Both Millennials and the Gen Zers are ignoring common sense and are, in fact, not saving money for retierment; they have the need to enjoy life in all its glory. After all, YOLO is their motto. They are all of the opinion that their golden years are something unimaginably far away. What’s more, they still carry the burden of their past student debts.
Here is another issue: a lot of them view social media posts of the people driving expensive cars, wining and dining in extravagant locations, which makes them crave for such a lifestyle on a daily basis. We might as well call it ‘keeping up with Instagram trends.’
Moreover, 35% of the American youth has admitted to feeling enormous pressure on spending more and more than what they can actually afford. This usually occurs after they see an image of their friends ‘Livin La Vida Loca’ on Instagram and Facebook, as shown on Schwab’s modern wealth survey in 2019.
This so-called FOMO effect is most noticeable among young adults. Approximately half of the Millennials and 44% of Gen Zers (people who were born between 1995 and 2015) know that their habits of overspending are shaped by the pressure of social media, at least partly.
How can anyone expect these youngsters to accumulate wealth (and save for rainy days) when all of their earnings come and go on a monthly, even daily, basis — says the vice president of financial planning for the Schwab Center for Financial Research, Rob Williams.
There is an over-the-top urge to ‘keep up with the Joneses,’ and it’s nothing new, he added. 35% of America’s youth know they spend too much, but they don’t do this out of envy. They try to chase after the main trends, as the survey shows. However, social media and the constant fear of falling behind made the pressure pretty big, states the executive vice president of Schwab Investor Services, Terry Kallsen.
As we all know, the pictures we are continually being bombarded with often have nothing to do with reality. No one is that happy, that beautiful, or even wealthy. Instagram and Facebook beautify the moment. We see the face of our friends which is customized for the public to see, but their financial life isn’t published there, Williams said.
Over 60% of the surveyees—including 74% of Gen Zers and 72% of Millennials—still wonder how their friends can afford such expensive experiences and such a prosperous lifestyle which they try to depict on the web.
An average American will spend around $500 per month on items which aren’t essential, according to the online survey conducted by Logica Research that involved over 1,000 people aged 21 to 75. Williams claims that there is nothing wrong with rewarding yourself with some occasional treats. However, one should save up for retirement. Still, there is around 60% of Americans who live from one paycheck to another; 44% carry the burden of credit card debt; and only 38% have some kind of emergency fund, as the survey showed.
Last year, a Cabient survey also found out that only three out of ten adults aged 22 to 35 actually have some money saved up for when they retire.
When asked what exactly would they do if they had a $1 million windfall, 54% of the respondents of the Schwab survey claimed that they would use the money to buy a car, a house, and travel. 28% of them said they would pay their debts, and only 21% said they would save the money.
Consequently, 59% of American citizens think of themselves as money savers. 65% claim they would be willing to sacrifice spending on luxury in order to save up for their final years, as the Schwab survey published.
There are many aspirations, but at times life just gets in the way, and this is extremely challenging, states Williams. Those adults who made financial plans are in a better position. Only 28% of Americans actually own such a smart plan. Generally, the Americans believe that it takes around $2.3 million to be seen as well-off.