Saving money is an essential part of achieving financial stability and independence, as it sets the foundation for future financial freedom. Despite this, a significant number of young adults face difficulties managing their finances, resulting in financial constraints, debt, and obstacles to achieving long-term goals. Here are some of the reasons why young adults struggle to save money today:
1. Lack of Financial Literacy and Education
A 2022 article by Business Mirror revealed that just a quarter of adult Filipinos possess basic financial literacy skills. This lack of financial literacy is one reason why many young adults struggle to save money in today's society. Insufficient education on financial planning, budgeting, saving, and investing leaves many young adults unaware of the advantages of saving, or how to develop a feasible savings strategy. Additionally, some may fall victim to get-rich-quick scams due to their lack of financial knowledge, mistaking these scams as legitimate methods of saving and investing their money.
2. Pressure to keep up with Social Media Trends and Peer Spending
Today's young adults face significant pressure to keep up with their peers' spending and social media trends, earning them the label of the "look at me" generation. With the increasing popularity of social media platforms such as Instagram and Facebook, many young adults feel compelled to maintain a particular image and lifestyle, often resorting to impulsive purchases. Furthermore, societal expectations to spend money on friends and family to impress their followers and friends, even if it exceeds their budget, adds to the pressure. This fear of missing out leaves little room for saving, making their financial situation worse.
3. Lack of Job Security and Benefits
The lack of job security and benefits is among the external factors that impede young adults from prioritizing their savings. In today's economic climate, job security, and benefits are becoming increasingly scarce. With the unemployment rate in the Philippines escalating to 4.8% as of January 2023, many young adults struggle to secure a stable source of income. Even if they do obtain a job, they may be offered a wage below the minimum, which is inadequate for sustaining their expenses. Consequently, living paycheck to paycheck becomes the norm for them, leaving little leeway for savings.
4. Unpredictable Economic Conditions contribute to Increased Expenses
The erratic nature of economic conditions is another external factor that impedes young adults from prioritizing their savings. These uncertain times bring about unforeseen expenses that can cause a considerable strain on their financial resources. The upsurge in expenses can make it even more difficult for them to save and grow their wealth. Inflation, recession, and other economic downturns further worsen the financial uncertainty that young adults encounter today, leaving them with limited capacity to concentrate on their savings objectives.
5. Lack of Long-Term Planning and Goals
Young adults may face challenges in saving money due to their lack of long-term financial planning and goals. Some may not have a clear understanding of their financial priorities and believe that they have sufficient time to save later. Without clear financial goals, they may lack the motivation and discipline to save, resulting in poor spending habits and reliance on credit cards and other forms of debt.
To sum up, saving money can be a tough undertaking for young adults who encounter a variety of challenges that may originate internally or externally. Nevertheless, saving even small amounts on a budget can help individuals attain financial independence down the road. With adequate financial knowledge and planning, young adults can effectively overcome these challenges and obtain financial security and stability.
If you're a young adult struggling to save money, don't worry - you're not alone. With the right knowledge and strategies, you can overcome the challenges and build a solid financial foundation for your future. If you want to get started, check out this blog post on practical tips for saving and investing as a young adult. Don't wait - start taking control of your finances today!
References:
- BusinessMirror. (2022). Empowering Filipinos Through Financial Literacy.
- The Manila Times. (2023). Unemployment rate up.
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