A recent survey conducted by Wells Fargo showed that 80% of Millennials say they understand the importance of saving. They believe in living below their means and they claim coming of age in the Great Recession has taught them how to survive tough financial times.
This is great news, right? Seems like those media outlets who claimed retirement wouldn’t be possible for Millennials, or who said that Gen Y were bad money managers, were wrong after all.
Not so fast.
That same Wells Fargo survey showed that 8 out of 10 Millennials know they should save also showed that only about half of them (55%) are actually saving at all.
So if Millennials know they should save, why aren’t they doing it?
Student Loan Debt Eats Away at Discretionary Incomes
One of the biggest reasons 45% of Millennials aren’t saving anything could be due to the amount of money they must repay because of the student loan debt they racked up in college.
42% of Millennials claim that debt is their biggest financial worry, while 40% say it’s completely overwhelming. And 55% of Millennials say they’re living paycheck to paycheck.
Specifically, 29% of Millennials say that paying off student loans is their number-one concern after regular monthly bills are paid. Compare this to older generations, like Baby Boomers, who say that their biggest concern is saving for retirement.
Gen Y’s answer should be the same, and the survey indicates they know this. But it seems there’s no saving for retirement until the weight of student loan debt that must be repaid is eliminated.
All Millennials Know They Should Save — But Men Save More
Another issue the survey brings to light is the fact that Millennial men seem to be pretty far ahead of Millennial women in both earnings and saving.
Where 55% of Millennials say they’re saving, it’s not an even split between male and female members of Gen Y. 61% of Gen Y guys claim to save, while only 50% of Gen Y women say the same. And while 58% of Millennial men say they’re satisfied with their savings, only 41% of women feel satisfied about theirs.
This makes more sense when you look at the difference in earnings: college-educated Gen Y males report a median income of $83,000 and college-education Gen Y females report a median of $63,000.
Why We Aren’t Saving
So what are we to make of all these numbers?
It’s awesome that Millennials want to save. We want to increase our financial education and we’re seeking out answers to our questions about money and how to do more with it.
When you account for monthly bills and Millennials who are playing catch-up with major life goals they may have initially put off (like buying a home and getting married), and combine that with the money required for debt repayment, there just isn’t that much left to go towards retirement.
And the ladies are earning less, which makes it that much more difficult to manage debt and save.
That answers why we aren’t saving right now. But that doesn’t explain what we need to do about it to solve this financial problem.
How More Millennials Can Save — and Get Ahead Financially
There are a few different ways we can approach the issue of Millennials not being able to save.
The first, and most obvious, is to aggressively eliminate debt so that financial burden no longer eats into our monthly income. Once we free up more money each month, more can be contributed to retirement savings.
To do this, we can:
- drastically reduce expenses while in debt-repayment mode. No, it’s not fun, but it’s necessary while finances are in trouble.
- avoid lifestyle inflation. Any raises earned should be used to pay down debt faster (or added to savings once debt is gone).
- earn more money. While we can all save a little here and there and cut costs, there’s only so much we can do to eliminate expenses. But we can all work and hustle to boost our monthly incomes.
- look into debt repayment or loan forgiveness programs as a last resort. If you feel there’s just no way you can manage your student loans on your own anymore, look at what programs are available for your federal loans from the government. This course may make the most sense if you’re working in the public sector, because there’s a program available that will forgive outstanding loan balances after 10 years and you won’t be taxed on that forgiven balance.
The next step, once we’ve freed up some cash to put towards savings each month, is to ensure we actually make it happen:
- Make savings and retirement contributions automatic.
- Do everything you can to max out various accounts. Don’t just settle for your employer’s 401(k)! You can open your own IRA, too or contribute to other, general, taxable accounts that are invested wisely.
- Whenever we find an expense to cut or additional money in our incomes, put that straight into savings or investments to ensure you’re growing your wealth — and not just the amount in your checking account that will be spent.
What do you think Millennials could do in order to save more?
Track All Your Accounts With Personal Capital

Source for data and statistics cited: 2014 Wells Fargo Millennial Study
Saving money and needing money is not a secret and Millennials know this, in fact we all do. Student loans have crushed many young adults and it’s putting the brakes on for many who want to get ahead but have to wait until they pay off the debt, work more or save more.
Many do all three just to get by or get ahead of the game but many either can’t or aren’t willing to. The fact of the matter is that it’s not getting any better. For some having a student loan is like having a mortgage so if that’s tough on you then you haven’t seen anything yet.
I’ve been to school twice graduating both times once in the UK and in Canada, paid my own way, lived on my own, bought two houses before the age of 24 and am now debt free including the mortgage under the age of 40. Why? I didn’t let “stuff” and “people” get in the way and I used a budget to track my finances.
Time to buckle up and get that budget working for you. It may be hard to say no to going out with friends, buying the latest trends in gadgets, cars and fashion but all that “stuff” can wait. You have nothing to prove to anyone. In the end those who can balance all of this to work for them will pat themselves on the back that they ran a tight ship to achieve their goals.
