You'll Never Guess Which Generation Is the Best at Saving Money
Millennials are often called out for financial missteps like carrying high debts, living without health insurance, and failing to establish credit. But they may be leading their peers in one key area of money management: saving.
A new survey from Bankrate.com found that millennials—in this case defined as adults between the ages of 18 and 29—are saving more than any other age group. The report found that 62% are saving more than 5% of their income—a 48% jump from last year, when 42% of millennials reported similar savings rates to Bankrate. Their savings rate also outpaces that of adults over age 30: About half of the older demographic say they're saving more than 5% of their earnings.
Millennials are starting early, but they're not necessarily starting big. Just 29% of young adults report that they save more than 10% of their income. That figure places them slightly behind people between the ages of 30 and 49, 32% of whom save more than 10% of their income.
Millennials, many of whom came of age during the financial crisis, may be putting away more because they've adopted a cautious outlook toward finances, said Greg McBride, Bankrate's chief financial analyst.
Even if they weren't directly affected by the crisis, "they know that saving is important and they're behind," McBride said. "They're not as consumption-oriented."
In general, those who belong to higher income brackets tend to save more. However, the report found that a greater proportion of Americans who make $30,000 and $50,000 save more than 10% of their incomes than among those who make $50,000 to $75,000.
"They might be realizing no one is going to do it for them," McBride said. "There’s not that level of 'keeping up with the Joneses' that you see among upper-middle income households."
Among savers, storing funds for a rainy day is becoming even more of a priority. Those who already save said they're putting more money away than they did last year: The percentage of Americans who say they save more than 10% of their earnings jumped from 24% in 2015 to 28% this year. And about 16% of workers in the United States say they're saving more than 15% of their paychecks—up from 14% last year.
Still, the report did deliver some bad news: 21% of Americans save none of their paychecks—for retirement, emergencies, or any other reason.