As the Millennial generation piles into the workforce, their financial habits will continue to mold the business world around us. Companies are already fighting to win over the youngest demographic of spenders, and a new report by iQuantifi sheds some light on how Millennials are handling their money.
What Are Millennials Doing With Their Money?
According to the report, 70% of Millennials plan on purchasing/opening a financial product within the next year. The most popular financial products that Millennials are seeking out are credit cards (37.6%), checking accounts (36.2%) and savings accounts (36.0%).
Less than 5% of Millennials currently do not have any relationship with a primary financial institution. When it comes to selecting a primary financial institution, the most important factors include branch location (23.0%), customer service (15.4%) and online banking tools (13.8%).
What Financial Challenges Do Millennials Face?
Millennials deal with many of the same financial challenges that people of all ages face. Millennials named making enough money (59.2%), staying on budget (40.6%) and managing debt (30.6%) as the three biggest financial challenges they face today.
With tuition costs continuing to skyrocket, it’s no surprise that lots of recent college graduates have large debt burdens. In fact, 70% of Millennials surveyed have some type of debt. While the average debt burden for Millennials seems high at $43,264, it is down more than $4,000 from last year’s average.
Clearly, mortgage debt is heavily impacting the debt burdens of older Millennials. By age group, respondents age 21-25 average $13,116 in debt (down $1,029 from 2015), respondents age 26-30 average $46,622 in debt (down $2,546 from 2015) and respondents age 31-35 average $69,552 in debt (down $11,473 from 2015).
What Goals Do Millennials Have?
The relative financial freedom of youth truly shines through when it comes to the financial goals of Millennials. About two-thirds of Millennials surveyed have definitive financial goals in mind.
The top short-term (one-year) financial goal of respondents was saving for vacation (55.2%). In the longer-term, however, Millennials also have their eyes on more responsible objectives. Top goals include increasing savings (46.2%%) and paying down debt (39.4%).
When it comes to meeting their financial goals, the study revealed that Millennials are struggling with establishing a long-term plan. Less than 20% indicated that they have a comprehensive financial plan, although nearly half (47%) said that they want to get their finances straight now so they can achieve their goals in the future.
Millennials seem to have a mistrust of the financial industry, which may have been influenced by the role the industry played in the mortgage bubble and subsequent severe economic recession. Only about one in four Millennials (27%) has sought financial advice from a professional advisor. Instead, when it comes to money, Millennials prefer to turn to family members (61%), friends (38%) and online sources (31%).
The financial world today is definitely a lot different than the ones that older generations faced when they were starting their professional lives. Although they may be taking a different approach to money, Millennials are also facing some of the same challenges that their parents and grandparents faced decades ago. Fortunately, the iQuantifi survey shows that most Millennials are mindful of their financial future and have the right goals in mind to achieve long-term financial success.