What are millennials spending their money on?

What are millennials spending their money on?

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In 2014, the Money Advice Service, an organisation that develops strategies to improve people’s financial capabilities, partnered with 2CV, a consumer market research agency, to conduct a study on youth aged between 16 and 29.

The study was titled “It is Time to Talk Money: Young People and Money Regrets”, and through its findings, the researchers hoped to gain a better understanding of young people’s perceptions and attitudes towards money, and their general financial habits.

A key finding was that young people are highly likely to make poor financial decisions, especially when making the transition between school and their first jobs.

Another finding was that the disconnect between social independence and financial responsibility does not last forever.

This is because ordinarily, by the time millennials gain complete independence from their parents or guardians, many of them will already have learnt the importance of financial responsibility.

This they will do either through experience, or through the mistakes made by their friends, family or close associates.


The same is true for many young adults in Kenya. Conversations relating to money are usually avoided almost as much as those touching on sex and death. Have you noticed that nobody ever displays their payslip publicly?

Financial experts say that most financial decisions made by young people are informed by either guess work, or peer influence.

But how effective or detrimental are these factors in preparing young people for the crucial financial responsibilities awaiting them when they become professionals in their fields?

This week, four young professionals open up about the financial mistakes they made, the lessons they learnt, and how they are making amends.

Geoffrey Ireri, 31, carpenter

“I received financial literacy training from an organisation called Alternative Africa. I was 28 years old at the time. During the training, we covered several topics, especially on how to differentiate our needs from our wants, how to save more, and we also identified the lifestyle habits that make saving easier,” he says.

Before he was 28 years old, like many other young people, Geoffrey made decisions about money based on what he believed his needs were and depending on the amount of money he had at his disposal.

“One major reason why money conversations are difficult to have is because people concentrate too much on how to get money, rather than what their actual needs are. We live in a world where money is scarce, so people are more concerned about accumulating as much of it as possible without thinking about what they will do with it,” he says.

“This way, we end up having our needs and actions dictated by money. I have 10 siblings, so working hard came instinctively to me. I started looking for money right after secondary school. I trained in carpentry for two years, and after that I started making plans to put up my own shop. I was 22 years old when I started working.

At the time, my needs revolved around dressing fashionably, impressing my girlfriend, having nice furniture, and taking care of some of my girlfriend’s needs. But now that I have a wife and child, I need a bigger house, a good phone and more airtime, and school fees too,” he says.

The key lesson that Geoffrey took from the programme was how to be content with the amount of money he made.

“Now, I write down my needs even before I set out to look for money. I then look for ways to sustain the recurring expenses, such as rent and food, either through my main job or the business I have set up. I own a car wash,” he adds.

About managing future needs, Geoffrey works out, and deliberately eats healthy foods. “I also have a good health insurance to take care of me and my family during emergencies,” he says.

“When I was 25, I got a job that offered a salary of Sh140,000. I bought a big television because I was trying to make sure that my peers respect me, and the girls to think I was cool.
I did not need it. I just wanted to impress others. How I wish I would have known the importance of planning and investing that money when I first got that job. Experience is an expensive lesson, and we shouldn’t always wait for life experiences to teach us such lessons.”

Agatha Zawadi, 25, interior designer and student

Agatha has never taken any financial literacy classes. She always relies on counsel from her mother and elder sisters whenever she needs to make financial decisions. However, this wasn’t always the case.

“I started earning a stable income when I was 18 years old. I spent most of my money on clothes, shoes and parties. At that stage, I looked up to my friends, who obviously did not know any better, for guidance on how to spend my money.

I didn’t think I needed to do any planning, and it never occurred to me that there could be a better way to use my money beyond exploring all entertainment spots in Nairobi. That is what was important to me at the time,” she says.

Looking back in hindsight, Agatha observes that peer pressure is what prevented her and many of her friends from saving more.

“Most of us tried to live as though we had much more money than we did. I believe this is what pushes people into debts, and debt is a major problem for young people right now. It happens when you try to live beyond your means,” she says.

Now that she is older and wiser, Agatha has changed. She has learnt the folly of spending money wastefully, and now that her mother is no longer working, she’s been forced to reflect and think about her own future.

“After my mother retired, I realised that she had supported me throughout my life. I did not want her to lack anything, or to work anymore. I want her to rest, and so I’ve had to make better financial plans to make that possible.

