Young People Think They Have Good Financial
Habits, but Many Still Depend on Mom and Dad
Millennials are confident in their ability to manage their
finances, but their actions tell a different story, according to
the Bank of America/USA TODAY Better Money Habits Millennial
Report, released today.
Even though a large majority (80 percent) of the 1,000
millennials ages 18-34 surveyed across the country believe they
will be better off or the same as their parents and two-thirds say
they have good financial habits, the report results indicate that
many may have a less-than-ideal financial situation. In fact, 53
percent of millennials are living paycheck to paycheck and many are
probably not preparing for the long term. For example, nearly as
many millennials are saving for a house (32 percent) as are saving
for a vacation (33 percent), 22 percent have yet to start saving at
all and 35 percent still receive regular financial support from
their parents or relatives.
“Many young adults have great confidence in their financial
situations, but we can’t ignore the fact that so many are living
day to day, not able to prepare for their financial future,” said
Andrew Plepler, Global Corporate Social Responsibility executive,
Bank of America. “We need to build on the enthusiasm we see from
this group by providing the educational resources and tools they
need to understand more about their money in order to achieve
financial stability and help them reach their long-term financial
goals.”
Millennials taking short-term actions, but may be delaying
long-term goals
Seventy-four percent of millennials say they worry about their
financial situation, and as a result, many are exhibiting good
financial behavior to help them get on track in the short term. For
example, nearly half (49 percent) pay off their credit card debt in
full each month and 35 percent report only carrying cash to limit
how much they spend.
However, these short-term actions may not be enough to help
millennials secure their long-term financial objectives. In fact,
only 31 percent of respondents said they are excellent/good at
saving for retirement. Of those who save, only 16 percent have an
IRA and one in three have contributed to a 401(k). At the same
time, the report results indicate that millennials are finding it
difficult to pay off their debts. Among the respondents with
student debt, 48 percent say they are paying out less than $100
each month for student loans, which means that their debt will
persist in the long term.
Consistent with the public’s overall perception of millennials,
the report found that respondents have a hopeful, if not slightly
idealist, view of their futures; only four in 10 believe that
salary is more important than doing what you love.
Many still on the family payroll or living at home
The majority (57 percent) of millennials say it is “really
difficult” for people their age to live within their means and not
overspend, while 36 percent cited “spending more than I should” as
one of their top causes of stress.
Many millennials are turning to their families for help; more
than a third (35 percent) say they are receiving regular financial
support from their parents or other family members, and one in five
(19 percent) still live at home and are not paying rent or
expenses. Further, 15 percent of millennials receive regular help
from their parents for their rent or mortgage, and one in four (25
percent) get help with their cell phone bills from family
members.
While seeking financial assistance from relatives a generation
ago might have been seen as an embarrassment, it now appears to be
par for the course. A staggering 80 percent of those who receive
regular support say they know others their age who are receiving
help from parents, and 55 percent of those who receive financial
help say they discuss it openly and honestly with friends.
It’s not just the young, out-of-work millennials who are getting
help from their parents or family members. Many respondents making
more than $75,000 per year indicated they have received financial
assistance as well: 25 percent of respondents in that category have
received help at some point to pay for their groceries, and 21
percent have received money for clothing. Even married millennials
are sending bills home: 11 percent of those who are married or with
a partner still have mom or dad helping out with cell phone
payments.
However, millennials who currently live with their parents don’t
plan to stay home forever. Seventy-four percent of those who
receive regular support say that they plan to stop taking financial
assistance from their parents within the next four years.
Finding solutions: Better Money HabitsTM
For those who want a resource to help better understand personal
finance topics from deciphering your paycheck to paying off student
debt to buying a house, Bank of America and education innovator
Khan Academy have partnered to help address this need. Together,
they have developed BetterMoneyHabits.com, a free, objective
education resource that pairs Khan Academy’s expertise in online
learning with Bank of America’s financial expertise to provide
content and tools for anyone, anywhere.
The site is designed with the key needs of the user in mind and
includes content that specifically addresses topics most important
to millennials. And, given this group’s inclination to turn online
for all information, including financial education, the site
provides simple, easy to understand content available on
demand.
