Despite all the depressing statistics out there about Millennials struggling with college loans and unemployment, the younger generation overall seems to be doing not all that bad when it comes to their personal finances. Back in February a UBS study claimed that Millennials were as fiscally conservative as their grandparents’ generation. Now a new study from the financial giant TIAA-CREF claims that Generation Y is shaping up to be the “powerhouse of the global economy.”
Here are five of the biggest, and most promising findings from the TIAA-CREF study, “College-Educated Millennials: An Overview of Their Personal Finances.”
- College-educated Millennials are making higher salaries than the general population. Over 60 percent of Millennials report making more than $50,000 a year, compared to 50 percent nationally.
- Millennials are more likely to own stocks and bonds. Nearly tw0-fifths of Millennials have investments in stocks, bonds and mutual funds which is more than the roughly 37 percent of Americans overall who have these investments.
- Most college-educated Millennials have a retirement plan. Over 69 percent of Generation Y has either a work-subsidized or stand alone retirement savings plan.
- A vast majority of Millennials are in debt. A whopping 81 percent of Generation Y has at least one long term debt, and 44 percent have more than one major debt they are working to pay off.
- Less than half of Generation Y has sufficient funds in their savings account. Conventional wisdom dictates that everyone should have at least three-months worth of salary set aside incase of unexpected events. Only 48 percent of Millennials have these savings.
Obviously there are some good and bad conclusions from this study. On the positive side, it would appear that Millennials are making more money, and are doing better at investing their money for the future. On the other hand, Millennials carry far more debt, and presumably as a result seem to be unable to save for the short term.
Conducted by Carlo de Bassa Scheresberg, Annamaria Lusardi, and Paul J. Yakoboski, TIAA-CREF’s report claims that “Millennials’ personal finances are more relevant for the state of the economy than those of any preceding generation,” based on their size, and the expectation that they will make up a majority of the workforce by 2020.
Overall the study also concluded that despite experiencing relatively stable financial situations for being so early in life, Millennials don’t have the necessary knowledge of finances to grow their assets appropriately. “Policies aimed at improving financial literacy could help Gen Y minimize the costs incurred in managing debt, improve personal financial safety nets, and fortify both short term and long term financial stability and security,” the study’s authors conclude. “The gap between the financial responsibilities of Gen Y and their ability to manage financial decisions and take advantage of financial opportunities has both individual and societal implications if it remains unaddressed.”
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