Millennials get a bad rap, facing a slew of unsavory stereotypes: they’re lazy, entitled and need constant praise. But maybe they do deserve some praise because data from a number of surveys reveals that millennials are actually outperforming other generations in one key area: saving money.
Millennials are star savers
According to Bankrate’s Financial Security Index survey in October, three in five American adults are limiting their monthly spending. The number one reason behind that decision? To boost their savings. And millennials particularly have an eye for the future: 60% of millennials who are cutting back on spending said they are doing it to save for the future. And the youngest group of millennials—ages 18 to 26—are even more focused on creating a nest egg, with 74% saying they need to stash aside more money. Meanwhile, only one in four older Americans cited boosting savings as a reason to cut spending.
“This is not a fluke by the way,” Bankrate’s senior financial analyst Greg McBride told CNNMoney. “Study after study has revealed that millennials do place a higher priority on savings and a lot of that stems from having a front row seat for the financial crisis and, for the older millennials, they were witness to the dot-com bust, too.”
That’s good news, especially given that an earlier Bankrate survey concluded that 59% of Americans don’t have enough cash stashed away to cover a $500 emergency expense. (See also: Why You Need an Emergency Fund)
But it’s not just emergency savings where millennials excel. A recent Bank of America Merrill Lynch study found that 82% of millennials are investing in retirement savings vehicles, compared with 77% of Gen X-ers and 75% of Baby Boomers. (See also: How Much To Save For Retirement)
Millennials are more likely to shun credit
Spooked by debt, millennials are also more likely to avoid credit cards. A white paper on millennials and money released by Facebook found that 46% of millennials defined financial success as being debt free. In fact, 57% of millennials prefer paying with cash rather than credit—as evidenced by the fact that just 33% of millennials own a credit card. Eight out of 10 millennials carry cash, while 42% still write checks, according to the Accel + Qualtrics millennial Study 2017. That said, they are also 16 times more likely to use mobile payments like Apple Pay than their Boomer counterparts.
But that may be a mistake, some experts say. Brian Kelly, the founder of ThePointsGuy.com, says that when used responsibly—that is not carrying a balance and paying off your card every month — credit cards can help you save money and reap rewards on spending you were already going to incur.
“Credit cards have helped me live a champagne lifestyle on a beer budget,” he told the audience at CardCon, a conference for credit and credit card media in October. “2018 is going to be really good for consumers when it comes to credit cards.” (See also: 5 Things Credit Card Companies Don’t Want You To Know)
Millennials are also missing the opportunity to build strong credit scores—something that will help them save money when it comes to finding the best rates on home or car loans.
Editorial Disclaimer: Opinions expressed here are author's alone, not those of any bank, credit card issuer, or other company, and have not been reviewed, approved or otherwise endorsed by any of these entities. All information, including rates and fees, are accurate as of the date of publication.