Millennials Don’t Let Past Financial Burdens Interfere With Living for Today, and Seek Sense of Balance for Tomorrow
CHARLOTTE, N.C.–(BUSINESS WIRE)– Despite the financial burdens and other obstacles millennials face, they are eager to use life experiences to pursue financial independence. The impact of the Great Recession, combined with insights from their parents, play a significant role in how millennials manage their own financial lives, according to the Bank of America Year-End Millennial Snapshot.
Bank of America evaluated data from more than 3,500 millennials across seven studies throughout 2015 to better understand how this generation is redefining its financial priorities and spending habits, in addition to learning what influences their financial behavior. The snapshot of data includes research from:
- The Bank of America/USA TODAY Better Money Habits Millennial Reports – Spring 2015 and Fall 2015.
- Spring 2015 Merrill Edge Report and Fall 2015 Merrill Edge Report.
- The Spring 2015 Small Business Owner Report and Fall 2015 Small Business Owner Report.
- Bank of America Trends in Consumer Mobility Report.
“The events taking place when millennials were coming of age are visibly impacting their financial decisions and behaviors. This will be especially apparent as they become the money managers for their households,” said John Jordan, Client Experience and Programs executive for Preferred and Small Business Banking at Bank of America.
Market turbulence during “coming of age” years gives way to extreme optimism
The snapshot reveals that outside influences had a direct impact on this generation’s financial behaviors and attitudes. Almost a third report that the Great Recession affected them personally; of this group, nearly half (46 percent) say it made it difficult to find a job, and one out of five (21 percent) report it made it impossible1. Nearly half said it also changed the way they think about saving, investing and spending (49 percent), making them more hesitant to invest in the stock market (40 percent), buy a house (36 percent) or put money into a retirement savings account (19 percent)1.
While only 21 percent of millennial small business owners reported six months ago that their company had completely recovered from the Great Recession, optimism has remained strong throughout the year despite the slow recovery2. Data from November proves optimism is not only strong, but showing major growth – with 88 percent of millennial entrepreneurs expecting their business to grow over the next five years (compared to just 56 percent of baby boomers who expect the same), and 80 percent expecting a revenue increase (compared to 60 percent of boomers)7. Confidence in the economy is also up; 74 percent think their local economies will improve in the next 12 months7.
In addition to the Great Recession, another influence on millennials’ financial behaviors has been their parents. Forty percent of millennials admit the successes and failures of their parents drove them to make a positive financial decision; in comparison, just 12 percent of Gen Xers, boomers and seniors had this experience3.
Millennials also say that even if they grew up being financially dependent on their parents, financial advice wasn’t always offered. For example, nearly half (44 percent) of millennials reported their parents didn’t talk to them about the impact paying for college might have on their future finances1. Furthermore, only 25 percent of millennials’ parents started talking to their children about good financial habits before they turned 10 years old; Almost twice as many millennials (43 percent) believe parents should have this discussion with their child before he or she reaches this age1.
Despite financial burdens, millennials desire financial independence
Notwithstanding the impact of financial burdens, millennials are not letting these hurdles get in the way of pursuing their financial independence. Contrary to what many may think, the snapshot shows millennials care about managing their money and are actively trying each week to be in control of their finances. Three-quarters (74 percent) say they pay their bills on time; and the majority say they spend less than they earn (58 percent) and regularly set money aside for savings (56 percent)5.
Technology appears to be impacting this attitude, as almost three in five (59 percent) millennials use their bank’s mobile banking app, the highest users of any generation4. Of those millennial banking app users, most (72 percent) access the app a few times a week or more, nearly three-quarters (74 percent) receive mobile banking alerts, and more than three in five (65 percent) use mobile check deposit4.
Additionally, millennials appear to be increasingly active in the mobile payments space. Seven in 10 (68 percent) would consider paying someone using person-to-person payments via mobile banking app, and more than two in five (41 percent) would consider or have already used their smartphone to make a purchase at checkout4.
As millennials work toward their financial independence, they are also planning for the future. The snapshot shows millennials prioritize saving for the future over having enough money to live comfortably today (71 percent vs. 60 percent)3. Similarly, millennials are willing to shoulder financial burdens in the short term to ensure long-term professional success, as nearly two-thirds of millennial small business owners would first delay their own compensation to make ends meet (64 percent)7.
In addition to prioritizing for the future, millennials believe they currently have good financial habits (74 percent)1 and are confident in their ability to effectively manage personal finances (84 percent)5. Looking ahead, more than three in five millennials don’t think that caring for an aging parent (67 percent) or their parents’ financial situation in general (62 percent) would put stress on their own finances3.
“While many millennials have major debt obligations, they are moving forward and making positive progress in their lives, and planning ahead for the future,” said Jordan. “Millennials are optimistic about their financial status and don’t seem to be compromising major milestones, which is reassuring.”
Seeking balance and a support system for tomorrow
While millennials are focused on preparing for their futures, it’s not stopping them from living for today. Given the millennial emphasis on experience, it’s not surprising to learn millennials who have gone into debt for personal investments such as buying a home (89 percent), education (84 percent), cars (69 percent) or moving to a new area (62 percent) believe these debts were well worth it6.
