Travis Credit Union recently surveyed nearly 2,000 Millennials and Gen-Zers to learn more about the money-saving habits of young Americans and how Covid-19 and the looming recession has impacted their savings. Not only have Millennials lived through the recession in 2008, but they are also living through a second major financial disaster in the Covid-19 pandemic. Let’s take a look at the findings of the study to learn more.
The money-saving habits survey from Travis Credit Union found that 90% of young Americans say they have a savings account that they are contributing to currently. When asked how much young Americans have in their savings account, the average response was $14,150. That’s a shade under $15,000 which is more than I think many assumed that young Americans had saved.
The next part of the survey asked young American’s’ how often they contribute to their savings. The results were a mixed bag, however, 52% of young Americans said they contribute to their savings at least monthly. 21% of young Americans said they preferred to contribute to their savings account at least weekly. Only a small amount said the are not contributing to savings regularly. 16% said they only contribute a few times a year, 8% said they contribute never and only 3% said they contribute once a year.
When asked about what young Americans are using their savings towards there were many popular answers. The top response at 30% was that young Americans are saving to by a home. Beyond that 26% of young Americans said they were saving towards retirement. 11% said they were saving to travel or take a trip. 8% said they were planning to buy a car with their savings. 8% also said they were saving to get married and pay for the cost of the wedding. 15% said they were saving for some other type of expense.
On a very positive note, 66% of young Americans said they aren’t currently satisfied with the amount they have in savings and that they plan to contribute more to savings in the future. Only 1 in 10 young Americans said they currently don’t have a savings account that they are contributing too. For that 10%, Travis Credit Union asked why don’t you have a savings account? The overwhelmingly top response was that young Americans don’t have enough or make enough to put money aside to save. 13% said they don’t know where to save my money and 10% said they don’t know how to save money. So, it’s either a lack of money or lack of financial education that are keeping young Americans from saving money.
The next part of the survey asked about emergency funds and that is certainly timely right now with so many people either out of work or furloughed because of the Covid-19 pandemic. 64% of Young Americans said they currently have an emergency fund. When asked how much they have saved in their emergency fund, the average response was $23,950. That’s almost an extra $10,000 in savings when compared to those that don’t have an emergency fund. I think this goes to show that people who plan ahead for emergencies area more likely to put money into their savings account each month. While 64% of young Americans said they have an emergency fund, surveyed respondents said they could only survive an average of 4.5 months on their emergency savings. 4.5 months isn’t a long time so while that average number saved may seem like a lot, it turns out that many young Americans are worried that it won’t last very long.
The survey then asked young Americans if they have had to use their savings during the Covid-19 pandemic. 39% of surveyed respondents said they have used on average 33% of their total savings during the pandemic. That’s a large number in a relatively short period of time, which goes to show just how impactful Covid-19 has been on young American’s savings accounts.
Young Americans were then asked what they used their savings for during Covid-19. The top response at 70% was a basic necessity like food. Food was followed by utilities at 48%. Mortgage and rent payments were the third most popular response at 41%. After that, young Americans focused on paying off their credit card debt. After credit card debt came student loans, which was followed by car payments and then health care costs which came in at 19% of responses. Health care costs being that low is surprising given how many people have had health issues during the Covid-19 pandemic.
On a positive note, a majority of young Americans said that they will change their financial habits because of Covid-19. 73% of young Americans plan to make that change. When asked how they are going to improve their financial and savings habits moving forward, the top response was that they plan to curb their spending and better manage their money post-COVID-19. 45% of respondents said that. 43% said they plan to make an effort to contribute more money to their general savings on a regular basis. Others say they are going to choose to build an emergency fund. 39% of young Americans said they will improve on their emergency fund. Saving for retirement was another area that young Americans said they could be better. 28% of young Americans surveyed said they plan to contribute more to accounts like their 401K post-covid-19.
This young American's savings habits survey from Travel Credit union showed that many young Americans are optimistic about their financial future. While many have some in savings and would like to save money, they are optimistic and have a plan for how to achieve their savings goals for the future.
Infographic by: www.traviscu.org
