Although the times may have changed and there are many differences between the modern Millennial, Gen Xers, and boomers; saving and preparing for the future is still important for a stable and secure financial situation for everyone. In fact, the impact of saving vs. not saving for a Millennial is tremendous and can be life-changing, as shown by the comparison here of each chosen pathway: the saver and the non-saver.
Millennial One: The Saver
The first type of Millennial is a planner who prioritizes saving early in their career. This savvy saver makes it a point to stick to their monthly budget, sets up regular contributions to savings accounts, and seeks out investments to secure their financial future. They understand the importance of saving and investing now while they are young and will reap the benefits of their savings habit by being able to invest in a home at a younger age and will have financial security during unexpected life events.
Millennial Two: The Non-Saver
The second type of Millennial is a non-saver who prioritizes buying things over saving money. The Millennial spender would rather take vacations, buy nice cars, and spend their money for immediate gratification rather than plan for their future. They often feel that they work hard for their money and should be able to have the things they want as soon as possible. Unfortunately, these spenders do not understand what it takes for financial security and often find themselves facing challenges due to their lack of savings, including the delay of major life events like buying a home and difficulty in handling unexpected emergencies due to lack of planning.
Comparative Analysis
The choices of savers and non-savers definitely have an impact on the lifestyle, opportunities, and stress levels of the average Millennial. Those who are savers will find themselves in a better situation – financially and emotionally, while non-savers will likely be stressed out and living paycheck to paycheck.
Savers
- Less money worries offer a much more stress-free lifestyle when it comes to paying bills and having the money needed for financial obligations.
- Saving for a down payment allows a Millennial to buy a home sooner, which is a Savers great investment that helps build wealth.
- Building a nest egg is crucial in the event of unexpected emergencies such as loss of employment, medical issues, or other unforeseen life issues.
Non-Savers
- Life is more stressful when you are not financially prepared to pay for monthly expenses and necessities.
- Lack of savings means postponing a home purchase that can build equity and offer financial freedom in later years.
- Not having money to fall back on in case of emergencies or other unexpected issues due to unsavvy spending habits can wreak havoc on your financial future and the happiness of your family.
Long-Term Consequences
Planning and saving now can help avoid long-term consequences that can affect many aspects of your life in the future. Those who save and plan at an early age can expect to be ready for retirement, have financial independence later in life, and offer security for themselves and their family.
Unfortunately, the long-term impact of not saving offers no preparation for retirement, a lack of financial independence, and puts you and your family at financial risk in the event of an emergency or life event for which you are unprepared.
Lessons Learned
Learning to save now, even if it is a small amount, is a savvy move that will help secure your financial future. Being unprepared for life’s unexpected curveballs is stressful and can be avoided by preparing now. A smart Millennial who saves now is setting themselves up for a more enjoyable and stress-free lifestyle where they can afford what they need and want.
Advice for Millennials for Saving and Spending
- Make saving a life-long habit starting now.
- Make a budget and stick to it for financial success.
- Plan for major purchases and delay instant gratification until you have the necessary funds.
- Invest now to reap the benefits in the future.
According to a report by the National Institute of Retirement Security, about 66% of working Millennials have not started saving at all, with only 5% of Millennials saving adequately for their future.
No matter your financial situation, it is important to start saving now. Here are some financial tips for Millennials to start building for the future:
Financial Tips for Millennials
- Regardless of your current financial situation, start saving now. Even just $50 a month in an account earning 6.5% interest adds up to over $226k over 50 years!
- Make owning a home a priority, as it is a solid investment in your future.
- Take advantage of employer-sponsored 401(k) or 403(b) plans for tax advantages and huge interest dividends.
- Be savvy when it comes to large purchases like vehicles and understand how automobiles depreciate, unlike buying a home or land which will only grow in value over the years.
- Seek financial advice from professionals and use all the resources available to you to ensure a bright financial future.
- Planning now for your future is crucial for your financial success throughout your lifetime. Now is the time to get motivated and start saving.