Great post and lots to think about.
Thanks Mr. CBB. I think it is a complicated issue and I’m not sure if not being good with money is really the problem for Millennials. I think many Gen Yers do keep a budget and live pretty frugally — at least, relatively speaking when you consider the spending habits of different generations. Millennials are much thriftier than their parents were. I think many members of Gen Y struggle with finances because A. they don’t know where to start and B. they’re more interested in doing work they enjoy than work that pays the bills. Nothing wrong with wanting your work to be fulfilling, but Gen Y needs to face some financial realities at some point.
It’s an interesting issue and as you said, lots to think about for sure 🙂
I wish more people my age were saving, it’s really sad. I actually heard a complaint the other day from a friend who was complaining about not having any money saved and complaining about not being able to make the minimum payment on her student loans. Yet, she bought a new $45,000 car and goes on 3 to 4 cruises a year.
I think more millennials need to be realistic with their budget and stop trying to keep up with the Joneses!
I agree, Michelle. I have a handful of friends like that too and I have to fight not to roll my eyes when I hear them complain! Thankfully I don’t think that’s the majority of Millennials.. I do think most Millennials are pretty good with spending — but aren’t motivated enough to earn more money to handle all their debts and bills. That’s a big problem Gen Y needs to overcome if they want to become financially stable and secure.
I think the student loan repayment factor is a biggie for lots of people. We are lucky that our loans are locked at super low rates, otherwise I think we’d have a bigger monthly payment and it would not be as manageable (and we wouldn’t be able to put extra toward it every month like we do now). Sadly, with the price of college tuition continuing to increase it seems like this may continue to be a factor for some time.
I wonder if the generation after the Millennials will continue to go to college in droves like Gen Y did because of the student loan debt problem? There are alternatives, like tech schools, that are cheaper — it will be interesting to see what kinds of trends evolve after we’ve had time to realize how indebted many 20-40 year olds are because of higher education.
This is an excellent question with so many correct answers! Milllennials want to save, know they need to save, but in my opinion, it’s more than not being able to afford it. It’sabout not feeling ready, and not knowing where to start. And when getting a job (or jobs, if self employed) is already a struggle, is saving more important than paying for the now? And when student loans go into repayment, the shock can stunt any savings goals. Not only that, the shock of debt ($30K+ anyone?) can scare anyone into not wanting to learn about personal finance and the value of saving at all.
Your tip to automate is perfect. If more banks set up auto-save accounts with checking accounts, or gamified personal finance tools like Smarty Pig, more millennials would be willing to sit down and set it up, if only to forget it later. I’m not mentioning 401ks and retirement-specific saving because I think, for millennials, just getting into the habit of saving *somewhere* and *anything* is more important at this point.
Brenda, I think you make an excellent point in saying that many Millennials don’t feel ready or don’t know where to start. It definitely feels weird to be so concerned about your financial future when you still feel like the same kid you were five or ten years ago (I know I feel like a kid every day!). The good thing is I think the want to learn more and educate themselves is there for Gen Y. It’s just a matter of actually taking action and initiative.
I think its an attitude problem.
Whilst people want to save, they want to spend even more. When they have the decision to put away $500 for the future, or buy the new smartphone, its amazing the number of people who will convince themselves that they NEED the latest very of the smartphones.
That’s certainly part of it, but I think that’s not as true for Generation Y as it is for older generations. Millennials are actually pretty frugal (collectively, and relatively, speaking). Attitude becomes more part of the equation for us when it comes to making more. We want to take jobs that are fulfilling, and that becomes our top priority — rather than, will this job help me cover all my bills with enough left over to put away for the future. While doing something you love is important, it can’t be the end-all-be-all. Your financial situation is a reality that you need to deal with, and I think that’s the challenge Millennials face. They know how to save and believe in living within or beneath their means, but they’re not prioritizing earning enough to make all that happen.
I think the italicized “want” in your post is a big part of it. Lip service is one thing, but doing it is an entirely different matter. The wage gaps between men and women is troubling, I suspect a lot of it is due to self-selection in job types, including STEM jobs.
You’re absolutely right, Anne, in that some of the income discrepancy is due to the kinds of jobs women pursue. Millennial women are going after jobs that simply pay less to workers, male and female alike, than Gen Y guys are. It’s fine to take a lower-paying job if that’s what you want, but that should also come with a plan to handle your finances in such a way that you can still build wealth and stability even with a smaller income.
Great post! Nowadays, it’s really important to save up money most especially that the prices are getting higher. I think it’s definitely up to the person if they will save, it’s their own disciplinary action.
Very true, Hannah — there’s a lot of personal responsibility involved. We need to be accountable for our own financial situations.
We all know saving is a good habit, but still carried away by our circumstances. If we’re serious about saving more money, then we’ll have to make lifestyle changes. Depending on our income and our seriousness of finding ways to save, these decisions should be taken. Things like cutting monthly housing bills, downgrading your car, changing your eating habits etc. can make a difference!