Millennials’ biggest financial focus is saving for a home and debt payoff, according to a new survey from Brandtrust. But does that make them unique? And why are Millennials missing their budgets or failing at buying that perfect suburban home? The answers may surprise you. Read on to learn more about Millennial budgeting and where all generations can make changes to improve their financial position.
What Millennials budget
Millennials are unique in many ways but have a lot more in common with Generation X and Baby Boomers most of us many realize. When it comes to savings priorities, those in their 20s, 30s, and 40s are generally focused on paying off debt as a first priority, with saving for a major purchase (like a house) a distant second and bills coming in third, according to the Brandtrust survey of 1,000 Americans.
Debt is a huge priority for this age bracket. For those in their 20s, 42.2% claim debt is the top reason for budgeting, with 46.7% of 30s and 42.4% of 40s respondents giving the same answer. Saving for a major purchase came in at 30.8%, 21.1%, and 17.4% respectively, indicating that those in their 30s and 40s are more likely to have purchased a home and not need those down payment savings.
For those in their 50s, bills are the biggest reason to budget, with debt rising again as the top reason to budget for those in their 60s. This is proof that debt is not unique to younger Americans. While younger people are struggling more with student loans, debt comes up again as a major focus later in life.
Where Millennials break their budgets
It doesn’t matter how old you are, the most common reason to go over on your budget is the food budget. And food from the grocery store is likely not the biggest reason why: it is the alluring restaurant experience causing most to blow through their budget. 40.0% of those in their 20s, 33.9% of those in their 30s, 38.9% of those in their 40s, 35.9% of those in their 50s, and 32.7% of those in their 60s and older said that food is the biggest reason they miss their budgeting goals.
We’ve known for a long time that Americans love to visit restaurants, and while dining out is great for the economy it isn’t so good for your wallet. Getting out of debt, saving for a home, and other goals are far more important than the convenience of a quick sandwich or burrito at lunchtime. Based on our spending you would think lunch is our biggest financial priority! Take your lunch with you and skip restaurants a bit more often to stretch your dollars farther.
Create a priority-based budget
It is up to you to decide where your money should go. A budget does not enforce spending limits on you, it is a way for you to make a plan so you can make smart spending decisions every time you to go the store, open your web browser, or think about going out to eat. Don’t spend money willy-nilly and hope everything works out for the best. Make a spending plan that aligns with your goals so you don’t make purchases you’ll later regret.
If your top reasons to budget are getting out of debt and saving for a home, make those parts of your budget as large as possible. Find something less valuable that you can cut to make up the difference. Popular places to cut spending include coffee shops, cable TV, clothing, and of course restaurants. Focus on big wins, like cars and housing, as well.
Also, remember to make room in your budget for retirement. Not saving more for retirement is a common regret for those nearing their golden years. Do not make the same mistake and neglect your future when planning how to spend today.