• Europeans are not taking advantage of their purchasing power, resulting in €1.2 trillion less wealth than if they invested their money instead of keeping it in the bank.
• Lack of trust in the financial system, debt, job insecurity and lack of financial literacy are contributing factors to why Europeans aren’t being smarter with their money.
• Millennials have been particularly impacted by the economic downturns and lack the basic knowledge to manage their finances effectively.
The Financial Wealth Gap
Europeans are missing out on a monumental amount of wealth due to an unwillingness or inability to invest their money. It is estimated that if savers had invested instead of keeping cash in banks accounts, European financial wealth would be €1.2 trillion higher. Data indicates that only 17% of Europeans own bitcoin and 15% invest in stocks — numbers much lower than those found among Americans (55%).
Factors Impacting Investment Decisions
The reluctance to invest can be attributed to multiple factors. First, millennials have experienced firsthand how banks were largely unaffected by the great recession of 2008 while individuals saw jobs lost, homes foreclosed and life savings depleted — leading to a general distrust towards traditional financial institutions and the system itself for being “rigged”. Second, owning a home often comes with hefty mortgages and other forms of debt such as car leases or credit cards which can make it difficult for young people to save or invest for the long term. Lastly, job insecurity caused by COVID-19 has made it difficult for millennials to plan ahead financially as well as lacking basic financial literacy skills needed to manage finances more intelligently.
Millennials Especially Affected
Millennials have been especially hard hit by economic downturns since entering the workforce after 2008’s great recession with limited opportunities and stagnating salaries at best followed by further blows from COVID-19 pandemic, Ukraine war and sky-high inflation causing widespread job losses worldwide making any kind of long term planning almost impossible.
Increasing Financial Literacy
In order for Europeans take full advantage of their purchasing power they must become more financially literate so they can better understand how investments work and learn about different ways they can grow their wealth through investing rather than keeping it locked up in bank accounts where it will eventually lose value due to inflation over time .
The struggle is real when it comes to investing money – Europe’s millennials have faced numerous obstacles including distrust in traditional investors, debts that prevent saving/investment opportunities plus job insecurity & lack of knowledge about investments – all combining together into a perfect storm preventing them from achieving greater financial success through smart investing decisions. Increasing financial literacy is key so that people can make informed choices about their future investments & break free from these vicious cycles we find ourselves in today