A survey of 4,000 adults revealed that 40% of those born between 1981 and 1996 believed they would have accumulated more savings at this point in their lives. Less than one in 10 millennials Have achieved their financial targets, with ‘lifestyle inflation’ being a significant factor.
Four out of 10 agreed that ‘lifestyle inflation’, the tendency to increase spending as income grows, has affected their saving capacity. Instead of saving more as their income grew, they focused on enhancing their lifestyle. A third admitted they had prioritised other objectives over achieving financial milestones.
On average, millennials find themselves £25,000 short of where they thought they would be, due to high living costs (65%) and unforeseen expenses (44%) limiting their ability to save.
The study also found that 30% expected to be earning more than they currently do, but one in three of these ultimately chose to prioritise their work/life balance over pursuing a higher income, according to research commissioned by first direct.
A quarter had predicted they would be homeowners by now, but on average, they are still four years away from buying their first property. Over four in ten (44%) attribute rising property prices to delaying their plans, while for 36%, their income has been too unstable over the years to buy a property.
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Despite the hurdles, a whopping 73% of millennials remain steadfast in their pursuit to achieve all their financial objectives. Additionally, 61% believe they have grown more financially resilient in recent years, having faced numerous economic trials.
Carl Watchorn, the head honcho at First Direct banking, commented: “As a millennial bank marking its 35th anniversary, we understand the challenges faced by the millennial generation.”
“Our research indicates that millennial and Gen Z savers are hitting significant milestones later than their parents and grandparents. This is undoubtedly exacerbated by harsh economic conditions in recent years.”
“However, it’s precisely these hurdles that have moulded millennials into one of the most financially resilient generations. Their capacity to adapt and navigate through adversity means they are now better equipped than ever to progress and secure their financial futures.”
A substantial 32% indulge themselves more frequently when they receive a salary hike, 17% take more holidays, and 14% embark on pricier trips.
Carl Watchorn further noted: “In the current climate, we are observing younger generations in particular reporting that they expected to be in a better financial position by now than they currently are.”
“It’s therefore understandable that people are prioritising enjoying the here and now over saving for financial milestones that may feel a touch out of reach.”