6 Money Misconceptions About Millennials
As a Millennial myself — though, admittedly, at the very outskirts of the spectrum (younger Millennials are keen to point that out to me; can't we all just get along?) — I can tell you that we're unjustly dragged through the mud by the press. We're lazy, entitled, self-absorbed, and demanding — or so claims the media.
Much of the shade that we're thrown, as far as I can tell anyway, is just that — shade. Because contrary to popular belief, we Millennials are savvier and more responsible, especially where money matters are concerned, than we're portrayed. To tips the scales back in our favor a bit more, here are six money misconceptions about Millennials, and why they're wrong.
1. Millennials Will Be Renters for Life
I'm 34 years old, born in 1981, and I purchased my first home with my husband at 28 years old. Most of my Millennial friends own their homes, too. The idea that Millennials will be renters for life is an outdated belief, perhaps established during the housing crisis of the last decade, but it's held on nonetheless. That's all changing now.
Trulia's Chief Economist Ralph McLaughlin is an expert on Millennials and the housing market, and he says that recent research suggests that 18- to 34-year-olds are on the path to homeownership, though the prospect is contingent on affordability.
"A recent Trulia survey found that 80% of Millennials said that owning a home is part of their personal American Dream, and of the young people who plan to buy, 35% plan to buy within the next two years," he says. "However, saving up for a down payment is the biggest obstacle to homeownership. Many say that a new job, promotion, or raise would be the deciding factor on taking the leap from renting to owning."
Trulia's research is supported by a study from the National Association of Realtors, which reports that 32% of homebuyers in 2014 were Millennials (Gen Y), and the median age group was 29 years old
2. Millennials Aren't Serious About Setting Savings Goals
While Millennials are focused more on obtaining material status symbols than older generations — 32% of Millennials said having luxury items was crucial to their attainment of the American Dream — they're also focused on saving, and setting goals to do so.
Chantel Bonneau, a wealth management advisor with Northwestern Mutual, says, "Millennials are a little more financially conservative than maybe their parents, and they act much more like their grandparents. Millennials feel goal oriented, more so than other generations even. Millennials are realistic about taking responsibility and want to see themselves achieve and progress. They want options in retirement and are hopeful that they'll achieve their goals."
The Northwestern Mutual 2015 Planning and Progress Study supports Bonneau's claims. The report details that:
- Nearly two-thirds of Millennials classify themselves as more inclined to save than spend, and more than half (53%) of Millennials have set financial goals, compared with 38% of Americans age 35 and older.
- Almost half of Millennials have spoken to their partner, friends, family, or an advisor about retirement, taking a step toward successful planning.
- Millennials know that safety nets won't be there for them in old age, with 73% of those expecting to need to work past age 65 doing so because Social Security won't take care of their needs.
3. Millennials Live to Work
Americans live to work, and work to live. That's how Europeans perceive our "no-vacation nation" anyway, but Millennials are poised to change that mindset.
According to Bank of America's 2015 Year-End Millennial Snapshot, Millennials are just as likely to balance saving for a dream vacation as they are investing — 32% and 37%, respectively.
It's likely this behavior will carry into Millennials' golden years, as nearly half of Millennials (49%) are spending less today so they can ensure a stress-free retirement where they envision time spent traveling and with loved ones. While investing and saving for the future, Millennials are willing to shoulder burdens in the short-term to ensure professional success by delaying compensation in an effort to make ends meet — so say 64% of Millennial small business owners.
4. Millennials Have No Buying Power
While older generations still think of Millennials as "kids," the 18- to 34-year-old demographic actually has major influence over the rebounding economy.
PayPal reports that 21% of Millennial shoppers opening PayPal Credit accounts in 2015 are in the high-spending power bracket.
"This tells us that the 'broke millennial' stereotype may be outdated," says Rob Skinner, director of marketing strategy at MSLGROUP, a marketing and public relations firm that targets Millennial consumers. "In fact, Millennials spend more money online in a given year than any other age group and represent a quarter of the population."
PayPal also found in a study that Millennials are changing their behavior with regards to using credit. They tend to steer clear of the commitment that comes with credit cards, but will use credit if it is integrated into the technology landscape.
5. Millennials Can't Focus on One Career
Millennials hop jobs more frequently than older generations — but that's because Millennials have no interest in staying in dead-end careers that show little promise of upward mobility…or the paycheck to match.
"Now that they've graduated and are on their own, Millennials are the group that placed the most importance on having a job that paid well, with 46% saying high wages are crucial to their attainment of the American Dream," says generation expert Tim Elmore, president of Growing Leaders, a nonprofit organization focused on youth leadership development. "Every age group wants to attain financial freedom, of course, but it appears Millennials are more 'direct' than others about their futures and pressuring employers for better wages."
6. Millennials Don't Save Enough for Retirement
There are plenty of articles that bash Millennials for their retirement plans — or the perceived lack thereof — but as Millennials age, they're becoming more concerned with saving for retirement, even if it may not look as traditional as it has in the past. Which is totally fine, by the way. Considering that Millennials will likely have to work until age 75 before they can retire — thanks to several factors, including high student debt, rising rents, and skittish investors — the no-rules approach to retirement saving is a perfectly acceptable compromise. And it's working.
Fidelity's Retirement Savings Assessment shows that, overall, Millennials are outpacing other generations when it comes to increasing their savings rate. Millennials are now saving 7.5% of their income versus just 5.8% in 2013. Generation X and Boomers are still saving larger percentages of salary but have not stepped up their contributions by nearly as much.
"Millennials also have the benefit of time on their side to save and invest, and the most single powerful step they can take for retirement readiness is to increase their savings," the Assessment states.
Do any of these misconceptions ring true for you?
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