Financial reality is especially harsh for 20-somethings as a mere 23 percent rate themselves as totally independent, according to a survey by The PNC Financial Services Group.
Worse yet, only 18 percent of 20-29 year-olds, whose adult lives began amid the 2008 Great Recession, are confident they will have enough money to live comfortably when they are ready to retire.
These findings are part of the PNC Financial Independence Survey, which sought insights into the financial mindset of 20-somethings within Generation Y, which is projected to outnumber all population segments by 2017.
The study compares the responses within the age group and reveals their financial concerns are mounting in the early years of adult life. For example, 26 percent of 22-23 year-olds feel optimistic about their personal financial future and 20 percent are confident about having enough money for a comfortable retirement. Only 14 percent of their older peers, at ages 28-29, agree on both points.
“The two keys to financial independence for 20-somethings in today’s economy are: Don’t panic now and plan for the future,” said Todd Barnhart, senior vice president, PNC Bank. “At a young age, time is on your side and you can take full advantage if you manage your spending, start saving and chip away at any debt.”
The following are other highlights from PNC’s research:
Financial Independence: In total, 23 percent describe themselves as “totally financially independent.” It increases with age, but starts small at 5 percent for ages 20-21 then 25 percent for ages 24-25 and 34 percent for ages 28-29.
Sources of Income: Forty percent of the total relies on two or more sources of income. This includes part-time jobs (57 percent), full-time jobs (28 percent) plus help from mom and/or dad (21 percent) – 48 percent for ages 20-21 and still 7 percent for ages 28-29. They also rate parents as their top source of information about financial matters.
Getting Behind: Almost half (46 percent) rate themselves as behind expectations for personal financial success, including 52 percent for ages 28-29. Meanwhile, 26 percent overall feel they are right on target and 25 percent are ahead.
PNC’s Barnhart offers the following tips to help Millennials feel more in control of their financial future:
Don’t panic. Time is on your side. You’re still young, and it’s important that you’re thinking about your financial future, but don’t beat yourself up for not meeting your own expectations. Try to think positively about your financial goals.
Avoid debt traps. Not all debt is bad, but seriously consider interest rates to be sure you don’t accumulate high-interest debt that can keep you from using that money to save or invest.
Pay yourself first. Establish a regular savings program. A 401(k) plan through your employer is a great place to start.
Budget and track spending. It sounds easy, and very basic, but this can be one of the most difficult things to do consistently. Make use of online money management tools that can help you better manage spending, payments and savings.
The Financial Independence Survey was commissioned by PNC to identify attitudes and behaviors about personal finances among those ages 20-29. The survey was conducted online within the United States in July 2011 among a nationwide cross section of 2,000 adults. The survey results were released today, Sept. 6.