By Harrison Furman
Are millennials saving or are they spending their money on luxury lavish lifestyles?
Currently, the majority of millennials have about $1,000 dollars saved and significant number of them have nothing saved at all.
When we take a look at millennial saving habits, this is an alarming statistic because what happens if you lose your job or you want to start saving for the future?
They would likely have no savings and would be unable to pay rent. They are not saving if they want to go back to school for a graduate program. They are not saving for a down payment on a mortgage or starting to build a retirement fund.
In a recent poll, over 60 percent of millennials have admitted to spending over $4 on coffee, while over 79 percent will splurge on a hot new restaurant. They are spending their money on lavish lifestyle.
While a four-dollar Starbucks coffee won’t end a millennial’s financial life, they must spend money in moderation while simultaneously saving.
These statistics are much more different with 40 percent of Generation X spending $4 on coffee and 66 percent of them splurging on new hottest restaurant in town.
If we look at baby boomers, 29 percent of them spend $4 on coffee, while 56 percent of them would pay at that new restaurant.
Apparently, as we look at the younger generations, the spending habits have become more lavish in which they believe they have more disposal income, when in reality they do not.
Savings is important because if millennials put away $1,000 annually at the age of 20 for 45 years (65 years old is the standard retirement age) at 5 percent return each year, they would have saved over $168,685 compared to begin saving at the age of 30 only save $95,836 over 35 years.
That difference of over $72,849, because someone decided to save 10 years earlier, is what millennials need to learn, and understand the power of compounding interest and time. When they see these numbers, this will help them curb their spending habits and be able to save.
These statistics are frightening because millennials are not saving for their future in case of an emergency or if they want to have an enjoyable retirement. It seems like the next generation will spend more if there is no education on savings.