بسم الله الرحمن الرحيم
22 Sha’ban 1446/21 February 2025
All praise is due to Allah, the Cherisher, Sustainer, Nourisher and Provider of the entire creation.
Millennials are considered to be the majority in the workplace environment. In addition to a major effect on investment and consumption, millennials are likely to inherit their parent’s wealth from the baby boomer generation. According to a pwc study, millennials are not considered as loyal consumers. (Pauline, 2022)
While revenue appears to be crucial, asset allocation also depends on the values that businesses advocate. As a result, green finance products and investments based on nonfinancial criteria are increasing (ESG, for Environmental, Social and Governance).
In lieu of the stock market, millennials are taking advantage of private equity and real estate investments. For ease of withdrawal during a storm, they prefer liquid products. (Pauline, 2022)
The millennial generation is frequently viewed as one that is creative, has interesting ideas, has a productive mentality, but also one that is consumptive. These traits developed as a result of the internet effect and digital culture. The internet is used by the millennial generation for its purposes. As an illustration, consider a transaction, a mode of transportation, food, or a walk outside. (Ramadhan & Asandimitra, 2019) The millennial generation, which uses the internet so frequently, has evolved into the consumerist generation. Their impulsive behaviour will have a significant impact on how they manage their finances. The way someone consumes, the types of items they consume, and the reasons they make purchases can all provide information about their money management behaviour.
Living in the 21st century, millennials are faced with numerous challenges. One of the greatest challenges faced by millennials is the increased cost of living which results in debt due to poor wealth and financial management abilities.
The big question is what are the priorities for millennials in terms of wealth management and how can one deal with the challenges discussed above.
Millennials tend to be sensitive towards the up-keep of the environment.
Human nature is particularly complex since it has many different elements that cannot be explained by a straightforward, clear-cut set of guidelines that apply to people as well as to other objects and creatures. One of the most popular approaches is to integrate psychology into other social sciences, such as politics, law, sociology, and economics. This approach has had significant and fruitful results that benefit a wide range of interested parties, including politicians and economists as well as authorities, social leaders, and thinkers.
The value of incorporating psychology is evident in both of them as Islamic wealth management is vulnerable to most trends as well as restrictions, restraints, and dangers that are facing conventional counterpart. Building trusting relationships with clients’ needs emotional intelligence and careful awareness of the non-financial variables influencing client decision-making in the financial advisor’s growing position. Major products of this integration of finance with other social disciplines include behavioural finance and financial therapy, which work to humanize and broaden the definition of finance by taking a multidimensional approach to the study of financial phenomena. The three approaches of acceptance, adaptation, and Islamization are at the centre of the Islamic perspective on behavioural finance and financial therapy. (Al-Abbadi & Abdullah, 2017)
Part and parcel on ones priorities, one should allocate for religious obligations such as distribution of Zakah and performance of Hajj after the disposal of basic expenses. Without a doubt, these religious obligations are of utmost importance to be fulfilled if one has the means. The next step would be to start early by planning and saving for the education of future offspring. Tertiary level education at a top level university could cost round $250 per module which is quite costly for the ordinary man.
CONCLUSION
What we notice that as time goes, life gets more expensive and with time comes technological advances which makes millennials more consumptive. As a means of recourse, financial and wealth management exercises are of great importance. The incorporation of psychology into financial and wealth management would be really beneficial for all millennials as it may assist in dealing with prevailing challenges in society such as the rise of debt in our communities and society.
May Allah accept our efforts from us and grant us understanding In Sha Allah!
References
Al-Abbadi, A. H., & Abdullah, A. (2017). Modeling Psychology in Islamic Wealth Management. International Journal of Economics and Finance, 9(10), 64. https://doi.org/10.5539/ijef.v9n10p64
Pauline. (2022, March 25). Wealth management: the challenge of Millennials. The Hokus Platform. https://www.thehokusplatform.com/en/gestion-de-fortune-lenjeu-des-millennials/
Ramadhan, A. Y., & Asandimitra, N. (2019). Determinants of Financial Management Behavior of Millennial Generation in Surabaya. Jurnal Minds: Manajemen Ide Dan Inspirasi, 6(2), 129. https://doi.org/10.24252/minds.v6i2.9506
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