If you think millennials are financially failing to launch because they like eating avocado toast with their friends, think again. This generation has it harder at their age than any of the previous two generations, according to Pew Research Center. They’re facing higher unemployment, lower levels of personal income, higher poverty levels, and higher student loan debt than both Generation X and the Baby Boomers. However, despite that, 80 percent of millennials report currently living fulfilling lives, meaning that financial success may look differently than it does for others.
But are they as good at actually managing their finances as other generations? You may be surprised to find that in many ways, millennials are more fiscally responsible than their predecessors.
1. Over Half Live on Their Own
Thanks to the Great Recession, many millennials graduated college only to find that the job market had collapsed and they’d have to move home with their parents. While 25 percent reported having to spend some time at home, according to a 2016 Fidelity survey, 66 percent report living away from their parents. Sure, it’s not a large majority, but it’s a step in the right direction as this generation finds a way to land on their financial feet.
2. They’re Saving More and More
As economic conditions improve year over year, millennials aren’t spending their earnings; they’re saving. In 2014, 77 percent reported that they were working toward shoring up their savings, according to Fidelity. By 2016 that number was up to 85 percent. This suggests that as they have more discretionary income, millennials are looking to save as opposed to spend.
3. Retirement Saving is Equally As Important to All Generations
Maybe it’s because they saw so many people lose their retirement savings in the recession, but millennials are in-step with both Gen X and Boomers when it comes to saving for retirement. Fidelity reports that 60 percent are saving for retirement, while 61 percent of Gen X are saving and 67 percent of Boomers are saving. You’d expect that as people inch closer to their golden years they’d be saving more, but Millennials understand the importance of starting young, and aren't far behind.
4. Working to Pay Bills
Millennials aren’t working to go on vacation with their friends, although they may do that from time to time. Instead, most millennials tell Fidelity they are putting their paychecks toward paying rent, paying student loans, and working to buy a home. With student loan payments coming in at $280 a month on average, that means it will take a bit longer for them to be able to afford a home.
For example, $280/month comes out to $3,360/year. In a little over three years, that money would be enough for a downpayment on a $300,000 home (using an FHA loan). But instead, it will take about 7.5 years to pay off the average $25,000 in student loans, setting back their homeowner dreams by over half a decade. So when you wonder why more millennials don’t own homes, here's some student loans to consider.
5. They’re Looking Forward to the Future
Bank of America Merrill Lynch reports that millennials feel more confident about their financial future (48 percent) as opposed to Boomers (22 percent). There are a few likely explanations for this, which include that Boomers are hit with unexpected costs like caring for aging parents and paying for their children’s college tuition, while millennials know that there’s still time for them to build up their nest egg – and that’s what they plan to do.
6. Financial Education is Important to Them
A hallmark of millennials is that they don’t really trust financial advisors, based on their experience seeing what happened during the recession. However, 92 percent still said they’d appreciate if their employer offered some kind of financial education program at work. This number is higher than any other generation, with 89 percent of Gen X saying they’d like this and 76 percent of Boomers. You could chalk this up to the older generations having their plan under control already, but as we’ve seen, they have some financial woes of their own they could use help with.
7. Bargain Hunting is Normal
Over half of millennials, 57 percent, report being fans of convenient bargain hunting. This is obviously not great news for retailers, but it is good for millennials’ wallets. While it may be easy to go to a store and find the perfect party dress, the larger half of millennials will use technology to research product reviews and compare prices online with prices in a store before loading up their cart, according to Goldman Sachs. If it’s convenient and cheaper than at the store, that’s a deal millennials are bound to take.
8. They Stay With Employers Longer Than Other Generations
Given the choice, millennials will stay loyal to their employers more than Gen X or Boomers did at their age. There’s a popular stereotype out there that because of the economy that millennials inherited, they like to jump from one job to the next, but that’s not what the data shows. According to a study published by the White House, overall, millennials tend to stay with one employer from three to six years, with hardly any jumping ship after less than a year.
