Young adults getting better at saving money
Over the last several years, financial responsibility has become a major issue for many Americans, because they learned some hard lessons about what is and isn't good money management during and even after the recent recession. But for many, while smart financial principals are all well and good, the actual work of getting to a stronger point isn't always easy to achieve. One group that seems to be placing a greater importance on these issues, though, is the youngest group of adults.
Millennials are doing more to be financially responsible in many aspects of their lives these days, likely as a result of the issues they saw their parents go through when the economic downturn hit, according to a new survey from T. Rowe Price. For instance, 75 percent of those in Generation Y say they track their expenses quite carefully, and about 2 in 3 report that they are diligent about sticking to a budget. Those numbers outstrip the baby boomer generation, for which 64 percent and 55 percent, respectively, responded similarly to the two above questions. In addition, almost double say they've been able to increase their retirement savings during that time.
Why is this happening?
In addition to the concerns that might have cropped up as a result of the economic downturn, one also has to keep in mind that the recovery really hasn't filtered down to millennials in a meaningful way, the report said. Many still struggle with low wages and job scarcity in a lot of cases, which in turn makes it somewhat important for them to monitor their money more closely than, say, older generations might.
"It's encouraging to learn that millennials are so receptive to saving for retirement and are generally practicing good financial habits," says Anne Coveney, senior manager of Retirement Thought Leadership at T. Rowe Price. "These millennials are working for private sector corporations, with a median personal income of $57,000 and an average job tenure of five years. So their circumstances may be somewhat driving their behaviors. When they have the means to do the right thing, it appears that they often do."
What happens when things go wrong?
In addition to all this, it seems that when millennials run into financial emergencies - as those with limited incomes often might - they are far more likely (55 percent) to seek assistance from friends and family than baby boomers in similar situations (just 17 percent), the report said. More troubling, too, is that 57 percent of millennials say they would use credit cards to get out of such a fix, versus 43 percent of boomers.
But saving money may actually be key to ensuring that credit card debt and other financial concerns are handled with relative ease. By finding ways to stick to a budget and save diligently, that might free up hundreds of dollars or more annually that can then be put toward getting out of debt or building up an emergency savings account that will reduce the necessity of relying on credit cards or assistance from friends and family going forward.