The New Status Symbol? Financial Boundaries

As we’ve covered before, today’s younger generations have a very different set of attitudes when it comes to money. This is partly around societal shifts, but also the changing nature of global economics, which has seen Gen Z and Millennials think about money and aspirations differently to their predecessors. This is particularly evident against the backdrop of a cost-of-living crisis, with many people of Gen Z or Millennial age finding it increasingly harder to cope against spiralling costs of utilities, groceries, accommodation and other must haves. As a result, home ownership is increasingly out of reach for many young people and forcing them to approach their careers and lives differently.

A new status symbol is therefore emerging: the power to say no.

No to expensive weddings, OTT birthday celebrations and other potentially costly and wasteful things that can further erode savings. Now, young people are regaining control over their finances and using these new financial boundaries as a flex.

A rebellion against the economy

The ability to set financial boundaries is an important psychological step for many people in the Gen Z and Millennial generations. People will be impacted by the cost of living crisis in different ways, but those who are younger - and at the beginnings of their careers – are at a considerable disadvantage. They are at the mercy of an unpredictable job market, and likely to be in a very modest salary bracket (with many forced to pick up side hustles as a result). Higher education may also be a costly factor, with soaring tuition fees either pricing more people out of their chosen universities (and thereby impacting their careers) or saddling them with even more debt if they are able to graduate.

Against this backdrop, the heightened cost of living is a particular injustice and one that many older generations did not have to contend with. It’s an often shared meme and comedic narrative that older people, having grown up with larger salaries and lower living costs, will tell people to cut back on coffees and streaming subscriptions to save up multi-thousand pound deposits…

Yeah, that’ll do it.

Therefore, creating financial boundaries is an important part of seizing back control.

The power to say no

This isn’t easy and one could argue that life is too short. There is naturally a temptation to spend money and enjoy what life has to offer (see our recent blog on the rising popularity of BNPL to learn more), on weddings, festivals, holidays and more.

There is a huge societal pressure to do things a certain way and this is compounded, like never before, by social media. Our newsfeeds constantly confront us with images of success and happiness, forcing us to spend or act in a certain way. It can therefore be very hard to say no and the sense of FOMO many will feel is real. Imagine missing out on Glastonbury while all your friends go? Avoiding an amazing and beautiful wedding of your oldest friends? Or skipping a gorgeous ski holiday?

However, these hard-to-make financial decisions can be extremely powerful in the long term and it’s easy to see how this can become a flex. Over time saying no to frivolous or needlessly expensive things will of course benefit savings and help protect your income. Think of it like a person who regularly misses out on nights out to go to the gym, and doesn’t partake in takeaways or fast food. But then summer comes and they are in great shape for the pool! Saving and developing financial security can take time and that same discipline.

The power of financial independence

Developing a sense of financial independence isn’t as simple as saying no to everything. After all, you don’t want to become a hermit! Instead, it’s about living life in a different way but with a more considerate and nuanced approach to spending.

This can be developed in several ways:

· Prioritising authentic experiences. It can be easy to gravitate towards Premier League games or major concerts, and you’ll likely have a good time, but is this worth it? Try non-league football or attending shows from unsigned bands. You still get a great experience, but at a fraction of the inflated cost.

· Shunning big fashion names. With more people turning their back on fast fashion, the wonders of thrift shopping are now being recognised. You can pick up great fits for barely anything, while also recycling your older pieces through numerous second-hand sale platforms.

· Strengthen your financial literacy. As we’ve covered, money can be a major source of anxiety but – like with many things – fear comes from not knowing. Therefore, educate yourself on your finances and embrace your situation to develop a firmer footing and better plan on how to proceed.

· Focus on you, not your newsfeed. Shunning social media is an often recommended step for younger people, with even short social media breaks being proven to lift users’ mental health. This can also be critical for financial independence. Think objectively – are you honestly enjoying following certain accounts where celebrities flaunt their wealth? Does it actually help your mood seeing them fly on private jets while you stress about rent? Unfollow!

Creating financial boundaries takes time and it isn’t easy. However, learning to say no and operate with your own autonomy – not being swayed by the temptations of financial frivolity – is an important part of improving your mental health and pursuing long-term goals.

That’s not to say you can’t treat yourself and go on holidays, attend friends’ weddings and so far, so it’s important not to overcorrect the other way! Essentially, this is as much about psychology as anything else and though we may describe this as a “flex” it’s important to do what’s right for you and own financial situation. Ultimately though, having financial boundaries and greater awareness of these can only be a good thing.