Lifestyle changes during pandemic helped millennials boost savings
As a result of these paused expenses and savings, younger generations are more focused on their finances.
Although millennials were forced to make tough decisions during the pandemic, many were able to save more money as a result. The latest New York Life Wealth Watch survey found that nearly one-third reported building a nest egg, saving an average of $4,241.
The economic slowdown caused by the pandemic halted major costs such as daycare, student loan payments and rent, and even paused everyday costs such as gym memberships, coffee runs and going out to eat.
These slowdowns in costs were the primary drivers of increased savings among younger generations, with 61 percent of millennials experiencing pandemic-related paused expenses.
“Millennials, while relatively early in their careers, have already had to face two financial shocks in their lifetimes: the 2008 recession and now the COVID-19 pandemic,” said Aaron Ball, head of insurance solutions, service and marketing for New York Life.
“It’s a silver lining that nearly two-thirds of millennials have had the chance to really think about their financial situation in the last 18 months.”
As a result of these paused expenses and savings, younger generations are more focused on their finances, with more than half of total respondents saying they are thinking about their finances more this year compared to last year (58 percent).
Across generations, the top three long-term financial goals reported were:
- Building emergency funds (41 percent),
- Paying off credit card debt (32 percent) and
- Being on track to retire at their desired age (28 percent).
Because of this focus on achieving financial goals, in tandem with increased savings, younger generations are open to professional financial guidance.
In fact, more than half of Gen Zers and millennials said their nest egg savings made them more likely to consider getting help from a financial professional (53 percent and 51 percent, respectively), compared to just 33 percent of all adults.
“While some of the deferred expenses are starting to return, younger generations have had a rare opportunity to consider their financial position and began to establish nest eggs,” Ball said.
“I’m encouraged by the degree of financial self-care and openness to hands-on professional guidance as this group begins to plan for major life events.”