Millennials have a bit of a reputation for being irresponsible with their money, but a new study might make you see this generation in a new light. According to the 2018 Better Money Habits Millennial Report released by Bank of America and KhanAcademy, 16% of millennials have $100,000 or more in savings, Travel + Leisure reports. Additionally, 47% of this generation has at least $15,000 put away and 63% have savings in general.
How Are They Doing It?
According to the survey, 73% of millennials create and follow a monthly budget. On top of their ability to set goals and stick to them, millennials appear to know their worth. Compared to previous generations, they aren't afraid to ask for a raise. The survey found that 46% of millennials asked for a raise in the past two years, while only 36% of Gen X individuals and 39% of baby boomers got up the courage to ask. This left 80% of millennials who asked for a raise with the pay increase they wanted.
Analysts surveyed 1500 respondents between the ages of 18 and 71 about personal finance and looked into three years of financial data on millennial spending habits to come to these conclusions. Millennials were categorized as anyone between the ages of 23 and 37.
What's the Problem?
This report surveyed over 1000 affluent Americans, focusing on millennials with either investable assets of $50,000 to $250,000 or $20,000 to $50,000 and who make at least $50,000 a year. Researchers found that 38% of respondents aged 18 to 34 save more than half of their paychecks, 54% are saving for the future, and 42% are giving up vacations to build savings.
Savings Accounts Vs. Investments
While this group of millennials has the money to invest, it seems they are less interested in the financial endeavor than their older counterparts. The survey found that more than half of millennial respondents say their savings accounts are what they can rely on the most in 20 years, while the majority of Gen X members said they count on their 401(k)s and baby boomers rely on pensions and Social Security.
According to Quartz, this is due in part to the millennial "do-it-yourself, self-sufficient" attitude. However, due to extremely low-interest rates on savings accounts, this savings habit may not be as effective as making an investment. Since the financial crisis, the S&P 500 (an index of 505 stocks issued by 500 large companies) has risen 188%, while interest rates on savings accounts remain near zero.
A Better Strategy
It seems as though millennials are much more conservative when it comes to their personal finances than anyone thought, but they might not be making the most prudent decisions when it comes to the long-term growth of their wealth. If you're a millennial with money in the bank, it might be time to rethink how you're saving for the future.