Millennials are Better at Saving Money than Their Parents
Posted on Monday, April 18th, 2016 at 7:00 am
Millennials had the misfortune of growing up at a time when the economy was absolutely dire. Good paying jobs required a college degree, and many young people ended up with expensive student loan debt. Despite this misfortune, a study shows that Millennials are actually better at saving money than their parents are.
A study was done by Bankrate, which has over three decades of experience in financial publishing. They are the Web’s leading aggregator of financial rate information, and they continually do surveys that relate to finances.
The study done by Bankrate found that Millennials are better at saving money than any other age group is. It found that 62% of Millennials are saving more than 5% of their income, and that 29% are saving more than 10% of their income. The same survey also found that 50% of older adults (defined as age 30 and up) were saving more than 5% of their pay.
One of the reasons why Millennials are better at saving money than their parents are is because of the Great Recession. They watched their parents struggle to pay mortgages and other bills, and decided to take actions that could help them avoid going through the same financial struggles if another recession happens. What are they doing?
Making a Good Savings Account
Millennials who are employed are opening savings accounts. They are regularly adding money into it. The money in the savings account is intended to grow and be used in case of an emergency. Or, it can become sort of like a retirement fund.
Avoiding Credit Cards
Millennials feel very uncomfortable about the idea of ending up with credit card debt. In order to avoid racking up an expensive credit card debt, they do one of two things. Some entirely refuse to get credit cards.
Others limit themselves to only one or two credit cards that they use responsibly. In other words, they don’t spend much money on their credit card, and they pay off the entire balance every month (to avoid interest payments).
Paying Down Student Loans
It is easy to see why many Millennials are uninterested in credit cards. Their generation has the highest amount of student loan debt. It makes no sense to take on more debt if you can avoid doing so. They make efforts to pay off their student loan debt. They are very motivated to become debt free.