Millennials often get a bad rap when it comes to financial responsibility. But it turns out those stereotypes may be off base. Millennials are saving more money than any other generation, according to a new study by Bank of America and Merrill Edge. But it’s what they’re saving for that really sets them apart from older generations.
Saving for financial freedom is the No. 1 priority for millennials — 63% of millennials said they’re saving a set amount of money to enjoy their desired lifestyle. This is a stark contrast to older generations: the majority of the Gen X and baby boomer generations prioritize their savings specifically to leave the workforce and retire.
This shift speaks to the bigger differences in the ways millennials and older generations view money, and what they prioritize in their lives. While it may not sound surprising that younger workers aren’t thinking about nest eggs as much as older generations, what’s a little different here is that they’re not thinking about retirement as a phase of life, let alone working to afford it. Millennials listed personal milestones as their top priorities: getting their dream job and traveling the world trumped more traditional goals like getting married and having children.
“Young adults tell us they are willing to do whatever it takes to achieve freedom and flexibility, even if it means working for the rest of their lives,” said Aron Levine, head of Merrill Edge.
But while millennials may be eschewing more traditional financial goals, they’re still focusing on building their savings. This age group, which includes people 18 to 34, is saving more money than any other generation; on average, millennials save 19% of their annual paychecks, compared with 14% for baby boomers and Gen Xers. More than a third (36%) of millennials say they save more than 20% of their paychecks each year.
So where does that money go to if it’s not being funneled into retirement accounts? According to the Merrill report, 81% of millennials spend their money on traveling. Eating out and exercising are the two other activities millennials listed before they’d save for retirement. These spending habits point to a shift in the way millennials use their money for personal fulfillment, compared to older generations.