Millennials' money habits 'influenced by parents'

Updated

Younger people are twice as likely to run out of cash before payday and save nothing each month if their parents had a negative rather than positive influence on their finances, a report has found.

In general, the "Millennial" generation of 18 to 34-year-olds are showing signs of building better money habits than the "Generation X" age group of 35 to 55-year-olds, according to the research from credit checking company Experian.

But for many Millennials, it was their parents who had influenced them to save more and dip into debt less.

More than two-thirds (67%) of Millennials said their parents or guardians have had a positive influence on their money management habits, while 17% said their parents have had a negative influence.

Of those in the 18 to 35 age group whose parents had been a positive financial influence, just 14% saved none of their disposable income each month, compared with 32% of those whose parents had been a negative influence.

People whose parents had been a negative financial influence were also twice as likely to have run out of cash before payday in the past, with 44% saying this compared with 21% of those whose parents had been a positive influence.

One in three (33%) people whose parents had been a negative financial influence had gone into an unplanned overdraft, compared with 19% whose parents had been a positive influence.

Experian's Millennial Me and My Money report found that generally, Millennials appear to have surpassed the generation above them when it comes to money management. Nearly half (45%) of people in the Millennial age group save at least one quarter of their disposable income each month.

This compares with just one in three (34%) people in the Generation X age group who save at least one quarter of their disposable income a month.

Clive Lawson, managing director at Experian, said: "It's striking to see just how much of an impact parental influence can have on the financial wellbeing of Millennials in adulthood.

"What this research made clear to me was the opportunity that we as parents have to set foundations by helping our children learn from our experiences of managing money and enjoy the advantages that might bring them later in life."

The research also found that one in four (25%) Millennials consider themselves to be "spenders" while nearly half (49%) see themselves as "savers".

The average Millennial has £8,384 in savings and £2,931 outstanding non-mortgage debt.

Millennials are also most likely to spend what remains of their disposable income on eating out, socialising, clothes and fashion.

There were still some financial pitfalls for the younger generation, however, with 13% saying they had had their card declined in the past without realising they had run out of money.

More than half (56%) of Millennials use online banking as their preferred method of managing their money, while 25% favour mobile banking. Less than one in 10 (9%) Millennials prefer face-to-face in-branch banking.

The research was conducted among 4,000 people from across the UK, of which half were Millennials and half were in the Generation X age group.

Experian has developed a free "beginners guide to credit" at www.experianimprove.co.uk to help people understand how credit works.



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