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Millennials – Never Too Early to Start Saving


The Millennials – 20-somethings, are just starting out, be it that first job, car, home, pretty much everything.

“They are a huge opportunity for brands and banks,” says Katie Sacksteder, vice president at TRU, which specializes in youth research and insights, and recently presented exploratory research about the Millennial generation's relationship with retail banking at the Consumer Bankers Association's annual conference in Phoenix.

What were the key findings? Millennials are overwhelmed by debt and it's keeping them from launching into the roads traveled by other generations at this lifestage, like buying a home. The debt finding squares with a survey last year by The PNC Financial Services Group, of 20-somethings. Some 60% said they were stressed about their outstanding debt. The survey found that on average, the total debt of those surveyed was $45,000, ranging from $12,000 for those ages 20-21, to $78,000 for 28-29 year-olds.

While the saying is if you know better, you'll do better, that's not necessarily the case. According to TRU's survey, many Millennials acknowledged that they should be planning for the future, but said they are caught up in the day-to-day, instead of focusing much on the future.

“It was startling to see how much talk, but how little action there is among twenty-something's we spoke to regarding fiscal planning. While many discussed knowing they should be saving now, they were not actually doing it – even among those who could afford to be saving for their future. Eighty percent of twenty-somethings agree that saving money is important to them right now, but only 20% say that they currently have a 40lk,” says Sacksteder.

A survey by Fidelity Investments last year also found that nationally, 42% of twenty-something working households were saving less than 4% of their income. Other studies have shown that many Millennials have not invested at all, or have shied away from stocks in particular.

When TRU asked Millennials about what they want in banking, the answer was ease and efficiency. This generation sees a virtual relationship with a bank the same way older generations see traditional relationships. They see virtual relationships as having the potential to be more intimate than traditional banking relationships, according to TRU.

Sacksteder shared what she found most surprising. “While Millennials are tech-savvy, they value tools that improve efficiency. At TRU, we have a macro-theme we've observed when it comes to Millennials called The Next Easier Thing. Ease may trump innovation for a generation weaned on Google and touch screens. Today's young consumers expect massive choice, overlaid by an easy interface. We urge brands and marketers to focus on tools that make interactions easier, rather than just introducing novelty for novelty's sake.”

What does all this mean for the banking industry? Says Sacksteder, “Help Millennials navigate debt. Provide a personal roadmap and digital tools, and reward their progress. Many are optimistic about their future, but they also seek pragmatic advice and virtual tools to help them navigate their relatively new independence.”

For sure, there is a ton of help available. In fact, the Millennials have more tools for financial management online and on their smartphones than any generation before them. There are tools that allow them to see their accounts in one place, share advice, establish a budget, set up alerts to help with money management, and more. Truth is, there's little room for excuses. A big part of growing up is taking responsibility.


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Comments
29 comments.
Comment #1 by playball posted on
playball
This the 1st year that I'm recording every dollar I spend. I have it divided into catatgories: Gas, Rent, Food, Car Repair, Cash, Other. And all of those expenses are subtracted from my current paycheck's net pay, and then added up from every paycheck throught this year. So far, I've Saved 35.91%, and Spend 64.09% on expenses w/ Rent & Food being the highest (18.05% & 17.13%).     All of this done on a spreadsheet.

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Comment #2 by Anonymous posted on
Anonymous
Saving to happen, there must be an incentives and means.
None of it applies today to me, I can barely make it as is and what to save for when nobody pays any meaningful  interest on your savings. Inflation is few times greater than the saving rates and postponing the purchases makes you pay more in the future for the same items.

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Comment #3 by Anonymous posted on
Anonymous
"postponing the purchases makes you pay more in the future for the same items".  This is the stupidist thing I've read.  Seriously the only inflationary items are food, gas, and health care.  You can't stock up on any of these.

TVs, cars, ipads will continue to decrease in price.

5
Comment #4 by Anonymous posted on
Anonymous
Average debt of $45,000?  I am almost 70 years old and never owed that much money in my entire life.  Not even when I purchased our first home.  My parents taught me to save no matter how little I earned way back when I started doing chores after school (grade school) for nichols and dimes.  And I worked my way through college.  No Spring Break flings for me.  I thus far went through life debt free.  I don't own the latest and greatest of everything, but I sure enjoy life just the same.  Thanks to Mom and Dad for teaching me how at a very young age.

