Millennials Save More Than Any Other Generation
When it comes to saving money, millennnials are doing much better than most people think.
A recent survey conducted on behalf of Merrill Edge shows that America’s youngest adult generation actually saves a higher proportion of their income than does any other generation.
In fact, millennials save an average of 19% of their annual income, while seniors save the least, at 12%—which makes sense, given that they’re mostly retired.
Nevertheless, this defies expectations, since only 8% of the general population believes that millennials are good savers (while 54% believe that seniors are good savers).
Perhaps most ironically, only 15% of millennials see their own generation as decent savers—turns out, they’re wrong.
Millennials Save For Temporary Lifestyle Changes
Millennials are saving a high proportion of their income, but what are they saving for?
Is it for retirement? Are they squirreling away for a rainy day find? How about preparing to raise a family?
These options would be prudent, since millennials have been getting the short-stick economically speaking.
In fact, they’re much worse off than their parents were at their age.
But no, they’re not.
The same survey shows that millennials are not terribly interested in living traditional lives.
According to the report:
When asked about their top priorities in life, today’s 18-to-34-year-olds are significantly more likely than their older counterparts to focus on personal milestones of working their dream job (42 percent, compared to 23 percent) and traveling the world (37 percent, compared to 21 percent). Millennials are also far less likely to emphasize the traditional family milestones of getting married (43 percent, compared to 51 percnt) and becoming a parent (36 percent, compared to 59 percent).
The study proposes that this is due to a Fear-Of-Missing-Out (or FOMO) mentality, claiming that millennials are more likely to save up for lifestyle enhancements such as gym memberships and traveling, than for their financial future.
This is reflected in the data when millennials are directly asked about their motivations for saving.
Millennials Must Reevaluate Their Savings Goals
Let’s be honest. Millennials are getting screwed.
1 in 4 of them are both unemployed and not in school—probably because the real unemployment rate is a lot higher than they say.
Millennials also have lower average net worths, salaries, and home ownership prospects than their parents’ generation as well.
This isn’t all their fault.
The middle class has been shrinking for some time and none of them were around to stop it.
Since millennials drew the short straw, if they want to succeed like their parents did, they may need to start saving for things that matter, rather than for ephemeral trivialities.