Savvy millennials are surprise savers
Almost three quarters (72 per cent) of young people have a savings pot set aside for emergencies, according to MoneySupermarket.
While it’s often assumed that millennials don’t have the cash or inclination to save, research by the price comparison website found that of the 25 to 34-year-olds who have a rainy day fund, more than a third (35 per cent) keep it in a dedicated savings account. A further 27 per cent keep the cash in their regular current account, while 10 per cent keep the extra cash under their mattress.
MoneySupermarket found the main reason millennials put money into a separate savings account is to cover the cost of emergencies, such as a broken boiler (41 per cent). Being prepared for unexpectedly losing a job (39 per cent) and emergency car payments, such as an MOT fail (37 per cent), are also among the top considerations.
Despite dipping into the pot 3.8 times a month for non-essentials, millennials don’t reach into it as regularly as other generations. Those aged over 55 dip into it 4.6 times a month, slightly higher than the national average of 4.2.
Younger generations are much more likely to use the pot for clothes (20 per cent vs 7 per cent), going out to eat/drink (24 per cent vs 6 per cent) and paying everyday rent or bills (38 per cent vs 15 per cent) than those aged over 55.
Despite showing saving willpower, the average £2,262 saved by millennials is 41 per cent less than the £3,826 put aside by those aged over 55.
When it comes to the national saving behaviours, residents in Plymouth are the best at paying into a rainy day fund with £3,527 tucked away. In comparison, people living in Edinburgh have the least saved, at an average of £2,596.
Emma Craig, money spokesperson at MoneySupermarket, said: “Our research highlights that millennials are far more financially savvy than many people think. The concept of a rainy day fund has been around for decades and it’s great to see it’s now popular with the younger generation – putting a little aside each month to build up an emergency fund can really help if and when unforeseen costs crop up.
“If you want to build up a rainy day fund you might want to consider a savings account, such as an easy access, ISA or fixed rate bond. The other option is to get a current account – some accounts offer competitive interest rates that can help make your money go further. However, before applying, it’s always worth checking each bank’s specific account opening criteria and terms and conditions to make sure you get a deal that suits your needs.”