If you are looking for trustworthy financial advice or a reliable checking account, savings account, or credit card to help keep your finances on track, contact Allegiance today!
FAQs
Comparative Analysis. The choices of savers and non-savers definitely have an impact on the lifestyle, opportunities, and stress levels of the average Millennial. Those who are savers will find themselves in a better situation – both financially and emotionally.
Why are millennials not saving for retirement? ›
There are many reasons for this, such as a shift away from pensions toward 401(k) plans and high student debt burdens. However, there are also reasons for optimism, such as advances in 401(k) plan design.
What is the negative impact of not saving money? ›
Unfortunately, the long-term impact of not saving offers no preparation for retirement, a lack of financial independence, and puts you and your family at financial risk in the event of an emergency or life event for which you are unprepared.
How many millennials have no savings? ›
Younger generations the least prepared
"Gen Z and millennials are notably behind, with over three in five (60%) either having no savings for retirement or having saved less than $5,000. But 17% have saved between $5,000 and $50,000."
Do millennials like to save money? ›
This generation is actively saving and investing for their future, but may also feel like they are not doing enough. Developing healthy money habits early can have a significant impact on millennials' financial future.
Do people regret not saving for retirement? ›
21 percent of Americans said not saving early enough for retirement was their biggest financial regret, according to a Bankrate survey.
Why millennials are struggling financially? ›
Coming of age in the shadow of the Great Recession, Millennials entered the job market during one of the worst economic downturns in decades, and now face mounting student loan debt, sky-high housing and healthcare costs, and increasingly precarious work environments.
What are 3 disadvantages of saving? ›
The disadvantages of using personal savings:
- You're limited to what you can afford: your savings may only get you so far.
- It's risky to spend all your savings: you might need your savings for a personal emergency.
- Your responsibility for success: having more people behind your business could lead to more success.
These can range from going into debt, facing financial hardship after losing your job, and not being able to achieve your aspirations, like homeownership.
Why shouldn't we save money? ›
2. Failing to Set Goals. Having a specific goal or target you're trying to reach helps you to stay focused on what it is you're trying to achieve. If you don't have a goal in mind of how much you want to save or what you want to use the money for it's easy to let other things take priority.
Researchers claim the distribution of wealth among millennials is so uneven because the economic rewards for middle and upper-class lifestyles have increased, while those for the working class have either remained the same or declined.
Which generation has the least wealth? ›
The generational wealth gap
| Generation | Generation wealth gap 2021 |
|---|
| Silent generation | 12.5% |
| Baby boomers | 52.1% |
| Generation X | 28.9% |
| Millennials | 6.5% |
News Releases
| 2024 | All | Millennials |
|---|
| Amount expected to need to retire comfortably | $1.46M | $1.65M |
Apr 2, 2024
Millennials embody a set of evolving values and aspirations that greatly influence their choices and behaviors. This generation highly values authority, achievement, and influence, demonstrating a strong desire for control, success, and recognition.
Which generation cares most about money? ›
Gen Z cares more than any other generation about how much money their romantic partner has, survey shows. It's a sign of their economic plight.
Which generation saves the most? ›
The youngest generation in the workforce has saved almost three times the amount Gen X households had saved in defined contribution plans at the same age, according to ICI data.
How much does the average Millennial have saved for retirement? ›
Average millennial retirement savings: $62,600 saved, 32 years left.
Why do so many people not save for retirement? ›
Social Inequality in Later Life (Russell Sage, 2019). Most working-class people don't have a pension now, Carr says, “and if they do have a pension, they can't afford to put anything in it. And so that's part of the reason why they just amass less over time.
Why will Gen Z not retire? ›
Retirement doesn't seem possible for a quarter of Gen Z
Roughly one quarter (23%) of Gen Z don't expect to ever be able to retire, according to a recent McKinsey & Company study. This belief stems from a variety of factors, but a major reason is the current job market.
How many 30 year olds have 100k saved? ›
Here's how many Americans have more than $100,000 saved for retirement (by age): Age 18-24: 2.1% Age 25-34: 4% Age 35-44: 11.5%
