Millennials are remarkably exceptional in many ways. They are better educated than other generations, more ethnically diverse, and more economically active. Modern life has brought new challenges, and millennials are feeling some of those challenges more keenly than others. Many millennials live by the YOLO (You Only Live Once) philosophy. YOLO emphasizes the importance of living the “now” rather than planning for the future, and older generations can easily see how this could spell disaster for a millennial’s financial future. Yet that is the stigma we have to break.
For millennials, living in the moment doesn’t mean going broke. In fact, watching their parents struggle financially through a high unemployment rate and economic uncertainty, millennials saw how they’re parents manage finances and have developed better financial habits as a result.
Millennials Have Better Financial Habits Than Their Elders
Yes, despite YOLO-ing and the like, many millennials are still taking important steps to get on a path toward a more secure and comfortable financial future. Here are some proofs of millennials’ financial habits.
A generation of savers
Millennials are more responsible with their finances. They are saving more than any other age group. To support this, the TD Bank Saving and Spending Survey questioned more than 1,600 U.S. consumers about their saving and spending habits. Given the current economy, the survey surprisingly found that nearly half of consumers (49 percent) described themselves as “good savers.” Millennials are leading the charge with 56 percent reporting that they are “good savers,” compared with 43 percent of Gen Xers and 48 percent of baby boomers. They are a lot more disciplined, in terms of thinking ahead and being proactive about saving for the future.
Millennials today have to divide their time, money and attention among more distractions than any previous generation. They’re busy juggling one or more jobs, paying down a lingering student debt, renting responsibly or contemplating home ownership, maintaining relationships and saving for retirement. Managing finances is really a difficult full-time job for anybody, especially for someone who wasn’t born into an abundance of wealth. Despite these many challenges, many millennials are still able to keep up because they already know what to prioritize how they want to spend their money.
They’re building good savings habits
Millennials are also making smart money-saving moves that other generations would do well to emulate, although they may not have much to put aside in living the moment. Compared with older generations, millennials are more likely to be saving for a goal, more likely to have a written plan for their financial goals independent of meeting with a financial adviser, and more likely to set savings targets before pulling the trigger on an unaffordable purchase.
They’re sticking to a budget plan
Planning a budget, and sticking to it, is essential to a healthy financial position. Millennials are particularly good at allocating their funds to one specific thing or another. Understanding and knowing where their money goes help them to make responsible financial decisions.
Just like people in older generations, millennials like to spend money. But where millennials outshine others is in budgeting — 78% say they follow a budget, as reported by Chase. In the same survey, only 59% of boomers reported staying loyal to a budget.
Defying the stereotypes
Could millennials be practicing better financial habits than older generations?
The answer is yes. Millennials are doing a better financial management job than their elders. Most of them are tracking their expenses carefully. They are more disciplined in sticking to a budget. They take initiatives in educating themselves about investing, and they pay more attention to their investments. They’re using technology to their advantage. And they understand the importance of retirement planning and getting an early start on building retirement security.
Millennials, indeed, are exhibiting financial discipline in managing their finances, thus defying stereotypes that their generation is prone to spend-thrift and short-sighted thinking.
So the stigma has been broken – millennials are more financially literate than others.