What’s in your savings account? If you’re a millennial, there’s a decent chance that there’s nothing in your account but IOUs and promises.
A 2017 survey by GoBankingRates found that 46% of millennials aged 18-24 have $0 in their savings account – a sharp increase over the 2016 survey where 31% of millennials reported empty bank accounts. This finding can’t be blamed entirely on college students and recent graduates – even with the 18-24 age group removed, 41% of the remaining millennials age 25-34 reported having no savings.
The picture is not grim for all millennials. A 2018 Bank of America survey shows older millennials (defined as between ages 23 and 37 in this study) with a brighter savings picture overall, with 1 in 6 millennials having $100,000 or more in total savings including all savings, checking, and retirement accounts. However, the Bank of America survey only had 63% of respondents saving at all – so the remainder may have $0 savings in the bank.
Millennials may have a high percentage of non-savers, but they aren’t much worse than the rest of the population – the 2017 GoBankingRates survey found that 39% of all respondents had no savings. The greater concern is the increase in millennial non-savers.
Millennials have certainly faced stiff economic challenges. Many of them came of age during the housing crisis and subsequent Great Recession, trying to enter an extremely tight job market while burdened with high levels of student loan debt. It’s no surprise that large numbers of millennials would have difficulty saving money, but the upward trend in an improving economy is disturbing.
It’s possible that the millennial non-saving trend is actually a sign of economic improvement. More millennials may be in a suitable economic position to take on greater responsibilities like starting families and owning homes – thereby increasing their overall expenses and temporarily diverting funds away from savings.
At least millennials tend to recognize the importance of saving and are attempting to address the situation. A 2017 survey by Bankrate.com showed that 60% of millennials (defined as 18 to 36 years old in this survey) who cut back on their spending did so with the specific goal of saving more money. According to Bankrate, millennials were over twice as likely as older generations to apply a cap on their spending to produce savings.
Are you one of the millennials struggling to save money while you embark on new family and career obligations? Don’t let an empty bank account get you down. Take action instead – you’ll feel better about your situation and start to gain positive momentum.
The first step is to budget properly to spend less than you make. You can’t save anything if there’s no money left at the end of the month to put away. Set realistic, achievable goals for saving and spending, with at least a bit of money set aside for fun purchases. (If your plan is too drastic, you are less likely to stay with it.)
Consider having some of your monthly paycheck deposited automatically into a separate emergency account. This helps you avoid the temptation to spend any surplus, and you’ll quickly adjust your spending habits to match your new take-home pay.
Armed with a new approach and the momentum produced by monthly savings, you can proudly show up on the 2018 survey as having more than $0 in your bank account. You may not be at the $100,000 mark, but at least you’ll be heading in the right direction.
Regardless of where you plan to retire, the number one factor in ensuring that you can retire on your terms is your 401(k). Make sure that your 401(k) is maximizing its potential with this free analysis that checks your fees, fund mix, and other factors to help you hit your retirement goals.
This article was provided by our partners at moneytips.com.
Jackie Cohen is an award winning financial journalist turned turned financial advisor obsessed with climate change risk, data and business. Jackie holds a B.A. Degree from Macalester College and an M.A. in English from Claremont Graduate University.
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