"Never too early to start saving."   Absolutely Right! 

 

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Comment #5 by ANY AGE (anonymous) posted on
ANY AGE
PRETEND THAT TOMMOROW  ALL SOURCES OF INCOME STOPS TAKE YOUR NET ASSETS  ALLOW FOR INFLATION  3 TO 4 PERCENT ON EXPENSES   RESULT WILL BE HOW LONG YOU CAN LIVE BEFORE YOU RUN OUT OF MONEY IN MY CASE THAT WILL ALLOW ME TO LIVE TO 80  TRY IT YOU WILL BE PLEASANTLY SURPRISED  

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Comment #6 by playball posted on
playball
I hate money. 

Who ever invented money in 1st place? 

4
Comment #7 by Super Saver (anonymous) posted on
Super Saver
It would be interesting to understand the types of debt and average income.  If 20-21 year old average debt of $12,000 is mainly student loan debt, that's not too bad if the average income is $30,000. if it's mostly credit card or other debt, I think that would troublesome.

3
Comment #8 by Anonymous posted on
Anonymous
To Anonymous - #3,
You are missing the big picture, like: housing, cars, furniture, travel, education, good clothes and many more are up over 8% in just one year. On top of that, you have to include the hidden inflation and there you have it, your purchasing power has shrunk.
I used to buy can food few years back in the hundreds of them and now their price is double and they are smaller. The can food is good for up to 5 years and some last longer.

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Comment #9 by Anonymous posted on
Anonymous
Anonymous #8

Since you're so paranoid, just go jump in a bunker with your paranoia, canned food, and new car (since they are going up 8% per year, based on your opinion and parnoid delusions).

3
Comment #10 by Anonymous posted on
Anonymous
We can thank Ben Shalom Bernancke and his central bank which is printing money with QE to infinity for this.  I mean, this bum is head of the central bank.  He never even had a job in a bank in his life.  Am I missing something here?  Would you go to a surgeon who never went to medical school.  And you guys are wondering why things are turning badly and why grandma has to alternate between dog food and cat food for dinner on a nightly basis for variety.  We haven't even had 3% growth since Big Ben has been at the helm of the federal reserve.  This is not a democratic or republican issue.  This is a people issue.

3
Comment #14 by Maecl posted on
Maecl
#10:  It's not a Republican vs. Democrat issue, but liberal vs. conservative idiology.  The latter are in both parties.

3
Comment #12 by Anonymous posted on
Anonymous
For #11, his middle name is Shalom, not Shabbat.  Shalom is peace, shabbat is the sabbath.

 

I prefer dog food over cat food, those biscuits are really tasty and you can get a really big bag for 5 bucks.

2
Comment #13 by Anonymous posted on
Anonymous
MAHALO 12  ESPECIALLY KHAM DOG FOOD

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Comment #15 by paoli2 posted on
paoli2
#13:  What grandma??  I have never seen my grandma!  I think you need to be sure to ask for KAM dogfood if you want the great stuff.  Soooo good even the cats love it! :)

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Comment #16 by Anonymous posted on
Anonymous
so shabbat shalom would be  peace on sabbath ??

1
Comment #17 by Anonymous posted on
Anonymous
Anonymous - #9,

You have not seen misery and you think and compare the world of what you would do and not the rest of us.

Isn't that little selfish from you?

I personally have saved thousands of dollar buying can food when on sale and or using coupons and I'm proud of what I did and still doing it.

3
Comment #18 by Anonymous posted on
Anonymous
For the previous poster, I agree with you.  Whenever I can buy something at a set price, I do, because everything goes up except for my salary.  I wish their was a **** product to get my salary up.

