Starting a career and taking on the responsibilities of adult life is difficult. This is true whether you begin your career immediately after high school or a few years later after graduating college. Moving out, learning how to balance a budget, and juggling all the daily expenses that your parents or guardians used to handle has always been a challenge.
Luckily, today’s young people benefit from access to financial services that former generations did not have. It’s still difficult to adjust to adulthood, but thanks to the fintech revolution, it’s definitely easier than it used to be. The following are just a few reasons why:
Access to Budgeting Tools
Being able to create and manage a budget is key to one’s financial success. This is particularly important for those who are just beginning their careers. The average young adult in this position typically isn’t making a very high income and may have limited experience paying bills regularly.
This is why fintech budgeting products, like Mint.com, are very helpful. They provide an easy set of tools to help people track and plan their expenses. In the past, many young people had to figure out how to create an effective budget on their own. With fintech products, they can follow an intuitive budgeting process.
Access to Investing
Robinhood is an investing tool that allows users to buy and sell stocks (as well as cryptocurrencies and some other tradable assets) directly via a simple mobile app. Because Robinhood doesn’t maintain brick-and-mortar locations, like a traditional brokerage firm, it allows users to make trades without having to pay brokerage fees. This makes it easier for people with limited capital to begin investing. This may be the reason the median age of a Robinhood customer is 28.
Granted, these services carry with them some degree of risk. Investing is always risky, and it becomes much more risky when the person doing the investing doesn’t have much experience.
However, if an individual is willing to do some research, he or she could stand to profit greatly from investing. Thanks to products like Robinhood, the barriers that used to prevent younger people from investing in the stock market have been substantially lowered.
More Small Business Capital
As this blog has pointed out before, fintech-based lending firms are often more likely to approve loans for businesses than other financial institutions may be. This isn’t because they all engage in predatory lending practices. It’s simply because they often have access to more information about someone applying for a loan than a bank might. By leveraging the information available via the Internet and other digital sources, fintech lending companies are often able to learn more about an applicant’s overall financial behavior than many other institutions can.
This makes it easier for young adults with limited credit history to acquire funds they might need to grow a small business. Of course, like investing, growing a small business can be somewhat risky, but it can also be very rewarding. This is the kind of opportunity that wasn’t nearly as easy to come by just a generation ago.
Although most people will have some experience managing a bank account before they start their adult life, the process of managing a bank account becomes much more complicated when you start earning a substantial income and start paying significant bills on a regular basis. The more experience people have familiarizing themselves with essential banking processes, the easier this task becomes.
Today’s youth benefit from the large number of mobile banking apps available. Not long ago, banking meant going to an actual branch to do everything from depositing a check to opening an account. Now, people can complete many of these tasks with just a few clicks in a mobile app. This gives young people today greater opportunities to learn about effectively managing a bank account.
As fintech products improve, they often integrate better. For instance, a budgeting app is already helpful, but a budgeting app that connects directly to all your financial accounts is particularly valuable. These features streamline the process of using what are already very efficient and powerful products.
In other words, the next generation of adults will benefit from even simpler financial services. With the rise of augmented and virtual reality technology, it’s not difficult to imagine a future in which a young adult could transform his or her surroundings into a virtual bank branch using a VR headset.
This technology will benefit the overall economy. When more people know how to save and spend money effectively, everyone wins.