There's a common misconception that the so-called “avo-toast” generation is irresponsible with money and unconcerned about the future. Sanlam’s 2018 Benchmark Survey shows this isn’t the case: long-term saving for big goals is top-of-mind for most millennials, although it can seem unrealistic.

Gen Y (born between 1981 and 1998; currently aged between 20 and 37) includes people in various life phases. With major expenses such as moving out of the parental home, lobolo, a wedding, buying a car – or even a home – short- to medium-term goals inevitably trump long-term ones. So how does a job-juggling, frequently family-supporting, debt-saddled generation of savvy side-hustlers win at the long-term savings game? By capitalising on their strengths and acknowledging where they need to grow.

Millennials are the best-educated generation to date, but they’re drowning in debt, and have limited employment opportunities, lower real (after-inflation) earnings and less disposable income. And they’re engaging the job market in a different way. The average person will have 12 to 15 jobs in a lifetime because of the rapidly changing employment market. With millennials comprising over 40% of South Africa’s workforce, this has major ramifications, particularly for the preservation of retirement savings.

Millennials are also less attached to conventions, which means they’re charting new territory and facing fresh socio-economic challenges. We know they’re using tech tools to investigate potential purchases, via bite-sized online content.

Despite low financial literacy and limited financial education, millennials are overconfident: 60% believe they don’t need help with managing their money.

Many do not trust the financial services industry, so they tend not to approach financial planners for help with achieving their goals. And to date, they’ve not been a focus for financial planners, because they have few assets.

This is a pity. Millennials want to save, and, with their multifaceted goals and drive, are primed for good advice and being steered in the right direction.

In terms of big savings goals, many millennials want to go on holiday, buy a car and/or property, get married, pursue further education, grow their net worth and achieve financial independence. Most of these goals may require saving and investing over the medium term (one to three years) or the long term (usually longer than five years).

The barriers to achieving these goals include:

  • Not having enough money at the end of the month to put something away;
  • Not knowing about, or understanding, the savings and investment options available, and not choosing the most appropriate vehicle;
  • Difficulty understanding and choosing the right investments;
  • Cashing in investments prematurely to meet other obligations, including debt;
  • Having a number of financial goals, but not knowing which one to prioritise; and
  • Not being able to imagine an event that seems so far in the future, such as retirement.

Millennials can overcome these barriers as follows:

  • Don’t be discouraged if you can save only a small amount every month. Even R150 can make a big difference over the long term. Start with what you can afford.
  • Spend time researching different savings vehicles and investment options. Seek advice, because these products can be complex, and it can be helpful to get the “big picture”.
  • Have an emergency fund in place to help you to stay on track for your bigger goals, or recover quickly when things go awry.      
  • Try not to spend savings on anything other than the purpose for which they’ve been earmarked.
  • Make sure you understand all the implications of withdrawing your retirement savings when you change jobs – you may be undermining your future financial security.
  • Although you should define your long-term savings goals, start saving if you haven’t – you’ll thank yourself later when you’ve figured out your goals.
  • Beware of “lifestyle creep” – particularly when you’re starting out. You probably won’t have much money to save in the beginning, but what you do with your next increase and the ones thereafter is critical.

Perhaps the most exciting attribute of millennials is their innate curiosity. Use it. Do extensive research and ask questions. Find a financial planner who can help you to unpack your goals, and who will put a financial plan in place that will give you the best chance of achieving them.  


André Wentzel is the solutions manager at Sanlam Personal Finance.