2
Comment #19 by Anonymous posted on
Anonymous
18 would not touch that with a 10 foot pole

2
Comment #22 by Anonymous posted on
Anonymous
still waiting on the skin care and exercise advice  maeci also when does the bus leave for foxwoods  20 might be a tad off base but if it is a reference to the grand brats then i totally agree they expect us to live in squalor so they can have new cars and go to college on  our dime  get a job and show some respect to your elders right apache i for uno am tired of eating milk bones  

1
Comment #23 by Anonymous posted on
Anonymous
I find this headline to be amusing. "Never too early.." Regrettably, that is not the point for the unfortunate milleniall generation. The point is that they are too late. Any dollars they now save will be deeply depreciated by the Federal Reserve's ongoing and soon-to-vastly-increase monetization of treasury debt. Cash will be trash within 5 years or even sooner. Paper currencies should not be "saved". They should be spent as they are a medium of exchange, not a store of value. If you want to "save", but some platinum and store it for forty years in anticipation of retirement. Although the price will go up and down, as manipulations and normal economic fluctuations will affect it, when prices quadruple, the price of the metal will quadruple also. The same cannot be said of the tiny, heavily taxed, interest payments that come from banks.

1
Comment #24 by Anonymous posted on
Anonymous
23 nail in the camel or is straw in the coffin  people will never learn the meaning of saving for a rainy day for that day is when they stick you in the ground  and the only thing the FAMILY SAYS is that all i get i cant go on vacation or buy a new car if grand pa onlty left me chump change  wake up people cut them off and out of the will  go  enjoy life  instead of pursuing those elusive  and worthless CDS  

2
Comment #25 by paoli2 posted on
paoli2
#24 : Our KIDS and/or GRANDKIDS did NOT throw our country's finances into the trash can!  They will have to suffer financially for what those bozos in Washington have done.  As for saving, their parents can't find safe places to even earn 2% interest and you want THEM to save?  If you really care one bit about your kids, I hope you are finding a way to leave them an inheritance.  That is about the only way they will have any extra funds when they get older.  I am not pursuing those worthless CDs so I can "enjoy" life, I am doing it so someone else in my life may be able to have a life.  Get a heart!

2
Comment #26 by Maecl posted on
Maecl
paoli2:  I couldn't agree more.

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Comment #27 by Anonymous posted on
Anonymous
HAY PA HOW MUCH DID YOUR PARENTS AND GRAND PARENTS LEAVE YOU? ME all i ever got was the back of their hand  and the sting of their belt  the youth of today would be much better OFF getting  a taste of both  IMHO  HOWEVER ON A POSITIVE NOTE I DID RETIRE AT 49  NOW GENERATE BETWEEN 40 TO 45K PER YEAR LIVE IN THE BIG APPLE O AND HAVE NOT STARTED TO COLLECT SS YET CHACHING  

1
Comment #32 by paoli2 posted on
paoli2
#27  If all you have is 600K, how in the world are you generating 45K on it?  Not in CDs, that's for sure!  Or you could have lucked out and latched on to some great lonnnnng term CDs before everything crashed.  Good for you if you did!     Problem is going to be when they mature and all you have is 600K to reinvest.  You need to get that sum much higher, imo.  Go back to work!   :)

1
Comment #28 by paoli2 posted on
paoli2
Hey 27:  My parents lost everything in the Great Depression but my mama left me the biggest prize of all.  The ability to love and care for my kid more than myself.  Now that's worth a ton of money!  You are still just a youngster yourself.  Maybe as you get older, it will dawn on you what life is all about. Chaching!

2
Comment #29 by Maecl posted on
Maecl
Anonymous - #27:  MY grandparents came from Europe.  They worked hard and bought a home, but they never got rich.  They loved me and I loved them.  My husband family mirrored that.  We couldn't have asked for more.

2
Comment #31 by Anonymous posted on
Anonymous
ps grandmama came to ths pais as an irish indentured servant

1
Comment #33 by Anonymous posted on
Anonymous
exactly why i use this site a good chunk is comming due this  year  but i also have bonds and mutual funds that pay  from 4.5 to 6 percent so  right after you get a job  I WILL GO BACK TO TRABAJO  PS THE 45 ALSO INCLUDES MY PENSION  AND IN 2 YEARS SS KICKS IN AT ABOUT 15 K SO I THINK I CAN CANCEL MY DOG FOOD ORDER

1
Comment #34 by paoli2 posted on
paoli2
#33  I am only kidding with you.  I think you have your house in order and are doing real good for yourself and family.  The fact that you are on here looking for better ways to get more interest says a lot for you.  Most people would love to be in your shoes.  Just don't knock the kids so much.  They may never have your chance again.

2
Comment #35 by Anonymous posted on
Anonymous
great advice and thanks

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