously thought.

There will still be a long road to recovery for some, especially those that have had to take on debt to survive the past year.

How to rebuild

If you’ve had to delay a financial milestone because of the pandemic, it’s best to take account of where you are before jumping back into rebuilding.

Before recommitting to financial goals such as buying a house or car, first make sure you’ve built up emergency savings and paid down debt, starting with high-interest debt first.

Good investing news

When it comes to investing, luckily, many of the most reliable long-term investing strategies used by successful investors are quite timeless. New investors may find it easier to avoid the noise and use books as a resource to get started.

The bottom line – delaying life’s milestones

In today’s world, milestones that used to have traditional timelines are changing. Young people leave the nest later, and Kiwi’s are tying the knot and retiring later in life too. While a lot of people are quick to say that delaying such major events is worrisome, it might not be at all bad to enjoy the benefits of heading into parenthood or retirement later, with a more secure financial footing. More than anything, remember that there is no one-size-fits all timetable for when you should hit a milestone, whatever age you may be.