Do Millennials Have the Best Personal Finance Habits?

Contrary to popular belief, millennials (those born between 1981 and 1996) have promising financial habits.

While there is a stereotype that millennials are too preoccupied with expensive lattes and avocado toast to make progress toward their financial goals, recent surveys suggest that millennials are quite savvy when it comes to managing their finances.  

They prioritize saving, are cautious about taking on debt, and show a higher level of engagement with their financial well-being compared to their predecessors. 

Certified Financial Planner (CFP) Marguerita M. Cheng of confirms, “Some misconceptions about millennials is that they don’t plan financially or want to plan. I don’t find that to be the case. They may have a different definition of financial independence or retirement, but that doesn’t mean they aren’t committed or serious.”  

8 money habits every millennial should develop 

1. Growing savings 

Saving money is a top priority for 59% of millennials, according to a recent American Express (Amex) Trendex report. They are willing to make sacrifices to achieve their financial goals. 

Gen Zers are the most ambitious savers of any generation. A Forbes Advisor study found that 46% of Gen Zers aim to save $5,001 or more, compared to 36% of millennials.  

To reach their savings goals, 57% of respondents plan to cut back on nonessential expenses, while 44% of millennials consider getting a second job to boost their savings. 

What are millennials saving for? Forbes Advisor found that the top goals are an emergency fund (25%), a vacation (14%), and a down payment for a home (13%). By prioritizing savings and making tough choices, millennials are taking control of their financial future. 

2. Managing debt 

According to Amex’s recent report, 42% of millennials are prioritizing paying off debt. While Generation X carries the highest average student loan balance at $44,290, millennials aren’t far behind with an average of $32,800, according to data from the Education Data Initiative.  

Millennials hold 30.26% of the total $1.63 trillion student loan debt, with 3.87 million borrowers owing between $20,000 and $40,000. 

To tackle their debt, millennials are getting creative. Some are taking advantage of debt consolidation loans, while others are using debt payoff strategies like the debt snowball or avalanche methods.

Many are also cutting back on expenses and putting extra money toward their loans each month. 

3. Budgeting 

Sticking to a budget is the third biggest financial goal for millennials, with 41% making it a priority. But it’s not always easy, especially with rising costs of living and other financial challenges. 

A Forbes Advisor survey found that 57% of millennials say a lack of budgeting and financial planning is the primary reason they live paycheck to paycheck, while 50% blame high monthly bills. 

The survey also shows that 69% of millennials are unable to save as much as they want due to the increasing cost of living. 

Despite these obstacles, millennials are finding ways to make budgeting work. Many are using apps to track their spending and stay accountable.

Others are embracing the 50/30/20 rule, which allocates 50% of income to needs, 30% to wants, and 20% to savings and debt repayment. 

“Some helpful advice that I share with my millennial clients is to align their savings, spending and investments with their passions and priorities,” said Cheng. “I also advise them not to compare themselves to others or let others define financial success for them.” 

4. Building an emergency fund 

Amex found that building an emergency fund is millennials’ fourth biggest financial goal. This is a smart move, considering that 31% of millennials have less than $1,000 in savings. 

An emergency fund is a critical safety net that can help you weather unexpected expenses, like a car repair or medical bill, without going into debt. Experts recommend saving enough to cover three to six months’ worth of living expenses. 

The best place to keep your emergency fund might be a high-yield savings account. These accounts offer higher interest rates than traditional savings accounts, which means saving can grow faster. Plus, you’ll still have easy access to your funds when you need them. 

5. Planning to invest more 

Investing can seem intimidating, but this report found that 29% of millennials prioritize growing their investments. Millennials’ second favorite way to save and invest is through a retirement account. 

But investing isn’t just about planning for retirement. It’s about building long-term wealth and achieving your financial goals, whether that’s buying a house, starting a business, or traveling the world. 

There are various ways to begin investing, including robo-advisors, online brokerages, and index funds, catering to every risk tolerance and budget. 

6. Building good credit 

Millennials prioritize building good credit for financial independence, with 84% believing it’s crucial. 

And that independence is important to them. The same study found that 47% of millennials say they’re at least “somewhat” financially dependent on their parents, compared to 61% of Gen Zers. Of those millennials, 70% feel ashamed about having to ask for help. 

Building good credit takes time and discipline, but it’s worth it. With a strong credit score, millennials can access better rates on loans, credit cards, and even apartments and jobs. It’s a key step toward achieving true financial independence. 

7. Breaking the paycheck-to-paycheck cycle 

Living paycheck to paycheck is a reality for many Americans, but some generations struggle more than others. Nearly half of baby boomers (49%) live paycheck to paycheck, compared to less than 40% of millennials. 

But just because millennials are faring better doesn’t mean they’re immune to financial challenges. Of those who do live paycheck to paycheck, the top two reasons are lack of budgeting and financial planning (57%) and high monthly bills (50%). 

So, what can millennials do to break the cycle? More than half (53%) say reducing expenses is their preferred strategy. That means cutting back on discretionary spending, negotiating bills, and finding ways to save on everyday expenses. 

But it’s not just about spending less—it’s also about being mindful of impulse purchases. According to an Experian study, 56% of millennials struggle “at least somewhat” with impulse buying. Curbing this could be key to breaking the paycheck-to-paycheck cycle. 

8. Openly discussing your finances with others 

Talking about money can be taboo, but it’s a conversation worth having. According to a Forbes Advisor study, most millennials (68%) and Gen Zers (63%) have learned valuable financial insights through open conversations about money. 

One key benefit of discussing finances is fostering pay equity and shrinking the wage gap. Most millennials (76%) and Gen Zers (74%) are willing to discuss their salary with a coworker, compared to just 41% of baby boomers. 

Not only can talking openly about money increase your financial literacy, but it can also help you avoid common financial mistakes your peers have already experienced.  

Embracing the millennial money mindset 

Millennials are redefining what it means to be financially savvy. By prioritizing retirement savings, staying engaged with their money and being mindful of debt, they’re setting themselves up for long-term success. 

Regardless of age or generation, adopting these money habits can help you take control of your financial life and achieve your goals.

By learning from the positive examples set by millennials, you can break free from stereotypes and build a strong foundation for your financial future. 

Written by Cassidy Horton | Edited by Rose Wheeler

Cassidy Horton is a finance writer who’s passionate about helping people find financial freedom. With an MBA and a bachelor’s in public relations, her work has been published over a thousand times online by finance brands like Forbes Advisor, The Balance, PayPal, and more. Cassidy is also the founder of Money Hungry Freelancers, a platform that helps freelancers ditch their financial stress.

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