Millennials Are Getting Surprisingly Good at Saving
Americans are steadily increasing their savings, but it’s the millennials who are really on a roll. The percentage of 18- to 34-year-olds who saved at least 5 percent of their income increased to 56 percent from 50 percent in 2014, a new report shows. Only the 45-to-54 crowd had a bigger jump on that measure, rising to 53 percent from 45 percent in 2014—also impressive, but they have more money to play with.
The eighth annual America Saves Week survey, put out by the Consumer Federation of America, a nonprofit advocacy group, shows that young people are making progress on multiple fronts: The portion of millennials with a spending plan that allows them to meet their savings goals rose to 39 percent from 34 percent; to 47 percent from 43 percent for those who actually have savings plans; and to 64 percent from 53 percent for those with an emergency fund to cover an unexpected car repair or doctor visit.
That’s the good news, says Stephen Brobeck, executive director of the Consumer Federation of America and co-founder of the annual America Saves campaign. “Younger people are now starting to become more hopeful, thinking that the future may be better than the present.” That’s important, he says, because when people don’t have hope, they don’t save.
The glass-half-empty part comes in the overall results, when you look across all generations. While 40 percent of those surveyed said they were were making “good or excellent savings progress,” up from 35 percent a year earlier, that leaves 60 percent who couldn’t say that. And that’s one key area where the results for millennials didn’t change.
There are a few other small improvements in the overall savings picture. More money is going to emergency funds, it seems. The majority of those surveyed—66 percent, compared with 64 percent a year ago—said they had “sufficient emergency savings to pay for unexpected expenses like car repairs or a doctor visit.” Seventy-eight percent said they had no consumer debt or were reducing it, a small bump up from 76 percent last year.
Other highlights from the survey:
The Planners Win
Sixty-five percent of those surveyed who “have a savings plan with specific goals” said they were saving enough for retirement. For those without a plan, the number dropped to 31 percent. Ninety percent of those with a savings plan said they were spending less than their income and saving the difference, compared with 20 percent for the non-planners.
Income, unsurprisingly, plays a part in that: There’s a 12 percentage-point gap between those with incomes from $25,000 to $50,000 who say they spend less than they earn and save the rest (75 percent), and those who say the same and earn at least $100,000 (87 percent). Much more remarkable, though, is that 54 percent of people who earn less than $25,000 said they spend less then their income and manage to save the difference.
More 5 Percenters
The overall percentage of those who managed to save at least 5 percent of their income rose from 47 percent last year to 52 percent in 2015. That was one of the biggest jumps in the overall survey results. The percentage of people who said they had savings plans with a goal remained unchanged, at 51 percent, as did the number of those who owned or were building equity in a home, at 55 percent.
Net Worth? Uh ...
The good news: Forty-three percent of people surveyed said they knew their net worth, up from 40 percent last year. But 57 percent of people not knowing their net worth shows a scary degree of financial ignorance. Unless, of course, you’re among those making about $25,000 and haven’t been able to create any real sort of net worth—or, given America’s generally lackluster degree of financial literacy, aren’t familiar with the term. The age group with the highest percentage of people knowing their net worth was, as you might guess, the 65-and-up crowd. Even then, though, just 62 percent knew their net worth.
For more, read this QuickTake: Recession’s Lost Generations
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