9. Frugal is Their Middle Name
There are probably a lot of reasons for this next stat, whether it’s higher bills or lower wages, but millennials spend a lot less annually than Gen X or Boomers. TD Bank’s Consumer Spending Index shows that millennials spend 27 percent less than Gen X and 23 percent less than Boomers, coming in at just over $26,000 annually. It will be interesting to see how and if that changes as the economy continues to grow.
10. Their Brunches Are More Sensible Than Other Generations
Among the things Millennials have been blamed for is not being able to buy homes because they eat too much avocado toast … seriously. But according to TD Bank, that’s not the case. It may seem like they’re going broke on going out, but despite dining out 13 times a month, millennials only spend $103 on average. Gen X dined out eight times a month to the tune of $123, and Baby Boomers five times a month at $139. They’ve found a way to be social on a budget, which is hopefully a habit they can carry with them through life. If so, they stand to save a lot of money.
11. Social Security Isn’t a Viable Retirement Plan
At one point in time, social security along with some modest savings may have been enough to retire on, but that’s not the case anymore, and millennials know it. Pew Research Center reports that over half of millennials think they won’t receive any social security benefits at all, which is likely why they’re so focused on building up their own retirement accounts. If they do receive social security, it will be the cherry on top, but it’s not something most millennials are counting on.
12. Keeping Their Credit Low
Some millennials report the need to use a credit card to make ends meet from time to time, but in general, this generation tends to use other forms of payment as opposed to racking up more debt. TD Bank found that cash, debit cards and checks were the preferred forms of payment, and made up for $5,200 of their spending. The average American only uses these methods for $2,400 of spending, and swipe their cards 22 percent more often.
13. They Trust Traditional Investing
If it ain’t broke, why fix it? That’s the approach millennials tend to take when it comes to investing, focusing on the long term as opposed to getting rich quick. They generally follow Warren Buffett’s advice and look to investing in index funds, which is a classic investing technique, especially when time is on your side. The stock market is time consuming and unpredictable, so instead, millennials choose to “set it and forget it.”
14. Financial Responsibility Comes Before Marriage
Millennials tend to carry a lot of financial baggage with them, and they know it. That’s why many people in this generation put off getting married until they feel that they’re financially ready to, so that they don’t saddle another person with debt. Additionally, they want to feel like their career is in a secure place before tying the knot. As a reference for what this looks like for people between the ages of 20 and 34: in 1960, 77 percent of these people were married; in 2013 only 30 percent walked down the aisle.
15. They’re the Best at Managing Their Wealth
Maybe one of the most empowering studies for millennials was done by Charles Schwab. They tracked 1,000 Americans between the ages of 21 to 75 to see how they managed and used their wealth according to four categories, which included staying on track financially, setting financial goals, saving and investing, and confidence in achieving financial goals. On a zero to 100 scale, Gen X scored lower than average at 45, Boomers were an average 49, and millennials were above average with a 51. Additionally, in three of the four categories, millennials scored above average.
- Study: Millennials are stressing about their finances
- 15 ECONOMIC FACTS ABOUT MILLENNIALS
- Millennials: Coming of Age
- FHA Loan Down Payment Requirements
- Younger people are actually better with money than Boomers and Generation X
- RentCafe.com. "Millennials Spend About $93,000 on Rent by The Time They Hit 30." Accessed Aug. 20, 2020.
- Urban Institute. "Millennial Homeownership," Page 7. Accessed Aug. 20, 2020.
- U.S. Bureau of Labor Statistics. "Consumer Expenditure Survey," Page 3. Accessed Aug. 20, 2020.
- Bank of the West. "The 2018 Millennial Study: What We Found Out." Accessed Aug. 20, 2020.
- Urban Institute. "Millennial Homeownership," Pages V-VI. Accessed Aug. 20, 2020.
- Pew Research Center. "Defining Generations: Where Millennials End and Generation Z Begins." Accessed Aug. 20, 2020.
- Charles Schwab & Co. "Modern Wealth Index 2017." Accessed Aug. 20, 2020.
Natalie has her BA from University of California, Riverside and has worked in digital media for over a decade. She has been a Bleacher Report featured columnist for Bleacher Report and created content for some of the leading companies in the financial space.