Seeing what all their friends post drives millennials to spend carelessly.
The generation that fears missing out could be the most fit financially — if they stop worrying what everyone else is up to.
Debt.com has previously reported that millennials out-save their parents. A new study says the same, but 57 percent spend money unexpectedly due to peer pressure from their friends’ social media pages, according to life insurance company Allianz.
“Millennials are finding innovative ways to build their financial strength and are becoming more confident because of these actions,” says Allianz VP Paul Kelash. “But, more than any other generation, social media and the allure to spend beyond their means could have long-term negative effects on their finances if they’re not careful.”
The social network generation
As early as 1997, blogging companies began popping up on the web. They enabled Internet users to have their own public profile web pages, customized to their personalities. Advertisement and marketing companies didn’t take long to catch on and use social media as a tool to target the millennial generation.
By the mid-2000s, Facebook changed social media by allowing users to update other and follow what was going on in our friends’ lives in real time. As it turns out, this has led millennials to “keep up with the Joneses” in a new way.
A huge majority (88 percent) of this generation say they compare their wealth and lifestyle to others on social media, more than Gen X (71 percent) and baby boomers (54 percent).
More than half (55 percent) of millennials say they fear missing out on what their friends are doing. And 61 percent feel their life to be inadequate when viewing what others have and are doing on their news feeds. Which is holding them back from shifting their savings into fifth gear in the race against older generations, says Allianz’s study.
The generational savings race
Over three quarters (77 percent) of millennials say they feel confident financially, more than their parents. Millennials are also more likely to contribute to retirement savings.
Almost half (48 percent) of millennials with a 401(k) contribute more than 10 percent monthly, more than Gen X (36 percent) and baby boomers (44 percent).
Millennials are the largest generation in the workforce now, and they didn’t just choose to spend so much time and money on their education without reason. Most decided to following the Great Recession, halting their career opportunities compared to previous generations.
How a recession shaped millennials’ savings habits
A quarter (24 percent) say they watched their parents suffer a major financial setback during the recession, leading to two-thirds (65 percent) of millennials feeling uncomfortable with too much debt.
Witnessing their parents have to cut back and live frugal has taught them to do the same.
Studying for a future career waiting for the economy to settle down was the best option for many. Then putting off marriage, homeownership and raising a family has allowed those millennials to take their time and save.
In turn, this has had drastic shifts on the overall economy.
One dilemma of this generation’s frugality is their fear of investments. Which is also a factor to blame on the recession, says Allianz’s study. Almost three-fifths (57 percent) say they’re wary of investing in the stock market.
“While it’s promising that many millennials are working to avoid debt and build savings, seeing such a large number of them averse to investing is a concern,” Kelash says. “A balanced approach to saving and investing is a strong recipe for a solid retirement.”
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Article last modified on March 16, 2018 Published by Debt.com, LLC . Mobile users may also access the AMP Version: Millennials: Stay Off Social Media, You’ll Save Money - AMP.