The convention wisdom is that young adults age 17 to 24 are either living with their parents or are financial dependent upon them.
Not so. Young adults graduating from college and beginning their careers may be more financially independent than many people think. According to a new survey released by TD Bank, only 42 percent of the youngest millennials currently rely on some form of financial support from family, and 61 percent know their credit score.
The TD Bank survey asked 505 gen Zers (ages 17–20) and young millennials (ages 21–24) about their financial habits, knowledge and concerns to explore their levels of financial literacy and independence.
Unsurprisingly, the survey found that as gen Zers begin their journey toward financial independence, three-quarters are receiving financial support from family. But at the same time, they are establishing themselves financially. Those in gen Z have almost as many financial/bank accounts as young millennials (2.4 accounts for gen Z vs. 3.3 accounts for young millennials) and 29 percent know their credit score.
“It’s encouraging to see that many gen Zers show some great money habits and are already beginning to prepare for their financial futures,” says Andrea Johnson, Head of U.S. Financial Education at TD Bank. “It’s crucial for gen Z to understand the importance of being good money managers, especially as they enter college and take on loans.”
Huge student loans
Student loans and personal debt are generally a new and large responsibility among young millennials and gen Zers. More than a third (38 percent) of gen Zers and young millennials surveyed are extremely or very concerned about their ability to pay back student and/or personal debt. For young millennials who are finishing school or starting their career, 38 percent have personal or student loans and have borrowed, on average, $27,286 for their education.
When it comes to gen Zers, who might still be accumulating school-related debt, 31 percent have already taken on personal or student loans, and they have borrowed $13,119 on average. The survey also found that 30 percent of gen Zers are unsure of how much they’ve borrowed. Despite not knowing what their current school debt is, they anticipate a greater amount of debt than their millennial counterparts after graduating.
Spending/saving habits of young Americans
While many gen Zers are receiving less financial support than once thought, they are still receiving some support from family members. According to the survey, nearly a quarter (24 percent) of gen Zers’ spending money comes from family, and only 7 percent for young millennials.
Of the money these younger Americans take in, whether it’s from family or a job, they try to save something. Eight-four percent of gen Z and 82 percent of young millennials say they are able to put some money into savings accounts. They also try to be responsible with their bills—63 percent of young millennials and 47 percent of gen Zers say they consistently pay on time.
Financial goals, confidence and outlook
When asked about the importance of a range of financial milestones over the next 10 years, graduating from school and starting a new job were ranked first or second by more than half of gen Zers (55 percent and 51 percent, respectively).
Young millennials, however, have more varied financial priorities over the next decade. Millennials said starting a new job was their highest priority in the next few years, with buying a home a close second in priority (38 percent and 33 percent, respectively.)
According to the survey, 38 percent of young millennials said they were confident in making financial decisions, compared with only 29 percent of the younger gen Zers. At the same time, 21 percent of gen Zers and 14 percent of young millennials say they’ll worry about money when they’re older.
“Financial confidence comes with time,” said Johnson. “Young millennials are gaining that confidence and are setting a good example for gen Z. Gen Z continues to become more financially confident as they tackle their first real monetary challenges.”
The study was conducted among a nationally representative group of consumers between October 5 and October 11, 2015. The total sample size is 505 respondents (254 ages 17-21; 251 ages 21-24) and has a margin of error of +/- 4.4 percent. The survey was hosted by global research company Vision Critical.
TD Bank, Cherry Hill, N.J., has 1,300 locations through the Northeast, Mid-Atlantic, Metro D.C., the Carolinas and Florida.