Survey: Millennials seriously can't wait to wipe out debt
Millennials are not down with being in debt, and getting rid of it is one of their top financial priorities, according to the latest USA TODAY/Bank of America Better Money Habits poll.
Nearly two-thirds of those surveyed said that having no debt is a top priority right now, ranking slightly above having minimal financial stress, spending less than they earn and having emergency savings.
Yet more people (20%) consider having savings over being debt free (13%), as the definition of being "financially fit," according to the online survey of 1,320 people ages 18 to 34.
The data also show significant divides in the confidence and habits of college-educated Millennials and those without a degree.
Nearly 60% of those who graduated college feel somewhat satisfied with their current finances. Yet among those who didn't graduate, that number drops to 40%.
Those who graduated college are also more likely to say their finances are in good or excellent shape. Meanwhile, non college grads are nearly twice as likely than college grads to spend more than they make (35% vs. 19%).
While the majority of those polled — 64% — have savings, that share drops to 57% for people who haven't graduated college, and jumps to 85% for those who did. And despite the burden of student loan debt, college graduates have much more financial confidence and satisfaction than those who skipped college or who started but didn't graduate.
Still, across the board, roughly half of Millennials (51%) say they foresee not making enough money as an obstacle to achieving financial wellness, whether they went to college or not. Indeed, wage growth has been slow in recent years, growing roughly 2% a year, according to Labor Department figures.
They also have some steep challenges in reaching goals such as "to not have debt, to have a safe amount of savings and yet have adequate resources for the future," says Mark Avallone, a certified financial planner and president of Potomac Wealth Advisors in Potomac, Md.
Even among those with savings, 43% have less than $5,000 socked away. Only a third of those who have savings have a 401(k). About half of older Millennials, ages 26-34, with savings have a 401(k), while just 14% of younger adults have started saving in such plans.
"They should be worried," Avallone says of the Millennial generation. "Someone in their 20s, even on a modest income, will need to save $1 million or more (for retirement)."
And in the short term, the problem with prioritizing debt reduction over savings is that when emergencies inevitably arise, Millennials may not be prepared, says Tom White, CEO of iQuantifi, a financial advising site aimed at young adults.
"If you have a need for $1,000, and you don't even have that in your checking or savings account, what do you do?" he says.
Despite their debt load and small amount of savings, Millennials generally feel satisfied with their finances and confident about their ability to manage money — even though most also worry about their financial situation at least sometimes.
They're also wary of taking on more debt, with many hesitant to pull out their credit cards for items they can't afford. Nearly half said they completely disagreed when asked if they usually buy things they can't afford on a credit card. A little more than a quarter say they somewhat disagree.
There may be at least one encouraging sign for the country's young adults: The data show "they are paying attention, which I think bodes well for the future," says Andrew Plepler, head of global corporate social responsibility at Bank of America. "They are much more conscious of how important it is to live within your means and build savings and pay down debt. Those are good concepts for young people to have."
