How many times have you heard people talking about how young people aren’t being financially responsible? It’s a common trope to assume that all Millennials are throwing away their money on needless purchases. While there’s some truth to this, it grossly oversimplifies reality of living as member of Generation Y.
Millennials Have to Deal with Some Tough Factors
It’s unfair to say that millennials are totally at fault for often not being able to save money. There are some very real factors that are working against this group. First of all, the whole concept of retirement savings has changed since their parents and grandparents were their age.
In the past, employee benefits such as pensions were commonplace for workers of all levels. This is no longer the case for young people, who often can’t even contribute money into 401(k) plans due to employment restrictions. Many employers require full-time status, or for a worker to have been at a company for at least a year in order to contribute to retirement accounts. Millennials are much less likely than older generations to check these boxes.
Most Millennials Are in Debt
Over three quarters of Millennials have debt of some kind. This should come as no surprise, since these people have taken out large loans in order to pay for school—often well over $100,000. In fact, about 11 percent of Millennials currently have over $100,000 in debt. Combine this will the economic difficulties experienced by young people following the Great Recession, and you start to get a better picture as to why saving is so difficult.
However, credit card debt is arguably the biggest issue facing the savings prospects of Millennials right now. This accounts for about a quarter of all debt for Millennials in the 25-34 age range. There are a few factors contributing to this. Many people are struggling to find ways to keep up with the expense of living in cities, paying off other debts, and affording necessities, without accumulating credit card debt.
On the other hand, there’s also a tendency for many people to spend more on things due to stress and lack of time. Individuals facing serious debt issues might want to consider looking into debt relief services. But it’s important to note that not all of these organizations are the same. Looking at Freedom Debt Relief reviews from real customers shows that they’re one of the most respected players in this field.
Some Millennials Are Actually Doing Pretty Well
It should also be noted that not all Millennials are behind on saving money. This pattern of not saving is often due to circumstances more so than a total disregard for the concept. Many Millennials have found themselves with quite substantial savings. One in six Millennials, mostly in the higher age range, have saved $100,000 or more, according to a survey conducted by Bank of America. And younger individuals in this group are showing signs of aggressive saving habits as well.
However, they are different than older generations in the ways they’re saving that money. Millennials who’ve been able to build savings mostly keep it in savings accounts versus investments. This is due to a general sense of distrust due to the aftermath of the Great Recession.
Still, the overwhelming pattern for Millennials is that they don’t have savings. Over 40 percent have absolutely no savings. And around two-thirds have less than $1,000.
All Age Groups Are Bad at Saving
It’s easy to place blame on younger people for not doing a good enough job at something. In terms of perception, people in the U.S. generally feel the Millennials don’t save enough, while older generations are doing a better job. Over 50 percent think the Greatest Generation does a “very good” job at saving—compared to only eight percent for Millennials. But despite this, all generations have problems with saving. Over 30 percent of people 65 and older have no savings. When you compare Millennials to older generations, and factor in external factors inhibiting their ability to save more, they’re actually doing a pretty good job.
Pretty much everyone wishes they had more money. But saving is hard, especially when circumstances prevent you from having a bit extra at the end of the month. There are major discrepancies between how much Millennials—and people in every generation—are able to save because of this.