The financial reviews keep pouring in for the first nine months of 2020 and it’s not pretty - especially for younger Americans.
Data from TD Bank’s 2020 Money Matters Survey shows that “most millennials are strapped for cash” with over 30% telling TD Bank their bank accounts are taking a big hit.
This from the study, which tracked financial outcomes from 1,000 younger Americans:
Millennials are Struggling to Save: Almost 60% of respondents say are not saving additional money as a result of the pandemic. Of those not putting away extra funds, more than half are millennials.
Millennials are Decreasing Credit Scores: More than 15% of millennials reported that their credit score has gone down due to the pandemic, significantly higher than Gen X and Boomers.
Millennials are Indulgent Their Spending Habits: Millennials continue to indulge on purchases during the pandemic, despite having less financial stability than older generations. Almost half (42%) of millennials said they still splurge on themselves, higher than any other generation.
Millennials are hurting in the pocketbook, too. Younger Americans were much more likely than Gen Xers and boomers (31% and 17%, respectively) to report their checking account balance were “decreasing.”
TD Bank survey analysts say that COVID-19 “has placed additional strain on a generation already saddled with significant debt and increased living costs.” More than 28% of millennials said they tapped into their emergency savings during the pandemic. Furthermore, one-in-five (20%) millennials don’t even have a savings account.
"A healthy savings account is key to planning for milestone moments and unexpected hardships," notes Lindsay Sacknoff, head of consumer deposits, products, and payments at TD Bank. "With COVID-19, many people are experiencing unplanned circumstances. This is a good time to take stock of spending and saving habits, create new financial goals, and stick with them."
There is some good news from the TB Bank study:
“Despite these discouraging statistics, many millennials want to improve when it comes to saving,” the study notes. “When asked what they would do if they had an extra $1,000 right now, 46% revealed that they would put the extra money into savings. Additionally, another 31% of millennials said they have spent time during quarantine reviewing their finances.”
TD Bank experts say there are ways for millennials to improve their financial standing during the ongoing pandemic lockdowns and resulting economic strife.
For starters, many millennials are also lacking basic credit card knowledge. The TD Bank survey found that:
- 16% don’t know their credit limit
- Nearly half of respondents use more than 30% of their credit limit
- 34% revolve a balance each month
"Millennials haven't had it easy. They've been impacted by student loan debt, a recession, and a difficult job market. Now, they face a global pandemic like nothing we've ever seen before," said Mike Kinane, head of U.S. Bankcard at TD Bank. "Much of their financial situations have been out of their hands, but there are a few things they can control – how they budget, how they spend if they choose to splurge and how they manage their debt."
Building a household budget isn’t as difficult as it sounds at first blush. TD Bank advises younger financial consumers to take the following budget-building steps.
- Determine your net income
- Identify fixed and variable expenses, such as. utilities, rent/mortgage, credit card bills, student loan payments, groceries, mobile and internet
- Set realistic goals
- Track spending
- Adjust financial habits (especially spending) as needed
“It's also a good time for consumers to review their credit score,” TD Bank reports. “Consumers can receive one free credit report per year from each of the three credit bureaus, which is useful in determining areas that need improving, like payment history and credit utilization.”