Millennials have taken a lot of flak for spending more money onthan on their financial futures. But a new survey indicates that this criticism may be unfair.
Today's 22- to 36-year-olds are actually doing a good job of balancing today's wants and tomorrow's needs, according to a Fidelity Investments report.
"Our survey suggests that 60 percent of millennials are balancing their current and future priorities with a focus on total well-being," said Brooke Forbes, senior vice president of digital planning and advice with Fidelity. "There are a lot of assumptions that millennials only live in the moment, but our research debunks that."
Although this group has a wide array of competing financial demands, nearly half (49 percent) are already saving for retirement. They're also attempting to build emergency funds (34 percent); pay for day-to-day necessities, such as utilities and rent (38 percent); and pay off student loans (26 percent). Nearly six in 10 (56 percent) said they balance current and future needs equally.
Indeed, though it wasn't part of this survey, Fidelity reports that millennials are considerably ahead of where Generation X was at this stage in their lives, at least in terms of saving for retirement. The big Boston-based mutual fund company, which does annual analyses of retirement readiness by looking at subsets of its client base, found that today's 30- to 35-year-olds are saving nearly one-third more for retirement than Gen Xers were at the same ages.
The average retirement balance for today's 30- to 35-year olds: $31,100. In 2006 (when Gen X was the same age), it was $23,100
The majority of millennials also have balanced porfolios, with 56.4 invested in target-date funds, which blend stocks, bonds and cash in a way that gets more conservative as you age. Just 8.1 percent of Gen X invested in target-date funds. However, considerably more of them (22.1 percent) rolled the dice on a 100 percent equity allocation, which likely hurt them during the 2008-2009 bear market. Comparatively, only 5.9 percent of millennial retirement accounts are 100 percent invested in the stock market.
When millennials were asked about "treating themselves," a surprising 75 percent said they consider saving for future goals to be a treat. However, 29 percent acknowledged that this future "treat" doesn't feel quite as good as getting themselves something they can enjoy today.
Going to bars and eating out ranked low on the generation's list of "must-haves," with just 7 percent of millennials saying dining out was something they would have a hard time living without. In fact, far more (25 percent) prioritized mental health/therapy and gym memberships (20 percent) as being tough to do without.
Millennials' top discretionary priorities: a car (76 percent), a cell phone (75 percent), health insurance (75 percent) and internet access (66 percent).
Their parents are their biggest influence on savings, and social media is the biggest bugaboo.
Roughly one-third of millennials reported that their extended social media network -- including celebrities and Instagram stars -- have influenced their spending. Just 17 percent of Gen Xers and 18 percent of baby boomers said social media had influenced their spending.
Keeping up with the Joneses has been a deterrent to financial health for every generation, Forbes said. But thanks to today's reliance on social media platforms like Facebook and Instagram, the Joneses aren't just the people next door. Now they include the celebrities you follow on Instagram and the reality TV stars.
"Given the various ways we now stay in touch through social media, the Joneses have multiplied," Forbes said, adding: "The millennials deserve some credit. Many display good financial habits, despite the magnified temptations they face daily with social media."