Bank of America study shows millennials are doing a good job of stashing away money
Alexandra Frost | WCPO Contributor
6:00 AM, Feb 13, 2018
9:34 AM, Feb 13, 2018
CINCINNATI -- Millennials have been labeled lazy, self-serving, technology-addicted and careless spenders. But a recent study by Bank of America may help break down those stereotypes.
Turns out this age group -- classified in the study as those between 23-37-- is turning away from meaningless spending, and instead stashing money away for the future at surprising rates. Around one of six millennials has at least $100,000 in savings. Nearly half have $15,000. Their habits are nothing to scoff at either, with nearly three of of four millennials creating and sticking to a budget each month.
But millennials themselves don’t even realize how well they are doing, according to the survey’s perception studies.
“Seventy-three percent of millennials say their generation overspends, and 64 percent believe that their generation is bad at managing money,” Bank of America revealed, demonstrating the significant disconnect between millennials’ generational self-image and reality.
According to Fortune, which further analyzed the study’s statistics, about 1,500 people were surveyed, broken down into “older millennials” (ages 28-37) and “younger millennials” (ages 23-27). The statistics included any money the millennials had stocked away in Roth accounts, 401ks, checking and savings accounts, and all other investments and retirements accounts.
Andrew Plepler, global head of environment, social, and governance at Bank of America, told Fortune that these statistics demonstrate significant growth, as millennials with $15,000 or more in savings increased this year.
He said this age group seems to be “adapting the savings habits a bit more rigorously, with a bit more discipline and a bit more intensity than even the older millennials and boomers. We’re seeing their saving habits start earlier.”
A 2015 Bank of America survey reported that 78 percent of millennials believe conversations about money should begin before the teenage years.
Local millennials are on their way to their savings goals, too. Serenity Heil of Harrison, a 32-year-old stay-at-home mother to two young boys, was not surprised by the survey, and feels her millennial friends have similar savings goals.
“Amongst our friend group we actually seem to have a common mindset,” she said. “We know some people our age who don’t have substantial savings, but of course that’s not a topic of regular conversation. I feel like as a generation we’re more mindful of the future and that includes everything from the environment, to our health, and retirement.”
She and her husband identify as “avid savers,” and while they don’t yet fall into the $100,000 saved category of the study, she said they are not far from it.
“If money comes in it goes to savings. We know what we are comfortable spending and stick to it.”
Heil pours any tax returns and inheritance she has received into savings, and also pulls in extra money through a rental property. The monthly profit from the rental goes into a savings account for her children, and is only used for purchases for them.
Her advice for millennials wishing to save?
“Make more than the minimum payment, and when you come into money, squirrel it away.” She also eases the burden of large purchases by using auction websites to save “ridiculous amounts of money on very expensive items.” For example, Heil and her husband purchased a home gym at a third of the cost of buying brand new equipment in a store.
Amy McDivitt of Northern Kentucky, who has three children between the ages of 1 and 5, also found ways to cut corners on major expenses to feed her savings goals. She purchased a condominium and a timeshare in her early 20s. It has minimized the cost of family vacations at age 37. She plans to have the rental property paid off by the time her oldest child goes to college, and pouring any rental profits into her children's college tuition fees.
McDivitt was thinking about retirement early, when she started maxing her 401K at age 23.
“I do think I am ahead of the curve. Most people my age are just starting to think of retirement.”