15th April 2016
Millennials are more financially responsible than they’re given credit for saving more of their monthly income than Generation X.
A study by Zopa shows that ‘millennials’ aged 18-35 are saving 10.9 per cent of their monthly income compared with their elder counterparts in ‘generation X’ aged 36-54 and who are saving 8.8 per cent.
However millennials see debt as a normal part of life as almost half (46 per cent) expect to manage their life with some form of ongoing debt.
The study paints a picture of a generation pulling out the stops to save, but still worrying that they are not doing enough.
Despite putting away an average of almost 11 percent of their post-tax income, millennials still think they should be saving more at closer to 17 per cent. However almost a quarter (24 per cent) admit to saving nothing at all as they use all of their money every month.
Almost half (46 per cent) of millennials said they expect to manage some form of debt for the rest of their lives. Coupled with this, they also have a much higher threshold of what they consider to be a ‘manageable’ amount of personal debt; an average of £5,892 compared to £4,251 among the older generation (a difference of 39 per cent).
Despite facing rising prices on home ownership, many millennials remain upbeat about their financial futures.
Just 38 per cent thought that they would never own their own home outright, and less than a third believed there was ‘little point in saving’. For the majority who are putting money aside each month, 41 per cent were saving towards their first home.
When asked what measures they believed could help the financial prospects of their generation, 44 per cent cited lower higher education costs, 42 per cent said fairer deals for renting and over a third (37 per cent) said better financial education in schools would be most useful, highlighting a need for better understanding of finance for their and future generations.
Some 61 per cent of millennials said that they would be more likely to save/invest if interest rates were higher.
Giles Andrews, executive chairman and co-founder of Zopa, said: “Millennials have been characterised in some quarters as spendthrifts, but this research shows that most young people have a very responsible and positive attitude towards their finances, in most cases beating the odds heavily stacked against them. In recent years, low interest rates have discouraged millennials from investing in their future, so it’s vital that young people are now given innovative ways to grow their money by making saving and investing worth their while.
“At Zopa we’re committed to creating a richer life for everyone by making money simple and fair. This is why we’ve built our P2P lending products based on customer feedback. We believe that by creating a fairer future we can help people boost their money to achieve their life goals. We believe peer-to-peer lending offers will be the normal way for millennials to invest for the important things in life like a home deposit.”
How much are millennials prepared to pay for their essential purchases compared with Generation x?
|Cup of coffee||£2.68||£3.07|
|Pint of beer||£3.87||£4.74|
|Meal our for two||£33.86||£33.79|
|Week long holiday in Europe||£416||£490|
|Gym membership (per month)||£31.54||£23.72|
Research was conducted by Opinium between 22nd and 30th March 2016. The sample was of 1,000 respondents aged 20-35 and 1,003 respondents aged 36-50.