Her retirement also made me realise that I would one day get there, and I need to have put aside enough to allow me have an easy transition to life without employment,” she says.

She has already taken the first major step — going back to school to complete her degree.

“I am back in school now to complete my undergraduate degree. This is something I could have completed a long time ago, but I didn’t know how to prioritise my money back then. House rent, transport and family are also major expenses for me right now, not going to entertainment spots,” she says.

She is a self-taught interior designer, and even as she hopes to complete school and become gainfully employed, she hopes to keep running her business.

“That is how I intend to raise more money for my needs. I have to save for the future, support my family, and when I have a family of my own, I will need more money perhaps to build a home, and this can only happen if I exercise some frugality right now,” she says.

Agatha believes that financial management classes are important for every young person because if she were as informed as she is now, she would have made decisions that would have propelled her business and career much farther ahead.

Javan Ofula (Javan the Poet), 29, entrepreneur and artist

“Pawa254 has so many programmes that target youth entrepreneurs and artists, and they usually post them online. Whenever I see something that I think could be useful to me, I purpose to attend. That is how I landed into a programme on financial management a year ago.

In addition, I source for financial management lessons online, such as “The Rich Dad” channel on YouTube,” he says.

The training I got at Pawa254 was on book keeping, and this has helped me become more aware of how much money I earn, how much I spend, and on what.

Keeping this information made it easier for me to run my cyber cafe business successfully, but unfortunately I had to shut it down because of the changing market dynamics. I do branding and advertising now, and I am also into music and poetry.

“I realised that many times we think we do not have money, when the actual problem is that we just don’t keep track of our expenses. For a long time, it was not easy for me to see the holes through which my money leaked.

But after I understood how to do my own book keeping, it became easier for me to know what to cut out from my expenses and how to increase my savings,” he says.

When he started earning a stable income at the age of 22, dressing well and having a nice phone was important to Javan.

But now, investing in his company is his most important expenditure. “I started saving a long time ago, but twice I’ve had bad experiences where my debtors disappeared with my money because I did not do enough research before investing my savings, and hadn’t put any measures to protect myself in such situations.

That taught me to always seek more information before investing in any venture. I believe that this is an important skill for many young people. It will help you avoid making financial mistakes,” he says.

His retirement plans? “I plan to make an investment that will keep generating an income for me even when I retire. I learnt this tip from some of my conversations with older people,” he says.

Wambui Murimi, 26, operations manager

“Until about a month ago, I had never sat in any financial literacy class. I signed up for a mentorship programme called “The Comms Table” and we had a session on financial literacy.

We were taught how to manage our income, and also how to plan for unforeseen events such as debilitating accidents. The session, especially the bit about the importance of investing, was an eye opener for me,” she says.

Before then, I had never thought seriously about investing for my retirement. By the time she was 23, Wambui already had a stable income, and this earned her almost complete independence from her parents. At that age, she did not care much about her expenditure.

All she had to do was pay her rent, ensure she had enough for bus fare and food every day, and put a little money aside for savings.

“Most of my money was spent on unimportant things. For instance, instead of cooking at home, I had a habit of eating out with my friends, or I could impulsively buy books,” she says.

However, from the start of the year, she made a conscious decision to rearrange her financial priorities.

“Nowadays I spend more on personal growth. I have enrolled for a master’s degree, I signed up for a mentorship programme, and a few other avenues where I can network with other professionals. Because of this, I have significantly reduced the amount of money I spend on vain things,” she says.

Wambui says that turning 25 was a turning point for her. She found herself thinking more about curving a desirable career path, and finding ways to secure her future.

This is why she decided to sign up for suitable mentorship programmes. If she had known what she knows now, she says, she would have saved up a lot more when she was younger, then use the money to pay for even more self-development programmes.

“Right now, I’m trying as much as possible to ensure that I increase my income. Academic certificates are important because they ready you for a promotion, but this is something I learnt only recently,” she says.

About formal financial education, Wambui believes that since money is a personal item, one must be willing to learn before any change in their habits can occur.

“When I was younger, I doubt if a financial literacy class would have been useful to me because I was just not interested. I just wanted to have fun. When I was 25, I invested in a business without conducting any market research. It flopped.

Yet when I was investing, I was sure that I was doing the right thing. If I’d have taken a financial class, I wouldn’t have lost the money I invested in the business because I now know that you cannot start a business without conducting proper research,” she says.


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