Millennials Saving Earlier But Still Have Challenges

Millennials Saving Earlier But Still Have Challenges

( – Younger Americans are managing their finances better than their parents and grandparents, and are preparing for retirement at an earlier age. That’s according to Bank of America’s 2020 Better Money Habits Millennial Report released on Thursday.

Americans between 24 and 41 years of age are engaged in the workforce, climbing the financial ladder, getting married, and having kids. They are a significant part of the economy and their economic output will have a long-term impact on older generations entering retirement over the next 20 years.

In the report, millennials say they are putting money away despite financial challenges with debt. Nearly 75% are saving money and 25% have $100,000 or more in savings or investments, that’s up 16% over 2018.

Many Millennials experienced the Great Recession as kids and watched their parents struggle, or they entered the workforce as young adults during a challenging economic time. Until recently, they had not experienced a dynamic, growing economy that had full employment let alone more jobs than there are people to fill them. Combine their experience growing up with college debt, many millennials may have learned that saving money is the way to long-term security.

What are Millennials Saving For?

Of the millennials who are saving money:

  • 75% are saving for retirement
  • 50% are building an emergency fund
  • 33% are saving to purchase a home

Homeownership is a bigger goal for younger generations than older ones. Around 40% of younger millennials and 41% of Gen Z say they are saving to buy a home.

Millennials Express Insecurity

Half of the millennials surveyed said they feel behind on their finances compared to where they thought they would be in spite of their financial success. About 75% said they don’t feel confident about their financial situation and 73% don’t feel optimistic about their financial future.

What do they say is stressing them out the most:

  • 44% aren’t saving enough
  • 38% need to plan and save for retirement
  • 32% don’t make enough money
  • 26% are living beyond their means
  • 25% have credit card debt
  • 20% can’t save for their child’s education
  • 20% are concerned they won’t be able to afford a home

The main reason for their insecurities: Debt.

75% of millennials reported carrying debt in excess of $50,000 or more. The types of debt include:

  • 40% – car loans
  • 37% – credit card debt
  • 36% – mortgages
  • 25% – student loans
  • 12% – personal loans
  • 11% – medical debt

In order to accomplish their financial goals, 90% of millennials said that they are making sacrifices. Those sacrifices include small lifestyle changes to major career trade-offs.

Future is Bright for Many Millennials Inspite of Concerns

Andrew Plepler, global head of environmental, social and governance at Bank of America, said in the report:

“The establishment of good money habits early does pay off over time. The more you can establish strong financial hygiene earlier in your career, the more stability you’re going to have throughout the highs and lows of an economy.”

It appears that millennials are saving more than Generation X and the Boomers before them. The average age that millennials started saving for retirement was 24 compared to 30 for Gen X and 33 for Baby Boomers.

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