Why So Few Of The Youngest Millennials Have Proper Savings

    Millennials represent a generation book-ended by two disparate groups. At the helm of Generation Y are the oldest Millennials, born in 1981. Nearly 15 years out of college, many of them are establishing their careers and thinking abut the future. Bringing up the caboose are the youngest Millennials, born in 1995, who are just leaving college with mountains of debt to their name. Though they both share the same moniker, they face vastly different conditions, and the latest financial surveys show the youngest of Generation Y are suffering.

    The latest Bank of America survey has positive things to say about the oldest Millennials’ finances, reporting one in six has $100,000 or more in savings. Meanwhile, the most recent GoBankRates survey has some distressing insight into the youngest of the snowflake generation. They, along with most Americans, have less than $1,000 put aside in savings. Roughly 46 percent of those surveyed have absolutely zero.

    Is irresponsibility to blame?

    It’s easy to believe the only reason why someone could be in debt is because of the bad decisions they’ve made. They spend too much money on clothes and takeout without putting aside enough money for emergencies. Millennials are accused of exactly that. Much of the media paints them as relentless brunch attendees who spend so much on coffee and avocado toast that they can’t get a foot on the property ladder.

    While you may be able to find some Millennials guilty of this, in many cases these stories act as a scapegoat for a systemic problem.

    Millennials are making less.

    Generation Y came of age at an unfortunate time in US history. The financial crisis of 2008 bred hostile work conditions for many of this generation that still affect their ability to find work 10 years later.

    They face the highest unemployment rate in the country, at 12.8 percent — which is 0.01 percent shy of triple the current national average. The lucky Millennials earning a living often struggle with underemployment on top of lower earnings. A recent report by the World Economic Forum reveals 27-year-old white males were making 31 percent less in 2013 than their equivalent in 1969.

    They’re spending less, too.

    Though Millennials carry the brand of the entitled, emerging studies show they value financial accountability. TD Banks’ 2016 Consumer Spending Index Survey reveals Millennials actually spend less than any other generation. (Probably because they also make less). Interestingly, they buy things more frequently. But as a money-conscious and debt-heavy generation, they often turn to apps and discount websites, saving them enough to earn TD’s title.

    Millennials use innovative ways to fix their finances.

    Wage stagnation and underemployment makes it difficult for Millennials to make ends meet. The fact that they’re saddled with the worst student debt in years — a third of Gen Y owes $30,000 in debt from their brief stint at college — only further curtails their ability to pay bills. Many of them live paycheck to paycheck.

    Others supplement their income with a side-hustle or a second job. Nearly one-third of young Millennials have a regular side hustle, many of whom use e-lancing website like Fiverr and Upwork to find gigs online to add as much as $500 to their incomes every month.

    They’re going online for financial solutions, too. Thanks to their experiences during the recession, Generation Y has a marked distrust of traditional financial services. They’re abandoning the biggest brands that received bailouts following the financial crisis for emerging fintech companies. These innovative startups include no-fee online banking and convenient online direct lenders.

    Using the phone in their pocket, they can deposit their paychecks and facilitate quick e-transfers using banks that have no physical branch, like Chime and Simple. When they find themselves momentarily short on cash when paying important bills, they rely on lenders like MoneyKey that facilitate installment loans entirely online. Millennials can apply for installment loans online from MoneyKey using their phone, laptop, or any IoT device in less than 20 minutes, and if they’re approved, their cash loan will be deposited directly into their bank account within one business day.

    Fintech companies offer a fast, convenient, and simple alternative to many of the traditional financial services provided by the biggest banks. Millennials are adopting these new innovations partly because the established banks let them down. But as the first generation to grow up alongside the smartphone, they’re also uniquely positioned to take advantage of tech-based solutions.

    Tech-savvy and ready for change, the youngest Millennials will lead a revolution in the way fintech and traditional banks deliver financial services. It’s already happening, as this group does more online banking than any other generation.

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