Two-in-five under 35s prefer to enjoy their money now rather than save and invest it for the future
Two out of three over-55s believe it's financially tougher for millennials than it was for them
Over a quarter (27%) think there is little point in investing while they remain in debt but 92% are worried about the long term consequences
Almost two-in five (37%) millennials say they prefer to enjoy themselves now rather than save or invest for the future, according to a new study1 commissioned by Investec Wealth & Investment ("IW&I").
The research shows that over-55s are more inclined than the younger generation to put money aside; only a fifth of the older generation (21%) would rather spend now than save for the future.
The declining appetite for saving and investing among millennials cannot be attributed to record-low interest rates as over two-thirds (66%) said this has had no impact on their behaviour.
Instead, the majority (88%) of under-35s blame the high cost of living, which they claim makes saving and investing much harder now than for previous generations. Most over-55s also share this view; two-thirds (66%) agree that the current cost of living means the younger generation has never had it so bad. As a result 83% of older people think they invested more than the current generation of under-35s when they were the same age.
As well as the cost of living, nearly half of millennials (48%) cite today's 'buy now pay later' culture as a factor accounting for the decline of thrift. Four in ten (38%) blame unaffordable house prices and the difficulty of saving for a deposit, while one in three (33%) point to the debts they have built up from college and university, which older generations never had to face.
The research also underlines how reliance on debt is eroding the culture of thrift among millennials; over one in four (27%) under-35s think there is little point in investing because debt is unavoidable compared to just 5% of over-55s. One in five under-35s (20%) think they will never be debt-free.
Chris Aitken, Head of Financial Planning at Investec Wealth & Investment, said: "The culture of thrift has declined in recent years among young people because they have become more reliant on debt to finance their lifestyles. University fees mean that debt is part-and-parcel of many young peoples' lives long before they contemplate taking on a mortgage. But given how much is required for a deposit it's easy to understand why so many millennials don't see the point of saving for one. There's a danger that this mindset becomes fixed for life. Our advice is to start saving and investing what's affordable as early as possible."
Millennials support the idea of thrift in theory as 83% agree that they will only get the things they want by working hard and saving up for them. Over two-thirds (67%) are worried by the long term consequences of failing to save and invest and 92% agree that this would enable them to have a secure financial future.