Millennials say they feel confident in their ability to manage their finances, but their actions tell a different story, according to a report from Bank of America.
Two-thirds of the 1,000 Millennials ages 18-34 that BofA surveyed across the U.S. say they have good financial habits, when the reality of their situation paints a different picture. 53% of Millennials are living paycheck to paycheck and many are probably not preparing for the long term. For example, nearly as many Millennials are saving for a house (32%) as are saving for a vacation (33%), 22% have yet to start saving at all and 35% still receive regular financial support from their parents or relatives.
74% of Millennials say they worry about their financial situation, and as a result, many are exhibiting good financial behavior to help them get on track in the short term. For example, nearly half (49%) pay off their credit card debt in full each month and 35% report only carrying cash to limit how much they spend.
At the same time, the report results indicate that Millennials are finding it difficult to pay off their debts, particularly among those with student debt. 48% say they are paying out less than $100 each month for student loans, which means that their debt will persist in the long term.
The majority (57%) of Millennials say it is “really difficult” for people their age to live within their means and not overspend, while 36% cited “spending more than I should” as one of their top causes of stress.
Only 31% of respondents describe themselves as excellent/good at saving for retirement. Of those who save, only 16% have an IRA and one in three have contributed to a 401(k).
Consistent with the public’s overall perception of Millennials, the report found that respondents have a hopeful, if not slightly idealist, view of their futures; only four in 10 believe that salary is more important than doing what you love. The large majority of Millennials (80%) believe they will be financially better off than — or at least the same as — their parents.
The Bank of Mom & Dad
Many Millennials are turning to their families for help. More than a third (35%) say they are receiving regular financial support from their parents or other family members, and one in five (19%) still live at home and are not paying rent or expenses.
Not surprisingly, 37% of Millennials in the 18-21 age range still live at home, but the numbers remain high for older Millennials. 26% of those aged 22-25 still live at home and don’t pay rent or expenses. 12% of those aged 26-29 still live at home and don’t pay rent or expenses.
15% of Millennials receive regular help from their parents for their rent or mortgage, and one in four (25%) get help with their cell phone bills from family members.
While seeking financial assistance from relatives a generation ago might have been seen as an embarrassment, it now appears to be par for the course. 80% of those who receive regular parental support say they know others their age who are receiving help from parents, and 55% of those who receive financial help say they discuss it openly and honestly with friends.
It’s not just the young, out-of-work Millennials who are getting help from their parents or family members either. Many respondents making more than $75,000 per year indicated they have received financial assistance as well — 25% of respondents in that category have received help at some point to pay for their groceries, and 21% have received money for clothing. Even married Millennials are sending bills home — 11% of those who are married or with a partner still have mom or dad helping out with cell phone payments. How often do they call home?
However, Millennials who currently live with their parents don’t plan to stay home forever. 74% of those who receive regular support say that they plan to stop taking financial assistance from their parents within the next four years.
Additional Findings in the Report
Savings shortcomings, student loan worries
- 37% of Millennials have less than $5,000 in savings.
- 22% have yet to start saving – this includes older Millennials (aged 30-34), 18% of whom have not started saving.
- Of those who are both saving and employed, only 18% have an IRA, while 43% have contributed to a 401(k).
- 33% have student loans.
- Of those with a student loan, only four in 10 receive help from parents or family with their payments.
Not all Millennials are equal: A graduate vs. non-graduate divide
- Data indicated a major difference between older Millennials (age 24 and over) with a college degree and those without the ability to manage their finances.
- 83% of college graduates say they have good financial habits, compared to 56% of those without a degree.
- 74% of those with a degree say they are currently financially independent, compared to 52% of those without.
- Two-thirds of college graduates say they are in good shape financially, while only 30% of non-college grads would agree.
Millennial optimism delaying adult decisions
- 59% do not worry about doing more “adult” things, like buying a house or starting a family.
- 32% say it would take earning $100,000 per year to make them feel successful.
- Many think having “made it” is being able to afford things like travel and treating friends and family (70%), vs. having their dream home (40%).
Millennials learned money manage from their folks
- 68% say that their parents taught them about money.
- 58% say their money habits came from their parents.
- 47% wish their parents had started talking to them about money sooner.
Ho, ho, humbug? Millennials may not feel the holiday cheer
- 70% of Millennials enjoy giving holiday gifts to their family and friends, but 45% worry about overspending on them.
- 53% of respondents with a credit card worry about overspending.
- 33% without a credit card say they worry about overspending.