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Impulse Purchases Derail Millennials’ Savings Goals

[Sunday, April 10th, 2016]

When it comes to self-improvement, many of us want to get healthy, pay off debt, and lose weight. But for young people, a more significant goal—and perhaps a harder one to follow through on—is saving money.

A survey from the American Institute of Certified Public Accountants (AICPA) and the Ad Council found that 34% of Millennials ranked saving more money as their number one goal for 2016. However, 65% of respondents said that the thing getting in the way of that goal is their penchant for impulse spending.

Saving for big things, and fun things too

Millennials, defined as people between the ages of 18 and 34, said they are trying to save for big things like emergency funds (40%), retirement (22%), and starting a family (15%). Things like taking a vacation (36%), buying a house (27%, buying a car (26%) and doing home improvements (20%) were also cited. Eight percent said they were saving for a wedding.

However, things that get in the way include a salary too low to allow for sufficient savings (84%), too many bills (81%), debt payments (79%), and lack of budgeting skills (62%). Forty-four percent of those surveyed said they don’t pay their credit card balance in full each month, or they borrow money from their friends and family. Thirty percent said they’d paid a late fee or an overdraft fee in the last year, 23% had missed a bill payment, and 41% had less than $100 in their checking account.

“Many young adults think saving is impossible,” said the chair of the AICPA’s Financial Literacy Commission, Gregory Anton. Anton, a CPA, said that low salaries and high amounts of debt were barriers to saving, but that the real key for Millennials is to create a budget and stick to it. “Establishing a disciplined saving strategy early in life and avoiding missteps will reap substantial long-term dividends,” said Anton.

Impulse shopping eats away at savings and may indicate other bad habits

Fifty-five percent of young adults surveyed said they tend to be impulse shoppers. This was defined in the survey as making an unplanned purchase of $30 or more, either daily or weekly. Impulse buying was linked with credit card debt—those who confessed to impulse buying were more likely to carry a balance on their credit card (45% of impulse shoppers versus 35% of non-impulse buyers), and to have paid a late fee or an overdraft fee (31% versus 21%).

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