Public opinion is often split when it comes to millennials and money. Some consider millennials as unfocused narcissists with unrealistic expectations. Others consider them as the recipients of a devastating one-two punch of high college costs and poor job prospects. As with any generation, it's unfair to characterize millennials as a homogeneous group — but it is fair to survey them and find out what they really think about money. What are their situations and objectives?
The financial education website iQuantifi teamed up with Middle Tennessee State University to clarify millennials' approaches toward money. The findings suggest that millennials do have financial goals and visions, but have difficulty executing those visions and may not be getting the best financial advice.
Consider these survey findings:
- Debt – The average debt for millennials was $47,689 and debt increased with age. From ages 21 to 25, the average debt was only $13,116. The average debt rose to $46,622 for ages 26 to 30 and $69,552 from 31 to 35. While 31% of millennials still have student loans, the age differential suggests that it's not just student loans that are the burden. As millennials buy homes, marry, and establish new families, they take on much more debt.
- Goals – A large majority of respondents (72%) claim to have financial goals. Increasing the overall level of savings was the top goal for 2015 with 76% of respondents — but over a five-year horizon that goal drops to 55% and is overshadowed by saving for specifics including vacations (68%), large consumer purchases (67%), cars (66%), retirement (64%) and a down payment on a house (60%).
Other primary goals include paying down debt. 63% of respondents want to pay down credit card debt and 60% have a goal of paying off debt entirely.
- Challenges – Millennials' two primary financial challenges were making enough money (57%) and staying on a budget or sticking to a financial plan (41%). Just over a quarter of respondents had trouble developing a budget/plan in the first place (28%), managing debt (27%), or understanding when and how to invest (26%). Others are just overwhelmed — 16% don't know what to do financially and 20% don’t know where to begin.
- Financial Engagement – Most millennials have the basics, with 92% having a checking account and 82% with at least one credit card. 37% have mortgages and another 27.2% plan to in the future — a greater number than those who have auto loans (35.4%) or plan to do so in the future (18%). 68.8% either have life insurance now or plan to in the future.
The biggest surprise is in investments. 31.8% of millennials own mutual funds, 35.4% own stocks, and 24.2% own bonds. Other investments include exchange-traded funds (13.2%) and index funds (10.8%). However, far too few millennials are putting anything away for retirement in tax-advantaged programs. Only 28% have a traditional IRA, 22.2% a Roth IRA, and 27.6% have other retirement savings plans. Funding retirement plans is critical now to take full advantage, even if the contribution is small.
- Sources of Advice – Part of millennials' problems may be the lack of professional financial advice. Only 29% have consulted with financial professionals, while another 24% have used apps or online financial tools — and there's no way to determine the quality of said tools. A whopping 71% consult family members and 45% consult friends. That may boil down to issues of trust, but it doesn't help if your friends and family are not capable of competent professional-level advice.
In general, this survey suggests that myths about millennials are a bit overblown and that they would benefit from higher paying jobs, better financial advice, and assistance making budgets/plans and sticking to them. Doesn't that apply to all of us? Moneytips can help.
If you want more credit, check out MoneyTips’ list of credit card offers.