Just over three-fourths (78 percent) of Millennials use their friends’ financial habits to determine their own.
What is the barometer by which Millennials determine their financial standing? For a significant majority, it is by comparing their financial situation with that of their friends, according to a new survey from the American Institute of CPAs.
Just over three-fourths (78 percent) of Millennials use their friends’ financial habits to determine their own. Two thirds said they want to keep pace with their peers on where they live, while 64 percent responded similarly about what their friends wear. Nearly two-thirds report feeling peer pressure to keep up with the types of places they eat and the gadgets they carry.
“As the old saying goes: Be careful about the company you keep, said Ernie Almonte, CPA, chair of the AICPA’s National Financial Literacy Commission, in a statement. “Many young adults are building financial foundations with the wrong blueprints. They need to make sure they’re modeling the best behavior for their long-term financial stability.”
How do Millennials define financial stability? Seven-in-ten said it means paying all of their bills each month. By that definition, many are falling short. Almost half of Millennial respondents (45 percent) reported having to use a credit card to pay for necessities such as food and utilities, while 24 percent missed a bill payment and 28 percent or were contacted by a bill collector. Six-in-ten said they still get financial help from their family.
Still, Millennials tend to be optimistic about their financial futures, an attitude influenced by the fact that they are at the beginning of the careers and have more of their lives ahead of them presumably to save and to build assets. Nearly six-in-ten (57 percent) of Millennials and late Gen Xers, compared with 48 percent of respondents overall, said that their financial situation today is better than it was a year ago, according to a 2013 wealth level study conducted by Millionaire Corner of investors with a net worth between $100,000 and $1 million (not including primary residence).
Similarly, nearly seven-in-ten (67 percent) expect their personal financial situation will be stronger one year from now, compared with 46 percent of respondents overall.
The AICPA survey coincides with a new series of national public service advertisements for its Feed the Pig financial literacy campaign which is designed to marshal that optimism and promote positive financial attitudes and behaviors. “You adults are in the midst of making critical financial decisions about family and careers and are establishing the spending and saving patterns that often last throughout their lives,” noted Peggy Conlon, president and CEO of the Ad Council, which developed ads. “Our PSAs tap into the insight that this generation is strongly influenced by their peers when it comes to lifestyle purchases, but our goal is to extend that peer pressure to also include saving for the future.”
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.