Millennials are also just as likely to balance saving for a dream vacation as getting the most out of their investments (32 percent and 37 percent)3. The data shows it’s likely their desire for experience will be carried into their golden years, as nearly half of millennials (49 percent) are spending less today so they can ensure a stress-free retirement where they envision traveling often (66 percent) and living near loved ones (54 percent)3.
While financial independence is a goal for many millennials, they expect to need some extra support down the road. More than two in five (43 percent) millennials intend to lean on their loved ones for financial help in retirement3. Parents also share this sentiment, as almost half (46 percent) of parents of millennials who currently provide assistance to their adult children have no plans to cut them off1. Fewer (9 percent) members of older generations plan to rely on loved ones for financial support during their golden years3.
1 Bank of America/USA TODAY Better Money Habits Millennial Report – Spring 2015
2 Spring 2015 Small Business Owners Report
3 Spring 2015 Merrill Edge Report
4 Bank of America Trends in Consumer Mobility Report
5 Bank of America/USA TODAY Better Money Habits Millennial Report – Fall 2015
6 Fall 2015 Merrill Edge Report
7 Fall 2015 Small Business Owners Report
Year-end Millennial Snapshot Methodology
Kelton Global, a strategic research and consulting company, analyzed studies commissioned by Bank of America in 2015 to create the Year-end Millennial Snapshot. The data includes information from the Better Money Habits Millennial Reports, Trends in Consumer Mobility Report, Merrill Edge Reports and Small Business Owners Reports. Research was gathered throughout 2015 and analyzed in totality through August and September 2015 and focused solely on millennial-facing data. This research was intended to help understand millennials and their approach to personal finance.
About the Bank of America/USA TODAY Better Money Habits Millennial Reports
Bank of America and USA TODAY commissioned two surveys in 2015 to explore millennials’ financial challenges, behaviors and attitudes. The Spring 2015 survey examining the parental influence on the money habits and views of today’s young adults was conducted online March 4–11, 2015 (1,000 millennials and 1,005 parents of millennial children were surveyed). The Fall 2015 survey focusing on aspects of financial wellness was conducted online August 6–24, 2015 (1,320 millennials were surveyed). Both surveys were conducted by GfK Public Affairs and Corporate Communication, using GfK’s KnowledgePanel®, a statistically representative sample source used to yield results that are projectable to the American population. To qualify, millennial respondents had to be 18 to 34 years old. The margin of sampling error for national data is +/- 3.4 percentage points for the Spring 2015 survey and +/- 3.2 percentage points for the Fall 2015 survey at the 95 percent confidence level.
About the Bank of America Trends in Consumer Mobility Report
Braun Research, Inc. (an independent market research company) conducted a nationally representative telephone survey on behalf of Bank of America April 13-26, 2015. Braun surveyed 1,000 (375 were millennials (ages 18-34) respondents throughout the U.S., comprised of adults 18+ with a current banking relationship (checking or savings) and who own a smartphone. The survey was conducted by phone to a dual-frame landline and cell. The margin of error for the national quota (where n=1,011) is +/- 3.1 percent with a 95 percent confidence level.
About the Merrill Edge Report
Braun Research, Inc. conducted a nationally representative telephone survey on behalf of Merrill Edge. The survey was conducted from March 12 through March 24, 2015 (1,001 total respondents; 159 were millennials) and September 8 through September 20, 2015 (1,000 respondents; 130 were millennials), among mass affluent respondents throughout the U.S., defined as individuals with investable assets (value of all cash, savings, mutual funds, CDs, IRAs, stock, bonds and all other types of investments excluding primary home and other real estate investments). Respondents in the study were defined as aged 18 to 34 (millennials) with investable assets between $50,000 and $250,000 or those aged 18 to 34 who have investable assets between $20,000 and $50,000 with an annual income of at least $50,000; or aged 35-plus with investable assets between $50,000 and $250,000. The margin of error is +/- 3.0 percent, reported at a 95 percent confidence level.
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About the Bank of America Small Business Owner Report
Braun Research conducted the Bank of America Small Business Owner Report surveys by phone, from March 4 through March 27, 2015 (1,000 respondents; 244 were millennials) and from August 21 through September 22, 2015 (1,001 respondents; 364 were millennials), on behalf of Bank of America. Braun contacted a nationally representative sample of 1,000 small business owners in the United States with annual revenue between $100,000 and $4,999,999 and employing between 2 and 99 employees. The margin of error for the national sample is +/- 3.1 percent reported at a 95 percent confidence level.
The Braun Research survey results conducted on behalf of Bank of America and interpretations in this release are not intended, nor implied, to be a substitute for the professional advice received from a qualified accountant, attorney or financial advisor. Always seek the advice of an accountant, attorney or financial advisor with any questions you may have regarding the decisions you undertake as a result of reviewing the information contained herein. Nothing in this report should be construed as either advice or legal opinion.
Bank of America
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