Survey: Millennials save the most money, but one-fifth of Americans aren’t saving at all
With the Great Recession and the financial struggles of older friends and family members still fresh in their minds, millennials are making a concerted effort to save — and a new study suggests they are doing better at that than any other age group.
The survey by Bankrate.com found 62 percent of millennials are saving more than 5 percent of their income, a 20 percent increase over last year. Almost half of that group, 29 percent of millennials overall, are putting away more than 10 percent of what they make.
That's up 7 percent from last year, and approximates the 28 percent of all employed Americans in the study who are currently able to save a similar portion of their income.
Increasing financial literacy through readily available resources is a key factor in millennials' money management decisions, according to Ken Kamen, president of Mercer County-based Mercadien Asset Management. He said these younger workers are trying hard not to get behind what he calls the "debt 8-ball."
"One of the benefits of the Internet age is that there's no shortage of information out there about the benefits of saving," Kamen said, adding that employers are also making it easier on the younger generation. "Many companies now are already enrolling you in a 401(k) plan when you join the company, (and) they have educational programs."
Because of the financial meltdown at the end of the last decade, Kamen said, millennials don't view future financial difficulty as a far-off possibility, as previous generations might have. They are actively preparing for just such a scenario, balancing budget-savvy responsibilities like paying down student loan debt with the knowledge that old "safety nets" like pensions and Social Security might not be around forever.
Still, 21 percent of respondents in the Bankrate survey said they are not squirreling away any of their paycheck, even for emergencies. Kamen said the reason for that is, despite the obvious advantages of building up one's savings, nonessential expenses are always out there as potential temptations.
"I think a lot of it is, we're living in a convenience society," he said, referring not only to things like restaurants but also ridesharing companies like Uber. "Conveniences cost money."
Another way in which Bankrate organized its findings was by income level º particularly significant in Kamen's view because, he said, millennials, more than any generation before them, are increasingly willing to discuss their salaries openly and compare themselves to their peers. The study found that 27 percent of Americans who make between $30,000 and $50,000 a year are saving more than 10 percent of that money, topping the 24 percent who earn between $50,000 and $75,000 and save the same percentage.
One in six working Americans is able to save more than 15 percent of their income, according to the survey, also an increase over last year.