Teachable Moments Stick With Millennials,
Result in Better Money Habits Saving for an Emergency Top of Mind;
Long-term Saving Still Lags
Millennials’ financial views and habits have been most
influenced by their parents, but the Great Recession has also had
lasting impacts on how millennials think about money, according to
a Bank of America/USA TODAY Better Money Habits Millennial Report
released today.
Eight in 10 millennials believe their attitudes toward money
were influenced “a lot” or “some” by their parents, with four in 10
saying parents influenced them “a lot” – a stronger degree of
influence than parents credit themselves (30 percent). Nearly three
in five (58 percent) say their parents’ advice or example most
influenced how they handle their finances today.
“Our research shows that parents remain the strongest influence
on the money habits their children develop and practice as adults,”
said Andrew Plepler, Global Corporate Social Responsibility
executive, Bank of America. “The research suggests that millennials
whose parents taught them the importance of wise money management
and saving are better prepared to meet their financial needs later
in life. That preparation is even more important in the context of
changing economic conditions that can impact one’s financial
situation.”
Saving early is most important lesson; millennials prioritize
emergency saving over long-term goals
Save and save early: Parents and millennials agree that’s the
most important piece of financial advice parents can give their
children, and that lesson is resonating. Two-thirds of millennials
(68 percent) have money set aside for savings.
In the aftermath of the Great Recession, the priority on saving
for emergencies is top of mind for both millennials and their
parents. Nearly half of all millennials (49 percent) say the
economic downturn changed the way they think about saving,
investing and spending, and more are currently saving for an
emergency than for anything else. Likewise, 64 percent of parents
say the downturn changed their financial behavior with one-third
(32 percent) of those reporting that they are now saving more for a
“rainy day” as a result.
Long-term savings challenges: After saving for an emergency (44
percent), there is a significant decline in the number of
millennials saving for other longer-term goals, with only 20
percent who are saving for a car and 26 percent who are saving to
buy a house. Slightly more positive is the number of millennials
who are saving for retirement at 29 percent.
“It’s good to see that millennials are planning for the
unexpected in the short term, but having a long-term view early can
make a big difference down the road,” Plepler said. “While
longer-term goals may seem far away, starting to save early is
critical to meeting your future goals, whether saving for a car,
buying a house or equally as important, saving for retirement.”
Student loan burdens: Nearly half of all millennial respondents
who attended or are currently attending college (49 percent) have a
student loan that they pay for, with an average payment of $201 per
month. Of these, more than half (54 percent) say student loan
payments have “a lot” or “some” impact on their ability to
save.
Teachable moments stick with millennials
For millennials who say their parents did an “excellent” or
“good” job teaching them about financial habits, 74 percent have
savings and 48 percent make a monthly budget. On the opposite end
of the spectrum, of millennials who say their parents did a “fair”
or “poor” job, only 55 percent have savings and 37 percent make a
monthly budget.
Parents used a number of different activities to teach their
children lessons about money. Across the board, millennials who
have savings are more likely to have said they experienced these
“teachable moments.” The most effective actions associated with
millennial savers include: opening a checking or savings account
(70 percent), earning money for helping with chores (64 percent),
saving for something they wanted (63 percent), saving money in a
piggy bank (62 percent) and playing board games that involved
money, such as Monopoly (54 percent).
Better Money Habits launches new content to help
parents
Bank of America is launching new tools and resources for parents
on BetterMoneyHabits.com, the free online financial education
resource powered by Bank of America and education innovator Khan
Academy. Inspired by Khan Academy’s modern approach to learning,
the platform provides engaging and easy-to-understand content on a
wide range of personal finance topics. The new Families and Money
content is divided into topics appropriate for parents of
elementary, middle and high school-aged children and includes
issues such as establishing allowances, setting up money rules and
introducing children to banking.
Parents see greater challenges for millennials; continue
financial support into adulthood
Majorities of millennials and parents believe today’s young
adults have struggled to find jobs and are still impacted by the
economic downturn of 2008. A majority of parents (56 percent), more
so than millennials (44 percent), also think young adults have it
harder living within their means than parents did when they were
young. Many millennials and parents think millennials’ financial
hurdles – from buying a house to saving for retirement – are more
difficult than those faced by the previous generation.
This perception of hardship could be why today’s parents are
lending more financial support to their adult children than
previous generations. Nearly two-thirds of millennials (65 percent)
say their parents helped them out “a lot” or “some” when they were
just starting out compared to 36 percent of parents who say they
received financial help at the same stage in life. Nearly one-third
(31 percent) who provide financial assistance do so because they
believe their children truly “need” their help.
Overall, 40 percent of millennials currently receive financial
help from parents, including more than one in five (22 percent)
ages 30-34 and one in five who are married or living with a partner
(20 percent).
Additional report findings:
Good comfort level on money conversations
- Majorities of both parents and
millennials say parent-child conversations about money matters are
“not very/not at all difficult.”
- Only a small number of millennials
report that spending and budgeting (17 percent) and savings and
investments for the future (16 percent) were “very” or “somewhat”
difficult topics to discuss with their parents.
- Almost half of millennials (44 percent)
and parents (44 percent) report that millennials are still directly
asking for financial advice at least somewhat often.
Large disparity on when money lessons should begin
- Seventy-eight percent of millennials
think financial conversations should begin before the teenage
years.
- Only 52 percent of parents began
talking with their children about the importance of good financial
habits before they were teenagers.
Parental double standard
- Nearly one in five (18 percent) parents
says they don’t follow the same financial advice they give to their
children.
Student loan pressures inhibiting personal and career
goals
- Nearly half of those who are going/went
to college or whose kids have gone to college (49 percent of both
millennials and parents) noted their family has a student loan that
the millennial pays.
- Millennials with student loans pay on
average $201 per month; parents who help their children with
student loans pay on average $158 per month.
- Among those who have a child who has
gone to college, one in five parents (23 percent) pays for their
child’s student loan; one in 10 parents (8 percent) have taken out
an additional loan on top of student loans to pay for their child’s
education.
- Twenty percent of millennials with
student loans have delayed starting a family because of their loan
debt.
- Twenty percent of millennials with
student loans say their debt caused them to take a job they are
overqualified for in order to make money.
Turning the tables on financial assistance
- Forty-two percent of millennials
believe they will need to support their parents “a lot” or “some”
as they age.
- Only 18 percent of parents think their
millennial children will need to help them to the same degree.
Additional findings can be found in the survey report at
http://about.bankofamerica.com/assets/pdf/bmh-millennials-report-spring-2015.pdf.
Bank of America/USA TODAY Better Money Habits Millennial
ReportIn follow-up research to a November 2014 report on
millennials’ financial habits, Bank of America and USA TODAY
surveyed 1,000 millennials and 1,005 parents of millennial children
to examine the parental influence on the money habits and views of
today’s young adults and to understand how these compare among
generations. The survey was conducted online during the period of
March 4–March 11, 2015 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 and the parent sampling
group had to have a child(ren) between the ages of 18 and 34. The
margin of sampling error is +/- 3.4 percentage points at the 95
percent confidence level.
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. Since the site launched
in 2013, we’ve connected millions of people to information to help
them make more confident financial decisions. To learn more, visit
BetterMoneyHabits.com.
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