Millennials still rely on parental spending, but many have good emergency fund
Millennials may strive for financial independence, but nearly half in the US (47%) have let their parents pay for certain items at some point since being on their own, Fidelity Investments’ second biennial Millennial Money Study reveals.
The researchers said that some of this spending can be considered part of ‘family plan’ expenses. This means bills parents typically cover even after their children have left home or are theoretically independent, including cellphone bills, utilities, movie and TV streaming services and cable.
There has also been a recent increase in those living at home with their parents, with 21% of Millennial respondents reporting they are currently living under their parents’ roof.
There are some surprises in the study, although these could be as much to do with a relatively small sample group (615 adults) rather than anything else. Taking the results at face value, the study also showed that 85% of Millennials say they have some form of savings, up from 77% in 2014 with many having a sizeable emergency fund.
Fifty-nine percent of Millennials said they have set aside an average of $9,100 in such a fund, a larger amount than older generations (Gen Xers have $8,700, while Boomers have $7,100). Millennials said this amount would cover six-and-a-half months of living expenses.
Looking even more long-term, 60% of them they are also saving for retirement, up from 51% in 2014.
Fidelity said many of these Millennials have learnt good financial habits from their parents. “Aside from giving their kids a financial leg up, parents can also take credit for being money role models,” said Kristen Robinson, senior VP at the firm. “In fact, 65% of Millennials say their parents have provided good examples of how to build a successful financial future, and the study suggests that’s exactly what this forward-thinking generation is doing.”
However, the study showed that the Millennial generation hasn’t yet developed an investing habit. Of those with an emergency fund, 86% have their money in a traditional savings account where it’s likely to earn less interest than the current rate of inflation.