Do Millennials Have Good Money Habits? Millennials are an interesting and important generation. They are quickly coming of age in the wake of the financial crisis, and there's a lot of discussion about their impact and financial prospects in a challenging economy. And, as a father of three, I'm keenly interested in the money habits of our younger generations.
No doubt, millennials can be facing a tough financial situation. College graduates today are averaging nearly $30,000 in student debt, and living expenses are higher than they've ever been. At the same time, they will likely face major financial decisions between the ages of 18 and 34: repaying student loans, building credit, purchasing a car, buying a home and starting a family, to name a few.
Bank of America recently teamed up with USA Today to gain deeper insights on millennials' financial habits and attitudes about money.
Some results are consistent with what you might expect. This is an optimistic generation, which is encouraging. They believe they have good habits, and 4 out of 5 believe they'll be as well off or better off than their parents are. The report also found that a large percentage of millennials have good short-term money habits; for example, 50 percent pay off their credit card bills in full each month.
However, this short-term perspective means many are struggling to meet longer-term financial goals. Half say they have virtually no cushion to fall back on, with 53 percent saying they live paycheck to paycheck. Only 31 percent say they are good at saving for retirement, and 22 percent haven't started saving, period. You might think that younger millennials -- those who are still in college or just starting out -- are pushing those percentages up, but astonishingly, the report also found that of millennials between 30 and 34, nearly 1 out of every 5 hasn't started saving.
Currently, when millennial savers are asked what they're saving for, as many say "a vacation" as say "a house." Unique to this generation, millennials value experiences over assets, thinking that being able to afford things like travel and treating friends and family (70 percent) outweighs having their dream homes (40 percent). While I can't argue the value of good experiences with friends and family, we can help millennials expand their perspectives on the value of longer-term saving, as well. One of the most important lessons to come from the financial crisis was the importance for everyone to have a cushion to help weather the inevitable downturns we will all face during our lifetime.
Providing Resources to Help
One of the best things we can do for this generation is ensure they have the education and resources they need to understand their finances and make the decisions that are right for them. While it seems like our children aren't listening to us about a lot of things, we can be assured that they're listening when it comes to money issues. The report found that a whopping 68 percent of millennials surveyed say their parents taught them about money, and 58 percent say their financial habits came from their parents.
There are simple things that we as parents can do to help our children develop better money habits -- like talking about our own experiences with money, sharing helpful resources and helping them determine the steps needed to reach their goals. There are free tools available to help you educate yourself as well as your millennial children in this area. Bank of America and Khan Academy, a non-profit with the mission to provide a free world-class education for anyone, anywhere, partnered to create http://www.bettermoneyhabits.com. This personal finance education resource uses the interactive and engaging Khan Academy approach to help people of all ages learn about good money habits for the short- and long-term. I encourage you to sit down with the young people in your life and share the tips you learned from the content. You'll be giving the gift of financial education to your children and yourself -- a truly valuable experience.
Video presented by Better Money Habits
The material provided on the video is for informational use only and is not intended for financial or investment advice. Bank of America and/or its partners assume no liability for any loss or damages resulting from one's reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional when making decisions regarding your financial or investment management.
No doubt, millennials can be facing a tough financial situation. College graduates today are averaging nearly $30,000 in student debt, and living expenses are higher than they've ever been. At the same time, they will likely face major financial decisions between the ages of 18 and 34: repaying student loans, building credit, purchasing a car, buying a home and starting a family, to name a few.
Bank of America recently teamed up with USA Today to gain deeper insights on millennials' financial habits and attitudes about money.
Some results are consistent with what you might expect. This is an optimistic generation, which is encouraging. They believe they have good habits, and 4 out of 5 believe they'll be as well off or better off than their parents are. The report also found that a large percentage of millennials have good short-term money habits; for example, 50 percent pay off their credit card bills in full each month.
However, this short-term perspective means many are struggling to meet longer-term financial goals. Half say they have virtually no cushion to fall back on, with 53 percent saying they live paycheck to paycheck. Only 31 percent say they are good at saving for retirement, and 22 percent haven't started saving, period. You might think that younger millennials -- those who are still in college or just starting out -- are pushing those percentages up, but astonishingly, the report also found that of millennials between 30 and 34, nearly 1 out of every 5 hasn't started saving.
Currently, when millennial savers are asked what they're saving for, as many say "a vacation" as say "a house." Unique to this generation, millennials value experiences over assets, thinking that being able to afford things like travel and treating friends and family (70 percent) outweighs having their dream homes (40 percent). While I can't argue the value of good experiences with friends and family, we can help millennials expand their perspectives on the value of longer-term saving, as well. One of the most important lessons to come from the financial crisis was the importance for everyone to have a cushion to help weather the inevitable downturns we will all face during our lifetime.
Providing Resources to Help
One of the best things we can do for this generation is ensure they have the education and resources they need to understand their finances and make the decisions that are right for them. While it seems like our children aren't listening to us about a lot of things, we can be assured that they're listening when it comes to money issues. The report found that a whopping 68 percent of millennials surveyed say their parents taught them about money, and 58 percent say their financial habits came from their parents.
There are simple things that we as parents can do to help our children develop better money habits -- like talking about our own experiences with money, sharing helpful resources and helping them determine the steps needed to reach their goals. There are free tools available to help you educate yourself as well as your millennial children in this area. Bank of America and Khan Academy, a non-profit with the mission to provide a free world-class education for anyone, anywhere, partnered to create http://www.bettermoneyhabits.com. This personal finance education resource uses the interactive and engaging Khan Academy approach to help people of all ages learn about good money habits for the short- and long-term. I encourage you to sit down with the young people in your life and share the tips you learned from the content. You'll be giving the gift of financial education to your children and yourself -- a truly valuable experience.
Video presented by Better Money Habits
The material provided on the video is for informational use only and is not intended for financial or investment advice. Bank of America and/or its partners assume no liability for any loss or damages resulting from one's reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional when making decisions regarding your financial or investment management.
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