According to new numbers released by Moody’s Analytics, most adults under the age of 35 have a savings rage of negative 2 percent. Looking at this and other data from the study, the of sought-after millennial generation seems to be saving very little. To find out how to combat this behavior, we spoke with Nicole Mayer, AIF, CDFA of RPG-Life Transition Specialists.
Banking.com: Should banks and credit unions be alarmed by news that millennial savings is at a serious low? What can they do to encourage saving?
Nicole Mayer: They should be alarmed by this. The financial services model is broken and this is where banks, credit unions and financial advisers need to educate millennials on the importance of saving and starting a plan early. Everyone is trying to sell something — instead let’s educate the generation to make better decisions. They will then buy products or services around savings and investments and be educated — not scared.
Is there one critical touch point or message that you think financial institutions are missing here?
Absolutely! Education! Financial institutions want to sell something instead of educating.
Why do you think millennials have stopped saving as much in past years?
People forget the 2008/2009 recession. We have short memories, and when you turn on the news or listen to the media about the stock market being at an all-time high and unemployment going down, people think all is OK. In fact, we are in the same position we were in 2007 with the stock market at all-time high. This is where we should be more conservative with our savings and make sure we have a “rainy day fund” set aside for when the market drops again and the job market slumps again.
Do you have any predictions in how this will change in 2015?
Hopefully, there will be a much needed market correction, which will remind people of the importance to save especially the millennials.
What do you think? Let us know by tweeting at us or posting in the comments below.