Europeans are terrible at managing their finances, but Bitcoin fixes this
The financial wealth of European millennials is being eroded by their inability to take advantage of their purchasing power, which is hurting their wallets. The financial wealth of Europeans would have been EUR1.2 trillion more if savers invested their money rather than keeping it in the banks. Despite high inflation, the most common way Europeans save money is to keep cash in bank accounts for emergency situations. Only 17% of Europeans said they had bitcoin by 2021. Data suggests that only 17% of Europeans own bitcoin in 2021. This is a similar number to the 55% of Americans. Many of them have witnessed their parents lose their jobs, their homes, or their life savings. They have witnessed the big banks, who are the architects of this catastrophe, go unpunished. This caused a lack of trust among millennials in Wall Street, banks, and the entire financial system. Many people believe that traditional financial institutions cannot be trusted, and that the system itself is rigged. Debt: Owning your home is a symbol for stability and security. A 30-year mortgage is often required to own a home due to the rising real estate prices in Europe. Add to that a car lease and credit cards and it can be difficult for young people save and invest. Depending on where you live, student loans can also make it difficult. Millennials have never had a job security. Many of them entered the workforce following the 2008 financial crisis. They were faced with limited opportunities and stagnant salaries. As things began to improve, their careers were hit by the COVID-19 pandemic and the war in Ukraine. All of these factors caused widespread job losses, a global economic downturn, and made it difficult for them plan for the future. Many Europeans lack basic financial knowledge and skills that will allow them to better manage their finances. I won’t get into the debate about if the lack of financial education in European public schools is a problem or a feature. But we are not being taught anything about money. This ignorance is being passed down from generation to generation. A PwC study found that only 25% of millennials had adequate financial knowledge. PwC found that only 25% of millennials had adequate financial knowledge. To quote “Fight Club,” a cult favorite from the late ’90s, “Advertising has our chasing cars and clothes, and working jobs that we hate so that we can buy shit that we don’t need, and end up owning us.” Many Bitcoiners, including myself, will tell you that Bitcoin has had a significant impact upon our lives and how we think about money. Bitcoin’s strength is its low time preference. It encourages you not to be gratified by the present and instead look to the future. A low time preference leads to saving, it encourages you to think before you do and consider the consequences of your decisions. This mindset is crucial for long-term financial stability, growth, and Bitcoin encourages it by its very nature. First, Bitcoin’s 21 million coin supply is a feature that makes scarcity a natural part of the currency. This scarcity preserves value over time. This scarcity protects value over time. How can bitcoin be a safe investment if the price crashes every day?” But price volatility is another way Bitcoin can change your time preference. While the short-term price fluctuations can be quite significant, Bitcoin has been able to grow steadily over the long-term. Many have come to see Bitcoin as a long-term investment and not a speculative asset. Bitcoiners will tell this to you, too. It is decentralized and operates independently from traditional banking systems. This allows you to keep your money in your own hands. Bitcoin will change the world but it will also change how we think about money. This guest post is by Imo Babics. His opinions are his alone and do not necessarily reflect the views of BTC Inc. or Bitcoin Magazine.