Millennials Making Financial Progress, but Efforts Thwarted by Influence of Social Media

by Paul Kelash of Allianz Life, 2/7/18

Key Findings Snapshot:

  • 77% of millennials feel financially confident; 48% of those with a 401(k) report they contribute more than 10% to it.
  • 57% spend money they hadn’t planned to because of what they see on social media and 88% feel social media creates more of a tendency to compare one’s wealth/lifestyle with others.
  • Perhaps due to what they saw their parents go through, 57% claim they are unlikely to ever invest in the stock market.
  • 40% say they currently have a financial professional and prefer to meet with a financial professional in person (vs. on the phone or online).

MINNEAPOLIS – Feb. 6, 2018 – Millennials are often labeled as being financially irresponsible, spending too much on frivolous things or experiences, but they are actually positioning themselves to be in better financial shape than other generations, according to the Generations Ahead Study* from Allianz Life Insurance Company of North America (Allianz Life®). The study found that 77% of millennials feel financially confident (compared to only 64% of Gen Xers) and 48% of those with a 401(k) contribute 10% or more on a monthly basis – which is the highest percentage of any other generation (only 36% of Gen Xers and 44% of boomers reported the same).

Further supporting this financial progress, 41% of millennials reported they always set aside money each month for saving (compared to only 36% of Gen Xers) and 58% believe saving for retirement is a basic necessity, like food or housing. Many millennials (71%) also use “tricks” to make saving money easier. For example, the majority of them use several different accounts to automatically save their money for specific purposes (one for everyday expenses, one for a particular loan, one for a special trip, etc.). Millennials also reported their median retirement savings to be $35,000, which is equal to Gen Xers, who have less time to build their nest egg.

Social media dangers

As their financial strength builds, however, social media has become the millennials’ financial Achilles’ heel. More than half (55%) reported experiencing a fear of missing out (FOMO) and 57% spent money they hadn’t planned to because of what they saw on their social media feeds. The vast majority (88%) of millennial respondents also believe social media creates more of a tendency to compare one’s wealth/lifestyle with others (versus 71% of Gen Xers and 54% of boomers). Sixty-one percent feel inadequate about their own life and what they have because of social media. And perhaps due to this FOMO, half also claim they spend more money going out than they do on rent or mortgage.

“Millennials are finding innovative ways to build their financial strength and are becoming more confident because of these actions,” said Paul Kelash, vice president of Consumer Insights for Allianz Life. “But, more than any other generation, social media and the allure to spend beyond their means could have long-term negative effects on their finances if they’re not careful.”