May   2015



Why Millennials Struggle to Save Money...and 3 Ways They Can Change That

CEO, Founder, Bennett Group Financial Services

Millennials already know they’re facing some dire financial straits, many of which—but not all—are out of their control. With student loan debt, stagnant wages, a saturated job market, and some overall generational values that may be hampering their financial growth, it’s no wonder it’s hard for them to find money to save. But there are ways to eke out those funds. Here one financial advisor breaks down Millennials’ savings problem and offers three solutions.

We know a secret about your spending habits, Millennials: you’re not saving any money. Actually, it’s worse than that. Not only are Millennials failing to save, they're living in the red. As Moody's Analytics reports, savings for this age group has dropped to a dismal negative 2%. And before you think that this is a systemic problem affecting all Americans, think again; Millennials are the only age group to report a negative savings rate. So what's happening?

Student loans, wage stagnation, and more

Millennials' ability to save is largely stifled by the growing burden of student loan debt. Today's average graduate maintains $29,400 in student loans, with interest rates on federal student loans set upwards of 7%. This has forced college graduates to make hefty monthly student loan payments well into their 30's, and for those with careers in which advancement hinges upon obtaining a master's degree, Millennials can expect their debt to double. This student loan crisis is unprecedented; for members of Generation X that attended college in the 1970s and ’80s, college tuition could often be paid for simply by taking on a summer job. Today, the idea of "working your way through college" just isn't realistic.

Rising student loan debt and increased cost of living is one primary reason Millennials struggle to save, but they're also challenged by bleak job prospects. Many indicators suggest the labor force doesn't need as many college-educated workers as there are college graduates seeking work. In fact, according to the Bureau of Labor and Statistics, only about 27% of jobs in the United States require at least an associate degree, yet 47% of job seekers hold at least an associate degree. It seems the job market is reaching a point of saturation, and this has led college graduates to remain unemployed or underemployed as they hold out for a well-paying job in their field or take lower-wage jobs that don't require a college degree.

Wages for workers aged 25–34 have also fallen significantly over the course of the last nine years. This has been true for young workers in all industries, from health care to manufacturing to leisure and hospitality. Most notably, wages for retail, wholesale, leisure, and hospitality positions, which employ 25% of this age group, have dropped 10% since 2007, indicating that wage growth is failing to stay abreast of inflation. Even more troublesome: wages for young people are growing 60% more slowly than U.S. wages overall. Harvard's Joint Center for Housing Studies also found that the number of young adults making less than $25,000 a year has increased by six million in the past year, while the number of young adults making more than $25,000 has decreased by two million.

Additionally, a disconnect in values may also be making it harder for Millennials to save. According to the Project on Student Debt, 70% of Millennials believe that financial success is defined by their ability to afford whatever incidental expenses they desire; just 24% said financial success meant reaching the pinnacle of their profession. In other words, Millennials value enjoyment and experiences more than aspirations like career success, which generally affords more income stability.

So what can Millennials can do to save money, despite these challenges?

Solution 1: Set savings goals

Studies consistently show that those who set specific savings goals save more than those who don't. Determine a dollar amount or percentage of funds to be withdrawn from your paycheck each payment period, and set up automatic withdrawals to reduce the risk of forgetting to make deposits into a savings account. You can start with a modest goal and grow over time. Making an annual savings goal is also important, as is building up an easily accessible emergency fund for unexpected expenses.

Solution 2: Enroll in a 401K or Roth IRA

When applicable, Millennials are wise to sign up for their employers' 401K program as soon as possible and contribute maximum amounts. A 401K account will have huge payoffs for investors at the time of their retirement; what's more, this is a savings option in which the sooner you begin saving, the greater your accumulated savings will be. The 401K is not a savings option to pass up. Should an employer not offer a 401K, Millennials can open up a Roth IRA account, which stands out as another savings opportunity with the ability to yield high earnings over time.

Solution 3: Readjust spending priorities

The average Millennial's definition of financial success may detract from his or her ability to save for a comfortable retirement. Millennials will therefore need to find ways to reallocate a percentage of whatever incidental expenses they're currently making, such as money for dining out or weekend trips, to a long-term savings account. If retirement is difficult to visualize, check out the site Face Retirement, which features educated predictions of the future prices of everyday items. Saving up $1 million for retirement may seem extravagant today, but if/when the cost of a gallon of milk is $13 dollars in 2050, you'll be glad you saved.

When it comes to savings, though the deck may be stacked against Millennials, there are ways they can make meaningful headway.

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About Dawn Bennett

Dawn Bennett is CEO and Founder of Bennett Group Financial Services. She also hosts a national radio program called Financial Myth Busting. She discusses educational topics and events in the financial news, along with her thoughts on the economy, financial markets, investments, and more with her live guests, who have included rock legend Ted Nugent, as well as Steve Forbes and Grover Norquist. Listeners can call 855-884-DAWN a as well as take podcasts on the road and forums for interaction.

She can be reached on Twitter (@DawnBennettFMB), on Facebook (Financial Myth Busting with Dawn Bennett), or via e-mail (

Her firm, Bennett Group Financial Services LLC, based in Washington, D.C., is a comprehensive financial services agency committed to providing opportunities to clients’ as they seek long-term financial success. Its customized programs are designed with the potential to help grow, lower overall risk and conserve client assets by delivering a high level of personalized service and skill. For more information, call 866-286-2268 or visit

Securities offered through Western International Securities Inc. (WIS), member FINRA/SIPC. BGFS and WIS are separate and unaffiliated entities.

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