Millennials struggling to save money

Millennials want to save more money, but low salaries, high living expenses, and poor financial habits get in their way, a new AICPA survey found. Over a third of Millennials (34%) said that saving money was their top priority for the year—more than chose leading a healthy lifestyle (20%) or losing weight (14%). Yet Millennials’ spending habits may be one reason they struggle to reach their financial goals: 65% of the young adults surveyed said impulse shopping got in the way of saving.

The survey, which was conducted by the AICPA in collaboration with the Ad Council, polled 500 employed adults ages 25–34 in December 2015. Many young adults in this age bracket are preparing for major milestones, which is reflected in their savings priorities: 27% said they were saving for a house, 26% for a car, and 15% for starting a family. While 40% said they were putting money aside for an emergency fund, only 22% were saving for retirement.

About eight in 10 Millennials chose their current salaries (84%), their bills and living expenses (81%), and their debt (79%) as reasons they couldn’t save more. However, their spending habits may also be affecting their ability to save. Fifty-five percent described themselves as impulse shoppers.

Impulse shoppers (defined as consumers who make an unplanned purchase of $30 or more on a daily or weekly basis) are more likely than less-impulsive spenders to carry a balance on their credit cards (45% vs. 35%) and to have paid late or overdraft fees (31% vs. 21%).

Saving money can be easier than many young adults think it is, said Gregory Anton, CPA, CGMA, chair of the AICPA’s National CPA Financial Literacy Commission. “While low salaries and high debt levels can certainly be barriers to saving, the key is to create a budget and stick to it,” he said. “Establishing a disciplined saving strategy early in life and avoiding missteps will reap substantial long-term dividends.”

A sizeable percentage of Millennials said they had made financial mistakes in the past year. Forty-four percent did not pay their credit card balance each month, while 44% also said they borrowed money from friends or family and 41% said they had less than $100 in their checking accounts.

Recently, the AICPA and the Ad Council’s Feed the Pig campaign has collaborated with partners such as Facebook Creative Shop and Games for Change to develop ads, videos, game design competitions, and content for Snapchat, Instagram, and other social media aimed at improving Millennials’ financial literacy.

“The good news is that Millennials are internalizing the message that saving is important, but they still need help creating habits that stick,” said Ad Council President and CEO Lisa Sherman. “We’re excited to collaborate with partners like Facebook and Games for Change to create new tools and content that will help make saving easier and more accessible for Millennials.”

—Courtney L. Vien (cvien@aicpa.org) is an associate editor for the AICPA.