American millennials have their “financial awakening” at the age of 33, according to new research.
A new study exploring the financial habits of 2,000 American millennials found the average respondent feels or is aiming to be well-versed and comfortable in all things finance a few years into their thirties.
The new survey, conducted by Ally Financial, uncovered how much millennials spend a month, what they spend on, and what role retirement plays in their financial habits to date.
The research found that the average millennial has a hefty amount of monthly payments – which may explain why it’s not until age 33 that they feel they will have a proper plan and financial understanding.
For example, the average millennial will spend $325.44 just on food every month. That’s in addition to $426.73 on housing, $198.51 on social events, $208.14 on clothes, $222.99 on travel, $222.23 on tech, $191.43 on student loans, $209.94 on medical costs, $32.65 on subscriptions, $29.13 on memberships, and $61.89 on transportation like Uber.
That comes out to $2,164.99 of expenses every month, or $25,979.88 every year. This is probably why the average millennial says they won’t feel like they can live comfortably unless they were earning $53,000 annually.
A healthy 82 percent of millennials say they are currently saving, but the majority of those saving (57 percent) are actually only saving through their 401(k) at work.
This may be because only a third of millennials (35 percent) are currently very confident in their financial knowledge, including taxes, investing and retirement planning.
Why? It could be because one in four (25 percent) feel their schooling did not adequately prepare them to deal with finances properly, and over half (55 percent) say they actually need help dealing with their finances.
“Millennials are one of our fast-growing demographics and we are an ally in helping them to achieve their financial goals,” said Diane Morais, president of Consumer and Commercial Banking Products at Ally Bank. “While it’s important to take advantage of a 401(k) account offered by an employer, it’s equally important to have a balanced strategy which includes a savings strategy to avoid dipping into that retirement savings too soon.”
So, since millennials do appear to be saving, what are they saving for exactly? Emergencies are the clear winner.
Nearly half of millennials (45 percent) say they are currently saving for an emergency, such as unforeseen medical bills or some emergency car/home repair.
That ekes out both retirement (41 percent), and new house deposits (41 percent) on the savings priority list.
And if you’re wondering why retirement isn’t more of a priority, it’s because, according to the results, half of millennials fear they will never be able to retire.
Another seven in ten millennials have also lost faith in federal programs, as they feel social security won’t be around by the time they’re old enough to collect it.
“We offer a number of tools as well as information on Ally.com to assist customers in managing their finances,” Morais added. “It’s never too late to come up with a balanced plan and start sticking to it. We at Ally Bank pride ourselves in this which is why we were recently named Best Online Bank by Money magazine, as well as Best Bank for Millennials by Kiplinger.”