A survey by Bankrate has debunked the long-held notion that Millennials are poor at saving compared to previous generations. The narrative was primarily considered accurate by virtue of Millennials desiring the finer things in life: traveling, expensive coffee, top-of-the-line fashion items, frequent partying, and so on.
Nevertheless, despite the Millennial penchant for things pertaining to the good life, they remain very conscious of the future, being careful to take steps to secure it financially. Here are 13 reasons as to why Millennials are better savers than previously thought.
Increasing levels of financial literacy
The most prominent deficiency in the Millennial curriculum was finance studies relating to prudent money use geared towards improving one’s economic standing over time. In due course, surveys unearthed that indeed, Millennials were lagging in matters personal finance. It is proposed that Millennials have increasingly become aware of their financial education deficit and they are doing something about it.
The influence of role models
Starting from the late 90s to the current post-millennium years, entrepreneurs have multiplied exceedingly and risen to the fore as generational influencers. Maturing in such an environment, Millennials are heavily influenced by the way of life and the teachings of leading entrepreneurial personalities many of whom highlight the importance of saving to achieve financial goals.
The 2008 recession
Many Millennials came of age just in time to feel the bite of the 2008 recession. The period is projected to have had a substantial impact on the generation instilling a fear of lack, and financial frailty. This concern is being played out as Millennials strive to save more to build a safety net in case things take a downturn.
The rainy day mentality
The saving for a rainy day teaching, which is closely associated with the fear created by the recession, is another proposed reason why Millennials are upbeat on matters saving. With social media providing a platform for the airing of worst-case financial misfortune cases, featuring prominent personalities who have gone bankrupt, Millennials seek security through saving.
Goal oriented
Millennials are the most goal-oriented generation thus far. Overambitious and willing to do anything to live a purposeful life that ticks all the personal checkboxes that typically represent a life well lived, Millennials have no problem with saving to build financial muscle to achieve their dreams.
Debt
Sadly, Millennials are also the most debt-laden generation at such a young age. Most leave school with a student loan and are quickly forced to take other loans, particularly, car loans. Their indebtedness has cultivated a deep desire to shake off the shackles of debt which drives them to check their spending to contribute more towards payment and saving to prevent a future need to take on more debt.
The fear of debt
Millennial indebtedness has also cultivated a debt phobia thanks to the first-hand witnessing of the ugly side of financial liabilities. This fear has been apparent with a significant percentage of the generation shying away from financially dangerous products (if used without caution) such as credit cards. This phobia has inspired a more prominent drive to save to achieve financial freedom.
The preemptive financial approach
Most Millennials watched their parents struggle with financial obligations in the face of several economic woes. This helped create a very distinct image in Millennials of what they do not want financially when they get to a similar point in life. In line with realizing this long cultivated ideal, Millennials find it easier to sacrifice by cutting their spending and saving more.
Stagnant income
Up to last year, income growth across many industries was mostly stagnant. The current upturn in fortunes has led to an increase in earnings which has empowered Millennials to save more to enjoy the financial freedom they sincerely desire. If the growth remains steady, it is projected that Millennials will save even more.
Retirement
Surprisingly, despite Millennials possessing a deep live-for-the-moment mentality, commonly referred to as YOLO, an acronym for You Only Live Once, they are also very mindful of their retirement. Compared to other generations, 82% of Millennials contribute towards a retirement plan while only 77% of both baby boomers and generation X contribute towards retirement.
Saving incentives
Previously, many surveys found that Millennials were not that much into saving. This led to a flurry of initiatives to turn the situation around with the most popular undertaking being the matching of the amount saved by employers and in some cases, even third-party organizations. Experts suppose that these initiatives and drives to encourage saving have worked.
Auto-enrollment
It is common practice in the labor market to auto-enroll new employees into retirement and saving plans. This is one more reason why Millennials are finding it easier to save as most of those auto-enrolled into saving programs do not opt out (97%). Chances are, they see the beneficial nature of the arrangement, and they stick with it.
Convenience
The digital revolution has brought elevated convenience in almost all sectors with the financial sector among the top five, if not the topmost. From banking and paying bills to tracking investments and expenditure, it is easy to conveniently undertake financial activities on one’s phone, or tablet which has encouraged Millennials to join and remain loyal to saving programs.
The Millennial saving phenomenon has led to many stakeholders who were previously worried exhaling. The better news is that with the story going around that Millennials are saving more, the percentage that is not saving is likely to strive to join their contemporaries given that Millennials are a competitive generation.