These Millennials Are Doing Just Fine at Saving
The best way to test your financial stability? Look under the hood of your car.
There's a belief, supported by research, that half the U.S. doesn't have enough money saved to handle an unexpected mechanic bill if the car broke down. A new study finds that certain millennials—despite being known as the nation's most indebted, underemployed generation—are (slightly) better equipped to tackle such an emergency expense than are older generations.
Asked how they would deal with an unexpected expense from $500 to $1,000, 45 percent of millennials (defined as people aged 18 to 35) in a recent survey said they would use savings accounts, compared to 39 percent of Generation X, aged 36 to 51, and 39 percent of boomers, from 52 to 70. The research, which polled over 1,000 American adults, was conducted by Princeton Survey Research Associates on behalf of financial data aggregator Bankrate in early January. The millennials surveyed make decent money, with 27 percent saying they earn over $75,000 a year, 13 percent earning from $50,000 to $75,000, and the remainder making under $50,000, closer to the national average wage.
Though a big chunk of young people are happy to dip into their savings accounts, they're wary of putting this kind of debt on a credit card: only 15 percent of those polled said they would use plastic for such an expense, compared with 19 percent of Gen Xers and 25 percent of boomers. This well-known aversion to credit cards is due, in part, to the generation having come of age around the 2008 recession. A recent survey of holiday shoppers found millennials were the least likely to use credit cards, with 60 percent opting for cash and 56 percent for debit cards. A 2015 study found that millennials are least likely to think loans and credit cards have expanded their opportunities.
Millennials and Generation X are more likely to curb spending on other things to make room for an unexpected expense, the survey found, but boomers are not: Only 17 percent said they'd opt to cut back on other things.
There was one thing debtors of all ages could agree on: Borrowing money from loved ones is a bad idea.