If you’re living paycheck-to-paycheck, the time may come when you’ll need to spend more money than you’re actively raking in. In the case of an emergency, will you have enough money to spare? Considering the fact that unexpected things may happen, it’s wise to plan ahead.
Where does that emergency fund come from?
According to a recent survey, many Americans will not have that extra money. This data says that 37 percent of respondents would be able to pay for an emergency expense of around $1,000 with just the money in their savings account. Twenty-three percent of people surveyed would instead spend less on other things for a while to make up for the sudden large expense. Fifteen percent would use credit cards, while another fifteen percent would prefer to ask people they know to borrow the money.
Millennial savings accounts seem to be faring well, however, because millennial respondents to the survey say they’d prefer to use those funds over other methods of payment. There’s even been an increase in this percentage over last year’s results. Fewer will borrow money and fewer will simply reduce their spending compared to the previous year’s data. These days, it seems that more millennials actually have money in their savings account. We’re learning the value of having money set aside.
Millennials like to save money
Beyond simply understanding the need to have money saved in case it’s needed, it just so happens that this generation is skeptical of financial institutions and more understanding of monetary hardships. This is likely a result of coming of age around the time period of a recession. As a likely result of this, money that is put aside by millennials is largely going to savings accounts. We know all about living within our means and doing what we can to secure our lifestyles as best we can just in case anything goes wrong.
It’s interesting to note, then, that as a generation, we’re not investing. In fact, a similar survey found that 66 percent of millennials believe that savings accounts alone will be able to get them through hard times. Older generations do not think in the same way, preferring to rely on sources such as 401(k)s, pensions and Social Security. The drive to gain wealth through investment is simply not there, but the foundation for financial security definitely is.
In the coming years, with the right education, we may see more and more millennial investors. As a generation that’s averse to risk, likely because we’ve felt the effects of a recession for a while, investing doesn’t come naturally to us. Still, at the very least, Millennials understand how important it is to have a decent amount of money to get them through hard times. Though balking at the possibility of amassing great amounts of wealth over time, millennials are making sure to have enough money to survive in the present and the near future. We’re saving more than other generations, and we deserve some credit for that.
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