Millennials and their fragile financial lives

From left: Brian Mburu, Gloria Grace, Dorothy Chumba and Erick Makatiani.

Photo credit: Pool | Nation Media Group

What you need to know:

  • Young people worry that they may not meet key financial goals such as buying a house, paying off student loans or saving for retirement.
  • Enter easy-to-access loan services, and young people, the majority who are perpetually battling fragile finances, can’t resist the bait.

Impressionable. Impulsive. Imprudent. These and many other not-so-flattering terms are often used to describe young people where money is involved.

Millennials are considered less frugal than the previous generations, driven by the need to satisfy immediate desires, sometimes at the expense of their financial soundness.

Some argue that times have changed. True to form, the cost of living has shot through the roof in the last two decades. For the working millennial, rent, education and personal upkeep take the biggest share of their income.

Enter easy-to-access loan services, and young people, the majority who are perpetually battling fragile finances, can’t resist the bait. The net result is a generation that is more debt-laden than any other in history, according to research findings published in Forbes this year.

But are young people that carefree? What does the average Kenyan millennial spend their money on? What’s their attitude towards savings and investment? Do they consider personal finance a priority?

This week, we speak to four working millennials about their outlook on money, their financial anxieties and how they address them.

Brian Mburu, Business Consultant

For Brian, the meaning and importance of money changes with every stage of his life.
Early in his youth, when he had literally no financial obligations, having money was merely a want. Now a young man, the entrepreneurship studies graduate from Moi University believes that money is a ‘‘serious need’’.
‘‘I now view money in terms of its ability to solve my needs, and I strive to do as much as I can with whatever amount I have,’’ he says.
On money management, Brian argues that the formula should depend on one’s income and their expenditure.
‘‘I apply the 50:30:20 rule to manage my income. Fifty per cent goes into paying for the necessary utilities while 30 per cent goes into savings. I invest the remaining 20 per cent to generate more money,’’ he says.
Brian admits that there are instances when this rule is hard to follow.
‘‘Sometimes the cash flow is irregular, which compels me to break the rules.
‘‘If I had, say, Sh100,000 to spare, I would spend it on utilities. Things aren’t very certain at the moment, so I exercise a bit of restraint in my spending.’’
For the entrepreneurship consultant, financial literacy lessons are highly important.
‘‘I read and keenly observe the happenings around me. Thankfully, there is a lot of information on financial literacy today.’’
These lessons, he adds, have made him a better manager of his finances.
‘‘I usually spend my money confidently because I’ll have already taken the necessary considerations.”
Still, he admits, that there are days when he spends money impulsively only to regret later.
He doesn’t hold the view that the older generation is more rigid in their approach to money, saying that it worked for a fair share of them. What he concurs with, however, is that times have changed.
‘‘Mine is more of a here and now generation. Whenever we get something extra, we either spend or invest a little rather than save for stormy days. Our idea of saving, spending and living is different. Things might even be worse with the next generation because I believe they will have an even greater itch to spend whatever money they have.’’

Erick Makatiani, Project Manager

‘’I am usually interested in the value of money and what it can do for me. This motivates me to work even harder to generate more,’’ says Erick.
Like many millennials, Erick has money-related anxieties, mostly stemming from limited resources. ‘‘There are times when I get really broke. But no matter how much I earn every month, I always find myself wanting more partly because the cost of living keeps rising,’’ he observes.
Research shows that most young people take loans for luxurious ventures such as going on holiday, buying a car or upgrading their household appliances. The project manager at Turnkey Africa Limited admits that such blunders have played a huge role in his financial woes.
‘‘When I started working, I bought an expensive fridge, a cooker, nice couches and a big flat screen TV that I hardly watch,’’ he says and adds that he used to attend parties with his peers even though he could barely afford it. So, how does he deal with these anxieties?
‘‘I have come to understand that I will never have enough money. There will always be the urge to acquire more. Therefore, I have to be contented with what I have,’’ he notes.
Erick reveals that he has never taken a loan, whether for personal use or for investing. ‘‘I usually invest part of my little savings,” he says.
So, what can compel him to enter into debt? ‘‘I can only borrow money for investment purposes.’’
Other than investment, Erick is acutely aware that emergencies such as hospital bills can push one into debt. His ultimate dream is to venture into business and start a company that will transform people’s lives. Building his dream home and buying an SUV car are also in his bucket list.
‘‘I hope to set up a retirement plan and to save enough money to buy shares and get a life insurance cover,’’ he says.
To achieve all this, Erick is very cautious when making financial decisions.
‘‘I believe that securing a better life and attaining financial stability requires proper planning. It all starts now.’’

