How COVID-19 Could Change Saving Habits for Millennials & Gen Z
The specter of recession appears to have left its mark on young people, according to a Travis Credit Union study.
They’re the generations of emojis, hashtags and avocado toast — and they’re also keen money savers, according to a new survey from Travis Credit Union, which suggests COVID-19 will change the way millennials and Generation Z treat their finances.
The Vacaville, Calif.-based credit union ($3.6 billion in assets and more than 214,000 members) quizzed 1,879 people born between 1981 and 2012 about their money habits in May to find that nine out of 10 had savings accounts, and more than half contributed to it on a monthly basis. The average person had saved about $14,140, as part of a habit most said they’d begun around age 19.
But 73% of those surveyed said the pandemic will change their financial habits, making them even more likely to curb spending and put more money away.
And it’s understandable, according to Matt Zajechowski of Digital Third Coast, which helped administer the survey.
“This pandemic has been a very real situation and a wake up call for a lot of young people I know,” Zajechowski said. “Even for me, and I think I’m on the very end of the millennial spectrum. So I think for people that are even younger than me it’s just going to be a new reality, unfortunately.”
Emergency funds were also common among the respondents, who, on average, could survive four and a half months with their rainy day money and had saved around $23,950.
The report said that’s likely because many of the respondents are heading into the second recession of their lifetimes, despite many still being young adults.
But in the midst of COVID-19, almost 40% of respondents said they’d already dipped into that rainy day money, using a third of it on average.
“Even people that have a decent amount of money stashed away are finding that, hey, they might not be comfortable beyond almost half a year, where they’re really worried about where their financial standing is going to be,” Zajechowski said.
The majority of emergency money went toward basic necessities, such as food, utilities and mortgage or rent, according to the report, which said health care costs only ranked seventh. Zajechowski said that was a surprising twist, given the current global health crisis.
When it comes to emergencies, respondents were most keen on saving for job loss and family emergencies. Buying a house was the top priority for savers, with retirement coming in at a close second.
However, 54% reported that they weren’t happy with their savings, according to the report, which said eight out of 10 respondents felt stress or anxious about saving. Among those who didn’t have a savings account, most said that was because they didn’t make enough money to save.
Zajechowski said the study highlights opportunities for credit unions to help educate current and potential members — particularly through social media platforms, where millennials and Generation Z are more likely to see it.
“That might be providing more information on your website guiding your customers about, ‘Here’s what you can do,’ and maybe taking a proactive approach to reaching out to current customers and scheduling times to check in with a financial adviser,” Zajechowski said. “And this can be a positive thing. An emergency like this can force people to think about emergency funds and have more money stashed away.”