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Mar 04

Here’s How Millennials Define Financial Success. Do You Agree?

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Facebook knows how you feel about money. The company has been listening in on young people’s online conversations, as well as analyzing audience data and conducting surveys, in order to learn more about how users between the ages of 21 and 34 think about financial matters. What they’ve discovered is likely to surprise some people, though probably not millennials themselves.

“Millennials are misunderstood – famous for their impulse for instant gratification. But when we stop to observe their financial behaviors and listen to them describe their relationship with money in their own words, a new millennial emerges,” notes the report, “Millennials + Money: The Unfiltered Journey.”

Once you brush aside the stereotype of the lazy and entitled millennial, a picture of a financially responsible generation comes into focus. Millennials want to pay down debt, save for the future, and manage credit responsibly, Facebook’s research found. Debt is by far their biggest financial concern, hardly surprising once you realize two-thirds of millennials are struggling with student loans and credit cards.

When it comes to money goals, young people think paying down what they owe is far more important than showing off in a luxury car. Nearly half of millennials define financial success as being debt-free, according to the report, while 21% say being able to buy your own home is a sign you’ve made it. Sixteen percent defined success as being able to buy experiences. Only 4% associate success with being able to splurge on material goods.

“A saver’s mindset is firmly entrenched” among young people, according to the report, but they’re most likely to save because they think it’s the responsible thing to do rather than with particular goal in mind. Those who do save with a purpose are most likely to do so for emergencies or to buy a home. Only 8% said retirement was the main reason they were saving, and just 13% identified being able to retire as a sign of financial success.

Not having access to the right savings tools may be one reason why young people aren’t focusing on putting aside money for retirement. Only 43% of millennials who didn’t have access to a retirement plan at workreported consistently saving, according to a new survey from Young Invincibles, compared to 76% of those whose employers did offer retirement benefits.

One other area where young people are falling short financially? Investing. Millennials are far less likely than Gen Xers and baby boomers to have investments, though contrary to popular opinion, it’s not because they’re afraid of the markets or nervous about the economy.

“While distrust in financial institutions and the economy are typically blamed, only 12% of millennials say distrust is their primary barrier. The real reasons millennials are not investing are that they don’t feel they have the money and that they don’t know enough about investing,” the report noted.

Young people, it turns out, don’t know where to turn for financial advice. More than half say there’s no one they trust to help them with major financial questions, and two-thirds say their bank doesn’t understand them. When it comes to investing, they’re more likely to trust a robo-adviser than an actual human being.

Ultimately, Facebook’s research suggests millennials’ biggest financial challenge may not be overcoming their own bad habits, but rather dealing with an out-of-touch financial industry that’s been slow to adapt to their financial needs.

“To connect with millennials, financial services will have to take a fundamentally new approach,” wrote the report’s authors. That means making it easier for people to manage their money on their mobile devices, positioning themselves as a financial partner, and helping them with their short-term goals, like paying down debt. Until big financial institutions adapt to their reality, young people are likely to continue to turn to their friends for help with their money questions, not their banker or financial adviser.

Source: Here’s How Millennials Define Financial Success. Do You Agree?

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