The mass media fascination with millennials has left us with no shortage of studies and assessments of millennial behavior, and millennial money habits are no exception.
Judging by the headlines, millennials are either on the cusp of financial disaster or super saving rockstars.
So, which is it? Are millennials helpless overspenders with no consideration for their overwhelming loads of debt, or are they in fact the most money conscious generation of our time?
Check out these latest findings on millennial money habits – good and bad- and decide for yourself.
So… are millennials really money conscious savers or blissfully unaware spendthrifts?
There are undoubtedly a combination of both financial types represented in this diverse, largest living generation, but assuming some semblance of an average or median exists, what does the data really say about millennial money habits?
In delving deeper into each of these studies I find the data suggesting that millennials exhibit good financial habits is largely gathered from surveys. In other words, the conclusion that millennials are money conscious comes from millennial self-assessments. Whereas the data suggesting troubling millennial financial behaviors comes from more objective measures, like actual spending.
In other words, there appears to be a disconnect between the way millennials see their financial behaviors and the manifestation of their fiscal reality.
Perhaps the most telling millennial money data comes from a recent Merrill Edge survey, finding that 88% of millennials say they intend to save more in 2016, but only 36% say they plan to spend less.
Millennials seem to understand the need to save, and indicate the intention to do so, but when it comes to implementation, a kind of delusional optimism appears to take over.
The only way to enjoy more savings without spending less is for income gains to fill in the gap – a reality hard to come by in today’s job market, even early on in a career, and dangerous to bank on.
This millennial optimism for the future has been noted in many studies, including a recent Wells Fargo survey finding that Americans ages 18-35 are the most optimistic about their finances, and Bank of America’s Better Money Habits Millennials Report finding that 80% of millennials think they’ll be financially better off than their parents – though more than half are still living paycheck to paycheck.
I applaud millennial optimism, particularly following the abysmal circumstances of their early adulthood – namely soaring college costs, crushing student loan debt, the sluggish post-recession job market and rampant underemployment. That said, I feel compelled to caution my peers not to rely solely on the passage of time as means to a more financially sound future.
There is a fine line between optimism and delusion and to stay on the right side, action is required.
Optimistic thoughts won’t pay down your debt or fund your retirement, actions and behaviors in alignment with achieving those optimistic future realities will.
Mindset undoubtedly matters, but we can’t dismiss reality from the formula, and a look at the reality suggests that we millennials still have a long way to go in bringing our financial habits today in line with what we want our financial future to look like.