VACAVILLE, Calif. — Saving money is a goal of most people, but it’s increasingly difficult when unexpected downturns shake the economy. For young adults, a recent survey shows many millennials and Generation Z are taking an active role in building their futures. Nine in 10 have already opened savings accounts and a quarter say that money is going towards retirement.
The poll, by Travis Credit Union, surveys 1,879 Millennials and Generation Z (born between 1981 and 2012) to discover how the COVID-19 recession is affecting their financial plans. Not surprisingly, 99 percent of young adults say saving money is important. The question researchers wanted to answer was: are people just saying that or are they putting their money where their mouth is?
The study shows millennials and most of Generation Z have lived through not one, but two economic recessions already. It turns out, all this uncertainty has made both groups more financially aware and prepared for the worst.
What are young people saving money for?
On average, respondents begin saving money at age 19. Young men tend to have more in their bank accounts, saving an average of $16,631 compared to $11,649 by women. More than half of the survey say they add to their nest egg every month.
The study finds young adults have big dreams when it comes to their money and the “long game” is very important to them. Thirty percent say they are saving to buy a home. Just over a quarter (26%) are preparing for retirement. These goals are followed by saving up to travel (11%), buy a car (8%), education costs (8%), and weddings (2%). Two-thirds of the poll add they’re right on track to hit their respective goals.
A savings account isn’t the only way respondents are getting ready for the future. Researchers say the most popular retirement account is a 401(k), which is used by a third of respondents. Roth IRA accounts (20%) and personal savings accounts (20%) also made the list.
Finances especially stressful during a pandemic
Despite good savings habits, eight in 10 people say saving money still gives them stress and anxiety. Most of the angst revolves around possible job losses, family and medical emergencies, and home or car repairs.
On average, researchers say young adults can survive 4.5 months on their emergency funds. Nearly 40 percent have had to tap into their savings due to the COVID-19 pandemic. Food, car payments, utilities, health care, credit card debt, student loans, and rent expenses have all contributed to eating up Americans’ hard earned money.
COVID-19 also has many young people taking a look at their finances from different angles. Over 70 percent say they’ll be changing their habits regarding money. Despite anxiety and stress about their finances, 46 percent say they’re satisfied with what they have saved and three in four people are optimistic about the future.