For the third post in our MIND AND MONEY series, we bring you an interview with Iona Bain, author of the recently published book Spare Change, 27 year old founder of the Young Money blog, and all round guru when it comes to millennials (eek, sorry) and money.
Just last week there was a news article saying the typical millennial’s response to questions about financial planning is: ‘Save money into my pension? I’d rather blow it on a holiday.’
This generation that, like Iona, reached adulthood at the turn of the century, not long before the financial crisis, is so burdened with debt, lack of pension provision and little hope of owning their own home, that thinking about how to fund or simply exist in retirement is just a dream – or perhaps nightmare.
Iona’s new book aims to help us change our preconceptions about money, and see our relationship with it in a new light.
We asked her a number of questions about her own relationship with money, and that of her generation.
Why does money matter so much?
Money is used by everyone all the time. As soon as we get up in the morning, we are spending money, and we can choose to do it mindfully and ethically or we can let big business boss us around and pull the wool over our eyes.
Sadly, many people sleepwalk into that second option, not realising that banks, retailers and other companies are out primarily to boost their own profits and provide value for shareholders.
But thankfully, it is also in their interest to pay attention to active consumers who hold them to account and refuse to accept rip-offs, poor deals and bad customer service.
Not making financial decisions is probably the most damaging financial decision we make. If that sounds paradoxical, you only have to consider the impoverished prospects for people who don’t save.
What’s your own relationship with money?
Like everyone, I have a complicated and tricky relationship with money. I would never want to put myself up as an expert or guru (although I am often called these things as marketing shorthand). I’m just learning about it all as I go along like everyone else.
I guess the key differences between me and your average 27 year old is that I was brought up in a very frugal house. We were not poor, and I don’t recall ever wanting for anything serious, but my mum didn’t like splashing money around and carefully conserved whatever was brought in. That has given me a deep-rooted resistance to spending for the sake of it.
The other factor that has shaped my financial outlook is my dad’s profession as a financial writer. He has spent the best part of 30 years exposing scandals and rip-offs and helping his readers get better at managing money. So I am naturally aware of consumer affair issues and on my guard when it comes to dealing with the financial sector.
Do younger people (dare I say millennials again?) have a different attitude towards money than their parents (baby boomers) and generation X?
Many younger people do have a different attitude to money compared to the older generations. Our grandparents have often opted for make-do-and-mend-approach, they’re cautious and more ascetic than the younger generations.
Interestingly, some baby boomers also have that attitude (such as my parents), having grown up in the post-war era with rationing. Perhaps as the generations have gone on, we have become more short-term in our approach to finance, and we feel a bit more helpless about our ability to manage things against prevailing economic winds.
The housing crisis means so many young people I know live for today and hate thinking too deeply about money. Ultimately, they feel very helpless and (understandably) reluctant to give up all enjoyment and pleasure today.
Having said that, most 20/30-somethings I know are responsible – they hold down jobs, they pay rent on time, they save. Many young people are trying to be smart with money and not get sucked in by materialism, which unfortunately can’t be said for some of their parents.
Baby boomers have been financially fortunate, but while many have made the most of that, I hear frequently about those who didn’t fix the roof when the sun was shining.
What does ‘good’ money mean to you?
Good money means not taking it for granted but not becoming obsessed with it either. It’s a reasonable balance achieved most of the time between enjoying today and making future goals happen. It’s a conscious understanding of why we spend and save money, driven by our values and a desire to do good.
Do you think younger people have a different attitude towards ‘good’ money compared to older generations? And living more sustainable lives in general?
I don’t think ‘good’ money really existed that much as a concept until relatively recently. Globalisation and the increasing complexity of financial markets mean the scope for ‘bad’ money is huge – and that’s partly why ‘good’ money has been catching on more and more.
Young people are idealistic and fortunately we have never before had so much opportunity to interact with brands, to see what they are doing, to investigate poor practice and to stand against it. That is why so many young people (like me) are boycotting tax avoiders, but it is difficult due to their global reach. I have to sell my book through Amazon, for instance, but like many I will keep writing critical articles about their tax practices and avoiding them personally as a consumer in the hope that individual actions will add up.
Being an ethical consumer cannot be a council of perfection because there is so much we still don’t know about, and stories of bad practice pour in everyday. But over time, if enough of us adjust our spending and business habits, we can drive change, and I think Gen Y is slowly grasping this.
Do you think doing good with your money has to come at a premium? Or is it possible to do good with your money and make money / save money at the same time?
I don’t accept that being good with money comes at a premium. Sure, replacing all your cheap Primark clobber with expensive eco-luxe garments might seem like an expensive price to pay for ethical fashion.
That is thinking about the issue in a narrow way. Reducing the rate at which you buy, choosing to buy locally, choosing second-hand or recycled where appropriate…all these things can make us a more responsible consumer and save us money.
What did the 2008 financial crisis / recession mean for you and your friends / generation? Has anything changed since then?
2008 was pretty devastating for a large tranche of my generation, not least because it meant that all these expensive degrees that we were told were so worthwhile for our prospects turned out (in some cases) to be as useful as chocolate teapot.
Many young people are still living with the consequences of being persuaded to go to university and do a degree, really for the sake of it, just before the jobs market for graduates collapsed.
Unfortunately, an even bigger problem has now arisen in the form of a booming housing market combined with a lopsided jobs market – this means young people are forced to live in places where wages are higher and jobs are more plentiful, but rent is eating into most of their income.
What needs to happen, if anything, to global economic / financial systems for a more sustainable future? Is this possible? What can person on the street do?
I think the Occupy Movement had a valid point. Many commentators say capitalism in this country and elsewhere has been frequently and grossly distorted and it’s hard to disagree with that. I can’t see how vast swathes of London housing owned by foreign billionaires and standing empty amounts to a triumph.
Alas, the issues are very deep-set and complex (take our byzantine, intertwined tax situations) to be sorted out even by the most independent, brave political leaders, let alone those hamstrung by various interests.
So it’s up to individuals to be the change they want to see in the world, as Ghandi once said. By refusing to make greed and acquisition the centre of our lives, we can take a personal stand against the things that corrupt our society. We can’t opt out of the financial system but being an active customer and refusing to let commercialism simply happen to us – these individual actions will collectively go a long way.
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