Gloria Grace, Quality Analyst

Paying her bills and saving for a rainy day ranks high in Gloria’s list of financial priorities.
 ‘‘If there is something the current Covid-19 crisis has taught me, it is the need to have a good savings plan. I’ve endured some financial challenges that nearly destabilised my career,’’ recalls the analytical chemistry graduate from Technical University of Mombasa.
As a young professional who only started working recently, it took Gloria some time to know how to effectively manage her expenses, let alone saving for the future.
‘‘Starting out wasn’t easy. Any spare shilling I had went into furnishing my house. I don’t have too many financial obligations at the moment, so I spend my money on things that make my life more comfortable.’’
But Gloria occasionally supports her parents. And while she is yet to attain financial stability, she says that she is at a better place than she was a year ago.
‘‘Now, I know how to save. I usually make a point of clearing my bills first, which then frees me to figure out how to meet my other responsibilities. Once I have paid my rent and other primary bills, everything else falls into place,’’ she adds.
In typical millennial fashion, Gloria enjoys going on adventure and recording good memories.
‘‘What’s better? To be frugal and save enough to go on holiday at a memorable destination or to live a standard, boring life? It is a hard choice to make.’’
Gloria doesn’t think her life would be any easier if someone would commit to footing all her bills and she no longer had to work.
Even with her bills all paid, Gloria believes that she would still worry about money, only that there would be less pressure on her to find it.
‘‘I need money for my personal comfort and indulgences such as getting my hair done, buying clothes and shoes and renewing my Netflix subscriptions.’’
In the event that someone would take care of her bills, would she still wake up to go to work every morning?
‘‘Yes I would. I have a career to build and I am determined to prosper in all areas of my life. I want to rise to a position of influence within my organisation.
“Besides, I have siblings who look up to me. I am also paying my school fees so I just have keep working.’’

Dorothy Chumba; Graphic Designer

Chumba views financial security as having a constant, dependable source of income that enables her to comfortably cater for all her basic and secondary needs.
‘‘I am not financially secure yet, but I’m on my way to attaining this,’’ says Chumba, who works at Squad Digital – a digital advertising firm.
Besides her day job as a graphics designer, the graduate of Moi University makes and sells abstract art pieces to boost her income.
‘‘Upon joining college, I took up painting as a hobby to fill my surplus time. When I sold my first artwork to our deputy vice chancellor, I realised that people actually liked what I was doing,’’ she narrates.
Chumba has since set up a gallery on Instagram (@fluidart_ke) and Facebook (Art by Dee) where she sells her pieces.
‘‘Art keeps me inspired even as I go about my work,’’ she says.
Her employer provides a health cover, she says. As such, she invests a large portion of her income in her business.
‘‘For luxurious expenses and other long-term activities such as travelling, I like to plan ahead so that I can give myself enough time to save,’’ she says.
For entertainment purposes, such as hanging outs with friends, Chumba religiously sets aside 10 per cent of her income every month.
And does she think that having money in her bank account constitutes financial freedom?
“This depends on where one is in their financial journey. If that money in the bank is working for you, then you have truly attained financial freedom,’’ she says.
Owing to her entrepreneurial disposition, Chumba doesn’t consider keeping a large but idle bank balance a wise decision.
She poses: ‘‘Why not use the money to create more of it or invest it in assets to add even more value to it?”
For Chumba having more than one source of income is key.
‘‘I believe in utilising what I have to add value to my life. For me, that resource is art. The Bible teaches us to invest in as many as seven or eight ventures to be able to counteract disaster when it comes.’’