Millennials get a bad rap and are sometimes thought of as irresponsible – especially when it comes to money. So it may come as a surprise that despite the financial hardships millennials are facing – mountains of student debt, soaring property and rental prices and shrinking interest rates – they are actually pretty great at saving money.
For one thing, millennials have been forced to grow up quickly when it comes to their financial futures, especially given the uncertain economic and political climate we’re currently in.
And, interestingly, millennials are a lot more concerned about their finances than people tend to give them credit for: more than one in three millennials who went to university admitted regretting the decision because of the debt they’re now in, according to recent research by Aviva. (1)
Here’s how millennials are coping with finances that are getting squeezed tighter than ever before… and making some very smart decisions to help their financial futures.
1) They are digitally savvy
You don’t need to conduct a study to know that millennials have embraced their mobiles, snapping every moment (and meal), communicating via memes and social media and using apps to track every aspect of their lives, from fitness to finance. But if you are interested in the data, research from Ofcom in 2015 found that 66% of UK adults own a smartphone. As for 16 to 24-year-olds? The number soars up to 90%. (2)
Since many millennials are reliant on their mobiles to make life easy, they turn to apps to help them get on track with their finances. (3)
Why not try thinking like a millennial yourself? Tools like Aviva’s Shape My Future might help you to envisage the life you’d like to be living in retirement, the amount that lifestyle will cost you and the steps you’ll need to take to help make that dream a reality.
2) They value experience over things
Millennials aren’t about stuff: possessions which might include cars, TVs and clothes just don’t have the same appeal for them as they did for previous generations. (5)
Instead, thanks to new apps, they share, borrowing cars and homes, giving each other surplus food and swapping clothes and furniture online are all ways that millennials manage to save up for that concert or road trip they’ve always wanted to take. (5)
This emphasis on experiences means that millennials are playing a vital role in the growing sharing economy, choosing to stay in another’s home over renting a hotel rooms, using neighbours to paint their walls instead of professionals, or dog sitting for a weekend instead of investing in a pet.
This all adds up to some serious cash-saving.
3) They care about their money
Since millennials have seen first-hand what financial struggles look like after the 2008 financial crash – and how they can affect people close to them, like their own parents – many are more realistic and concerned about their own financial precariousness than generations past.
In other words, millennials, despite financial obstacles in their way, are motivated to save, because they’ve seen what it looks like when people don’t.
In fact, research from HMRC from September 2016 has found that the younger generation is super clued-up when it comes to savings, with 34% of under-35s – the biggest percentage of all age groups – contributing to personal pensions (compare that to 24% of 35-44-year-olds and 26% of 45-54-year-olds). (6)
That makes a grand total of 2.7 million (and counting) under-35s contributing to a personal pension – the highest number since records began in 2001, and up 30% compared with last year.
Practice good thinking and take some tips from the millennial generation to secure your own financial future. Find out how your retirement’s looking right now with Aviva’s Shape My Future tool.
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(1) UK: Generation regret: over a third of millennials who went to university regret doing so as they struggle with debts and squeezed finances, Aviva
(2) Ofcom
(3) US Federal Reserve
(4) Why it pays to start your pension early, Aviva
(5) Investing in the Millennial Effect, Goldman Sachs
(6) HMRC