Whether it’s buying a car, building up savings or paying off a
credit card - setting goals can help. In fact, the report shows
that those who set goals seem to be good at reaching them; of the
41 percent of respondents who set savings goals, 65 percent said
they normally achieve them. To support this, the site allows users
to identify goals important to them, and recommends videos,
articles and tools that give practical, actionable steps to take on
a daily basis to help them get on track financially.
Additional report findings:
Savings shortcomings, student loan worries
- Thirty-seven percent of millennials
have less than $5,000 in savings.
- Twenty-two percent have yet to start
saving – this includes older millennials (aged 30-34), 18 percent
of whom have not started saving.
- Of those who are both saving and
employed, only 18 percent have an IRA, while 43 percent have
contributed to a 401(k).
- Thirty-three percent have student
loans.
- Of those with a student loan, only four
in 10 receive help from parents or family with their payments.
Not all millennials are equal: A graduate vs. non-graduate
divide
- Data indicated a major difference
between older millennials (age 24 and over) with a college degree
and those without the ability to manage their finances.
- Eighty-three percent of college
graduates say they have good financial habits, compared to 56
percent of those without a degree.
- Seventy-three percent of those with a
degree say they are currently financially independent, compared to
52 percent of those without.
- Two-thirds of college graduates say
they are in good shape financially, while only 30 percent of
non-college grads would agree.
The Peter Pan effect: A closer look at those still receiving
help from their parents
- Not surprisingly, 37 percent of
millennials in the 18-21 age range still live at home, but the
numbers remain high for older millennials.
- Twenty-six percent of those aged 22-25
still live at home and don’t pay rent or expenses.
- Twelve percent of those aged 26-29
still live at home and don’t pay rent or expenses.
Millennial optimism delaying adult decisions
- Fifty-nine percent do not worry about
doing more “adult” things, like buying a house or starting a
family.
- Thirty-two percent say it would take
earning $100,000 per year to make them feel successful.
- Many think having “made it” is being
able to afford things like travel and treating friends and family
(70 percent), vs. having their dream home (40 percent).
Many agree that parents prepared them to manage their finances –
but they’re still dependent
- Sixty-eight percent say that their
parents taught them about money.
- Fifty-eight percent say their money
habits came from their parents.
- Forty-seven percent wish their parents
had started talking to them about money sooner.
Ho, ho, humbug? Millennials may not feel the cheer this holiday
season
- Seventy percent of millennials enjoy
giving holiday gifts to their family and friends, but 45 percent
worry about overspending on them.
- Fifty-three percent of respondents with
a credit card worry about overspending.
- Thirty-three percent without a credit
card say they worry about overspending.
About the Bank of America/USA TODAY Better Money Habits
Millennial ReportThe Bank of America/USA TODAY Better Money Habits
Millennial Report was conducted online among 1,001 adults during
the period of October 9 - October 20, 2014 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,
millennials had to be 18 to 34 years old. The margin of sampling
error is +/- 3.5 percentage points at the 95 percent confidence
level.
About Better Money HabitsBank of America has made a substantial
commitment to address the need for better financial literacy by
partnering with Khan Academy – a nonprofit with the mission of
providing a free, world-class education for anyone, anywhere.
Together, they’ve developed BetterMoneyHabits.com, a free,
objective online financial resource that pairs Khan Academy’s
expertise in online learning with the financial expertise of Bank
of America. The customizable experience breaks down concepts and
provides practical, actionable steps to strengthen the connection
between financial knowledge and behavior.
About Bank of AmericaBank of America is one of the world's
largest financial institutions, serving individual consumers, small
businesses, middle-market businesses and large corporations with a
full range of banking, investing, asset management and other
financial and risk management products and services. The company
provides unmatched convenience in the United States, serving
approximately 48 million consumer and small business relationships
with approximately 4,900 retail banking offices and approximately
15,700 ATMs and award-winning online banking with 31 million active
users and more than 16 million mobile users. Bank of America is
among the world's leading wealth management companies and is a
global leader in corporate and investment banking and trading
across a broad range of asset classes, serving corporations,
governments, institutions and individuals around the world. Bank of
America offers industry-leading support to approximately 3 million
small business owners through a suite of innovative, easy-to-use
online products and services. The company serves clients through
operations in more than 40 countries. Bank of America Corporation
stock (NYSE: BAC) is listed on the New York Stock Exchange.
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Reporters May Contact:Tara Burke, Bank of America,
1.203.292.6590tara.a.burke@bankofamerica.com
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