Recent data suggests that younger generations are on track to save more than their parents and grandparents, despite their earnings on average being considerably lower. Part of the reason for this is time: simply put, young people have more years ahead of them than older generations until they retire, meaning that any money they put away now has more time to grow.
But it’s also become apparent that many younger workers are also managing to put away a significant amount each month – in some cases up to 15% of their income – by making some considerable sacrifices. Some of these are undoubtedly luxuries, such as eating out and going on holiday, but the savings are substantial: restaurants on average charge a markup of 300%, making eating at home a great way to cut costs. The rise of the ‘staycation’ – saving money by holidaying at home and exploring free or cheap activities to enjoy – also helps younger people to find more money to put towards their savings instead.
However, some of the costs that millennials are willing to cut in order to save are at the opposite end of the scale. More young people are choosing not to continue in education to help them save. The financial benefits of this are twofold: not only does this remove the expense of continuing on to college or university, but it also allows a young person to begin working full time earlier in their life, which in turn allows them to start saving sooner. It’s a sacrifice some would not be willing to make but is nonetheless an attractive option for others, especially as more opportunities to earn qualifications through full time work become available.
Housing and car ownership are also areas where considerable savings can be made. Perhaps the most personal sacrifice some millennials are making is to limit the number of children they have in order to find more money to save.
It will always be a matter of individual choice as to what people decide to spend or not spend their money on but the data highlights that the decisions made now have a significant impact for the future.