‘Don’t spend just to impress your friends’

millenialsPETALING JAYA: Financial planning experts say millennials have to spend moderately and start budgeting if they want to continue spending on “convenient vices”.

Such vices include indulging in designer coffees, drinks and meals on a regular basis without having a thought for the effects of such spending on their personal finances.

Kevin Neoh, a financial planner from VKA Wealth Planners, said improved technological advancements was one reason that contributed to such spending by millennials.

“Vast social media sharing from friends have improved communications but this has exposed us to a lot of distractions.

“Youths today should be encouraged to not lose focus on the future and not be overly focused on living just for the day, at least financially,” Neoh told FMT.

Another financial planner, Eno Wong, said peer pressure can cause millennials to constantly have their presence posted on social media.

“Many spend so much on expensive coffee, foods and drinks just for their social media postings … just for the sake of telling the world they exist and they can afford to spend or indulge in such vices,” said Wong.

A study conducted by US-based bankrate.com said the average millennial eats out five times a week, and between Starbucks runs and bar tabs, it’s making it harder for them to develop a savings habit.

Bankrate.com data showed 29% of millennials, which refers to those born from the early 1980s, say they buy brewed coffee at least three times a week, 51% go to a bar at least once a week and 54% eat out at least three times a week or more, and the costs all add up.

This phenomenon is also seen in Malaysia and Wong said millennials should follow a good cash flow management technique to help contain all unnecessary spending.

“I once realised I was spending RM500-RM600 a month just for coffee.

“And this revelations made me more aware of my spending.

“If it is too much, I tend to find an alternative or substitute for this,” said Neoh.

Nor Nabihah, 21, a degree student at Lim Kok Wing, indulges in Starbucks drinks at least twice a day.

Her order of choice is a 20-ounce iced caramel macchiato.

“It definitely is pricey. But it’s some sort of a weird addiction. I spend like more than RM50 a week or so,” she told FMT.

Wong said the paycheck to paycheck spending trend is just the first wave.

“High debts will be the next wave.

“And then they live as a financial slave for their entire life if they don’t commit to doing something about it.”

Business consultant John Tan, 27, said he orders takeouts and goes to restaurants four times a week. It is not just about spending on the food as he looks forward to meeting friends.

“You just want to have a nice night out somewhere with friends and maybe do a posting or two on Instagram,” he said.

Coffee shop owner Hakim Rizal, 39, feels lucky that the younger generation considers his Taman Tun Dr Ismail cafe a “cool” place to get together.

“We serve more than 300 cups of coffee a day.

“It gets busier during peak hours but it is kind of a good thing for us as these people bring in business when they come in large packs, especially after hours,” said Hakim.

Neoh advises that apart from keeping to a budget, millennials should also take a step back and not overly follow trends that will have a negative financial impact on them in the future.

“It’s just like you can play candy crush during working hours to relax a bit but you don’t play it all the time,” Neoh said.