An insightful Forbes article (“How Millennials can Survive and Thrive in a New Economy) published online Friday and set to appear in the December 5th issue of the magazine delves into the challenges facing younger Americans who have come of age in a recession economy. Now that the Millennials are hitting 30, buying homes, and getting life insurance quotes, it’s worth asking how the traditional pieces of a personal financial puzzle fit together for this very untraditional generation.
Millennials are the generation born after 1980, who have come of age in the new millennium. As the Forbes article discusses, they grew up in the culture of the 1980s and 1990s, which was defined by all the social impacts of the longest period of sustained growth in American history. Consequently, they grew up believing that if they followed a well-defined path, they would naturally find a good job, a good income, and a comfortable lifestyle.
But all that changed with the tech crash of 2000, which could in many ways be seen as the inaugural event of the Millennials’ coming-of-age generation. The immediate impact of the tech crash was overshadowed by other world events (such as 9-11) that happened shortly after. And it was muted by the fact that the cornerstone of the housing boom that emerged from that mess was a form of securities that helped to prop the financial sector back up.
In this decade, as the Millennials move into their 30s, a slow recovery is happening, but the damage of a decade of financial turmoil has been done. The pathway that generation believed they could follow to stability has been undermined. Millennials don’t follow established paths anymore; they find their way. And they are becoming a self-sufficient, resourceful, entrepreneurial, financially conservative lot as a result.
When it comes to the traditional financial structure that has built wealth for generation after generation, the same new rules apply. Key wealth drivers for previous generations, such as investing in a home or buying securities, are just as likely to be financial disasters as financial builders. Even going to school and getting an education doesn’t hold the value today that it once did: huge numbers of Millennials are opting for non-standard careers rather than amassing hundreds of thousands of dollars in student debt.
Life insurance is one of those things that we tend to ignore in our 20s and buy in our thirties, but like other financial instruments, does it make sense for Millennials? Salesmen will convince you that it does regardless of who you are, but the only way to know is to create a personal financial stress test that asks: what would happen if I died today and my income disappeared?
To do the test honestly, you have to list out all your financial obligations, including your monthly bills and your other commitments. (For example, if the culture of your family demands that you provide for your parents when they retire, that’s a commitment even if you aren’t paying on it today.) Next, list every person who depends on you and your income. Next, eliminate everything from the list that would go away if you lost your life.
What you’re left with will tell you whether a policy makes financial sense for you or not. Of course, if you have children you don’t even need to do the math; you should just go looking for life insurance quotes. Visit this website to learn about life insurance to see if it would be worth it for you and your family.