Fidelity’s Millennials & Money study reveals that around 39% of Gen Y-ers have expressed worries about finances and one in four don’t know who to trust.
According to Fidelity Investments’ first-ever Millennial Money Study, far too many Millennials (aka Gen Y, born 1980-1989) struggle to answer that question.
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When asked who they trust most for information on money matters, one third (33 percent) of Gen Y-ers identify their parents as the top choice, but almost one in four (23 percent) indicate they trust "no one" when it comes to advice about money, making it the second most common response. (Note: Watch a video of Millennials sharing their fears and tips on handling their finances.)
This lack of trust could be an indication that Gen Y-ers tend to be more independent and prefer making their own money decisions. However, 39 percent admit to worrying about their financial future at least once a week or more, suggesting peace of mind is not a universal Gen Y trait. Women tend to be less confident than their male counterparts, with 19 percent of Millennial men saying they never worry about their financial security, whereas only 2 percent of women can say the same.
"Feeling financially ‘on their own’ about finances also could be fallout from the Great Recession, since many Gen Y-ers witnessed their parents and grandparents struggle with the impact of job losses, tighter budgets, and/or declining retirement accounts," says Kristen Robinson, senior vice president, Fidelity Investments. "Whatever the reason, this generation fortunately has a big advantage — the luxury of time, as nothing is more powerful than the impact of saving early and often."
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By GlobalDataAn obvious source for financial counsel is one’s parents, and the study revealed a strong connection between Gen Y and family. In addition to being most trusted when it comes to money matters, three quarters (76 percent) of Gen Y-ers indicate they don’t have any difficulty starting conversations with parents about saving and investing for the future. This openness is encouraging, according to Robinson, because engaging in frank family financial conversations helps ensure families are on the same page with regard to goals, while also enhancing the chances for long-term security.
However, while Gen Y may say they have an open door policy, almost half (49 percent) admit they don’t ever receive financial advice from their parents — and 27 percent of Gen Y confess to telling parents nothing when it comes to money. This could be a matter of finding the time, given challenging schedules. Another factor could be that while the majority of Millennials (59 percent) consider their parents to be good financial role models, a fairly sizeable number do not.
A Silver Lining: Many Gen Y-ers Serious about Saving
The survey uncovered many positive signs that this young generation is thinking long-term and taking steps to save early. Nearly half (47 percent) have already started saving for retirement, with 43 percent indicating they have a 401(k) and 23 percent indicating they have an IRA. Furthermore, of the top issues Gen Y-ers say they are trying to tackle, more than half (52 percent) place "accumulate more for retirement" at the top of the list.
On the flip side, the news that many don’t have money in a 401(k) is cause for concern, as it means some who have access to a 401(k) or workplace plan aren’t taking advantage of the "free money" on the table in the form of a company match from their employer, as well as the related financial guidance available through a workplace plan. Professionals suggest saving 10 percent to 15 percent of one’s annual pay for retirement, inclusive of both personal and workplace contributions.
"This trend toward saving is encouraging, especially since the oldest of this generation are now juggling competing demands, such as saving to buy a house, raising a family or starting a college fund for their own children," says Robinson. "Finding ways to turn positive savings habits into more deliberate investing strategies can make a huge difference — and may provide the peace of mind many Millennials desire."
Resources to Help Millennials Build a Strong Financial Plan
Fidelity offers a variety of tools specifically designed to meet the unique needs of Millennials:
- The MyMoney web site, which has tools, videos and a wealth of resources targeted to people at the early stages of their investing lives, helping them transition ideas into actions. This includes budgeting tools, helpful articles and step-by-step guidance on saving and investing, including "Saving tips for twenty-somethings," "Ditch debt and start saving," and "Surviving a market meltdown."
- LinkedIn Influencer Kathy Murphy’s "If I Were 22 – Get a Financial Head Start" discusses the importance of charting your savings goals and setting aside more starting at an early age.
- For help engaging the entire family in important financial conversations, there’s "Eight Tips for Talking Money with your Millennial Kids" as well as the online series entitled Special Report: Families and Money.
