There used to be a time when it made perfect financial sense to work very hard at your 9-5 job, for a good 45+ years of your life and then look forward to a great retirement. The infamous gold watch comes to the fore as a frequent mention of a retirement gift which symbolized the hard work and dedication you put in, so too perhaps symbolizing the good times to come as you enjoy a little bit of an easier life.

Your contributions to your retirement fund which were perhaps automatically deducted from your salary formed part of your savings, but there would also be some savings which you actively put aside perhaps in anticipation of a rainy day or for something specific. That was the general approach to managing one’s personal finances of which their savings were a part thereof and generally that was a blueprint to proper financial management.

Somewhere between the transition through the era of Generation X and the Millennials however, the financial management game got flipped right on its head. Generation Xers had it a lot like their parents’ generation (the Baby Boomers) in many respects, although there were most definitely some radical changes, but us Millennials are right in the middle of a complete pivot by way of how we’re to manage our finances effectively.

With specific reference to the required approach to how one handles their personal savings, things have changed, perhaps making a complete 180 degree turn!

It’s simply no longer enough just to put money away in your savings account. That approach to saving will readily be encouraged by the banks, but their only motive behind that is to have you giving them a little bit more power over what they can do with your money. If you have a 30-day notice account or savings pocket in your savings account for example, this gives the bank 30 days to come with your money should you need it for something. Meanwhile they offer you interest on that money which is frankly a joke compared to considerations of the likes of the inflation rate, but perhaps more importantly, it’s a joke compared to what they make through the interests earned from lending that money to other clients.

It goes beyond that though. It would have been one thing if the money you kept in your savings account as cash neither gained nor lost any of its value, but as things are currently this would result in your money losing its value. Cash just sitting around loses its spending power.

Because money that just sits idle loses its spending power as a factor of time, the new approach to saving is that of putting your money in the safest investments you can access, investments which granted yield slow and often low returns, but the aim is for those returns to off-set the effects of idle cash losing its buying power when saved through traditional savings channels.

If you can get into something like property, perhaps with a group of other Millennials who understand the new rules of saving, then that would be even better by way of principal-safety as well as returns that beat inflation.