Although the times may have changed and there are many differences between the modern Millennial, Gen Xers, and boomers; saving and preparing for the future is still important for a stable and secure financial situation for everyone. In fact, the impact of saving vs. not saving for a Millennial is tremendous and can be life-changing, as shown by the comparison here of each chosen pathway: the saver and the non-saver. The first type of Millennial is a planner who prioritizes saving early in their career. This savvy saver makes it a point to stick to their monthly budget, sets up regular contributions to savings accounts, and seeks out investments to secure their financial future. They understand the importance of saving and investing now while they are young and will reap the benefits of their savings habit by being able to invest in a home at a younger age and will have financial security during unexpected life events. The second type of Millennial is a non-saver who prioritizes buying things over saving money. The Millennial spender would rather take vacations, buy nice cars, and spend their money for immediate gratification rather than plan for their future. They often feel that they work hard for their money and should be able to have the things they want as soon as possible. Unfortunately, these spenders do not understand what it takes for financial security and often find themselves facing challenges due to their lack of savings, including the delay of major life events like buying a home and difficulty in handling unexpected emergencies due to lack of planning. The choices of savers and non-savers definitely have an impact on the lifestyle, opportunities, and stress levels of the average Millennial. Those who are savers will find themselves in a better situation – financially and emotionally, while non-savers will likely be stressed out and living paycheck to paycheck. Planning and saving now can help avoid long-term consequences that can affect many aspects of your life in the future. Those who save and plan at an early age can expect to be ready for retirement, have financial independence later in life, and offer security for themselves and their family. Unfortunately, the long-term impact of not saving offers no preparation for retirement, a lack of financial independence, and puts you and your family at financial risk in the event of an emergency or life event for which you are unprepared. Learning to save now, even if it is a small amount, is a savvy move that will help secure your financial future. Being unprepared for life’s unexpected curveballs is stressful and can be avoided by preparing now. A smart Millennial who saves now is setting themselves up for a more enjoyable and stress-free lifestyle where they can afford what they need and want. According to a report by the National Institute of Retirement Security, about 66% of working Millennials have not started saving at all, with only 5% of Millennials saving adequately for their future. No matter your financial situation, it is important to start saving now. Here are some financial tips for Millennials to start building for the future: If you are looking for trustworthy financial advice or a reliable checking account, savings account, or credit card to help keep your finances on track, contact Allegiance today!
Millennial One: The SaverMillennial Two: The Non-Saver
Comparative Analysis
Savers
Non-Savers
Long-Term ConsequencesLessons Learned
Advice for Millennials for Saving and Spending
Encouraging Proactive Financial Planning
Financial Tips for Millennials
FAQs
Why are millennials not saving for retirement? ›
There are many reasons for this, such as a shift away from pensions toward 401(k) plans and high student debt burdens. However, there are also reasons for optimism, such as advances in 401(k) plan design.
How much money do millennials have saved? ›Our survey found that the majority of Gen Zers (54%) and Millennials (52%) have less than $5,000 saved, compared to 42% of Gen X respondents and 29% of Baby Boomers.
Why is it important to spend less and save more? ›The importance of saving money is simple: It allows you to enjoy greater security in your life. If you have cash set aside for emergencies, you have a fallback should something unexpected happen. And, if you have savings set aside for discretionary expenses, you may be able to take risks or try new things.
How does the age a person starts saving at impact the amount they can earn in compound interest? ›The longer the money is invested, the more time it has to grow and earn interest, resulting in a higher amount. For example, if someone starts saving at age 20 and invests $1000 at an interest rate of 5% compounded annually, by the time they are 40 years old, the investment will have grown to $2653.30.
What are two reasons people don't save for retirement? ›- Inflation causes current expenses to rise.
- Unemployment.
- Student debt.
- Poor spending habits.
- Lack of income.
- They don't know where to start.
Key Takeaways. Millennials are confronting the distinct financial challenges they have, such as a post-recession job market, high student loan debt balances, a more expensive housing market, and growing credit card debt.
How many people have $100K in savings? ›More than one in 10 Americans do not have any savings
Almost one in ten men have $100,000 or more in savings, but the figure falls by four percentage points for women (9% men vs. 5% women).
One in seven (13%) people in the UK revealed they have nothing in their savings, whereas a third (33%) of UK savers said they would struggle to cover a month's worth of living expenses if they lost their primary source of income.
What generation saves the most money? ›Statistically broken down into generations, Gen Z (ages 18-25) saves an average of 14% while millennials (26-42), Gen Xers (43-55) and baby boomers (56-75) save an average of 12%, per CNBC.
What are the pros and cons of saving money? ›Savings account benefits include safety for your savings, interest earnings and easy access to your money. However, savings accounts may have drawbacks, such as variable interest rates, minimum balance requirements and fees.
Is it better to save or to spend? ›
It's our simple guideline for saving and spending: Aim to allocate no more than 50% of take-home pay to essential expenses, save 15% of pretax income for retirement savings, and keep 5% of take-home pay for short-term savings. (Your situation may be different, but you can use our framework as a starting point.)
Why is too much saving bad for the economy? ›If a population decides to save more money at all income levels, then total revenues for companies will decline. This decreased demand causes a contraction of output, giving employers and employees lower income.
Which strategy will help you save the most money? ›- Set Your Goals Early On. Setting a financial goal early on will boost you to stick to your savings plan. ...
- Understand Your Cash Flows. ...
- Open a Savings Account. ...
- Rethink Debit Cards. ...
- Monitoring Your Spending. ...
- Revise Your Emergency Fund.
Saving provides a financial “backstop” for life's uncertainties and increases feelings of security and peace of mind. Once an adequate emergency fund is established, savings can also provide the “seed money” for higher-yielding investments such as stocks, bonds, and mutual funds.
What is the best age to save money? ›One key short-term goal to plan for is the need for an emergency fund. According to Bankrate, your emergency fund should equal three to six months of bills. CNN Money suggests that you start saving for long-term retirement goals in your 20s, as soon as you leave school.
Why aren't Americans saving for retirement? ›And saving for retirement is only becoming more difficult as Americans deal with rising costs. Escalating housing, healthcare, and long-term care costs in retirement are creating financial obstacles for many Americans.
Why will Gen Z not retire? ›Retirement doesn't seem possible for a quarter of Gen Z
Roughly one quarter (23%) of Gen Z don't expect to ever be able to retire, according to a recent McKinsey & Company study. This belief stems from a variety of factors, but a major reason is the current job market.
“By the time you're 40, you should have three times your annual salary saved. Based on the median income for Americans in this age bracket, $100K between 25-30 years old is pretty good; but you would need to increase your savings to reach your age 40 benchmark.”
Why do millennials have less wealth? ›Millennials in their mid-30s are more likely to work low-paying service jobs and live with their parents, researchers found, but those with affluent middle-class lifestyles often have more wealth than boomers did at the same age.