Why Millennials Are Prioritizing Spending Over Saving
A survey by the Financial Times suggests that millennials should be saving $1,146 a month so that by the time they hit 65, they can retire with a comfortable financial cushion. However many have protested that in this day and age, it is simply not possible to be saving that amount.
While it is well known that the earlier you save, the more you are expected to make through compounded interest. According to Suzanne Mcgee from The Guardian states that if you put away $1 when your 20, with a 6.6% return, by the time you’re 65 it will be worth $18.50. By just delaying saving that dollar for a few years and you will significantly reduce your potential gains.
So why is it that the millennials are not saving as much as the previous generations? McGee in her article describes the reasons that are summarized below:
College students are graduating with an average debt of $33,000 which is double the amount from 10 years ago
Cost of living is increasing, mainly driven by rental cost increases
Health insurance – premiums and deductibles are on the rise
Life events – celebrating special moments including friends elaborate weddings
And to add on more pressure, as they progress in life other obstacles will appear: children, housing and aging parents.For a more in-depth analysis, check out Suzanne McGee’s article here.