I'm a Millennial, and I have to admit that my generation often engages in some pretty stupid behaviors and trends (think the Tide Pod challenge and the like). But I must give credit where it is due, and apparently one of those areas of life where Millennials are savvier than we might think is personal finance.
I know the objection is going to be that we have mountains of student loan debt and that we have absolutely nothing to say about personal finance. As much as many of us are drowning in student loan debt, in other areas of finance we are apparently getting our act together fairly quickly, and that's worth noting.
According to new research information provided to USA Today, a sizable portion of Millennials are saving quite a bit of money. The research from Bank of America shows that 16% of Millennials have at least $100,000 saved in the bank, and that’s double of what they found in 2015.
The perception that Millennials — Americans between the ages of 23 and 37 — lack savvy when it comes to saving for retirement, budgeting and setting up and sticking to a financial plan is showing signs of being outdated, noted the survey, made available exclusively to USA TODAY.
Despite many of these young Americans coming of age a decade ago during the worst financial crisis since the Great Depression and despite being saddled with high student loan debt, Millennials appear to be getting their financial lives in order and taking money matters more seriously.
Additionally, 47% have nearly $15,000 in savings, and that’s up from 33% in 2015.
There’s a perception out there that Millennials are foolish with their money, but Andrew Plepler, global head of environmental, social and governance at Bank of America, says that my generation appears to be behaving rather responsibly. So what are we doing exactly?
About 54% of Millennials says they have a budget, and 73% of them say they stick to it each month. 57% say they have a particular savings goal, whereas 42% of Gen Xers and Boomers say they have a savings goal in mind.
What are they saving for? 64% said they were saving for an emergency (smart!), 49% for retirement, and 33% for a house. At this fairly early stage of adult life, the fact that such large percentages of Millennials are saving is incredibly encouraging.
What we need to do with this information is to figure out why this many Millennials are so emphatic on saving. USA Today believes that the “gig economy” is contributing to that, which certainly may be the case.
One potential challenge for Millennials saving for retirement is the fact that one in four (26%) say they work in the "gig economy," or take on short-term contract work or freelance work. That means they likely don't have access to an employer-sponsored retirement account, such as a 401(k), and, as a result, they have to save on their own.
In other words, many of the jobs Millennials have are not as sophisticated our predecessors, with health benefit and retirement accounts. We’re returning to a pre-benefits kind of jobs market, and that may be future of jobs for some time.
If that is the case, it provides an incentive to handle finances properly. By way of necessity, Millennials are budgeting because if their job happens to disappear one day, an emergency fund will be needed to carry them through the dry time.
But what about other factors? Could their upbringing have an effect on their financial habits? I would definitely say so; consider the circumstances through which many of them came.
A large percentage of Millennials were still living at home when the Recession hit. Some of our parents lost their jobs, many of our friends’ parents lost their jobs. We saw people have their homes foreclosed on, and struggling to get by for years. Perhaps that sight affected us so deeply that many of us have chosen a different financial path?
There are plenty of things that I could go on and on about regarding my fellow Millennials, but if this research is right, it indicates that we are wising up about personal finance and are getting on the ball early in life (count me as one of them).
I hope that we are all sharing our experiences with friends and family so that they can be motivated to kick things into gear as well.