More than a quarter of millennials tapped into their emergency savings and more than 20% applied for credit cards since the start of the pandemic
TD Bank, America's Most Convenient Bank®, announced today that more than a third of millennials report COVID-19 has negatively impacted their checking account balance, according to the results of the latest TD Money Matters Survey.
The survey, which polled more than 1,000 U.S. consumers to learn more about their financial behaviors and credit habits during the pandemic, found that millennials were much more likely than Gen Xers and boomers (31% and 17%, respectively) to report their checking account balance is decreasing.
Given that information, it's no surprise that the ability for people to save has also been hindered by the pandemic, as nearly 60% of respondents are not currently saving money. Of those respondents, more than half (54%) are millennials.
However, the pandemic has not been negative for everyone. Of those fortunate enough to save money, 38% are saving on average an extra $1,127 per month due to a decrease in expenses, including dining out and travel.
Struggling with Saving
COVID-19 has placed additional strain on a generation already saddled with significant debt and increased living costs. More than 28% of millennials said they tapped into their emergency savings during the pandemic. Furthermore, one-in-five (20%) millennials don’t even have a savings account.
"A healthy savings account is key to planning for milestone moments and unexpected hardships," said Lindsay Sacknoff, Head of Consumer Deposits, Products and Payments, TD Bank. "With COVID-19, many people are experiencing unplanned circumstances. This is a good time to take stock of spending and saving habits, create new financial goals and stick with them."
Despite these discouraging statistics, many millennials want to improve when it comes to saving. When asked what they would do if they had an extra $1,000 right now, 46% revealed that they would put the extra money into savings.
Another 31% of millennials said they have spent time during quarantine reviewing their finances.
Room for Improvement in Credit Usage
In addition to savings, Americans are struggling with their credit due to the pandemic. About one-in-six millennials reported that their credit score had gone down during the pandemic. This is significantly higher than GenX and Boomers, of which 4% and 3%, respectively reported a similar drop in their scores. The pandemic also sent millennials on the hunt for additional credit lines to support expenses, with nearly a quarter (22%) reporting they applied for a new credit card since the start of COVID-19.
Many millennials are also lacking basic credit card knowledge. The survey found that:
- 16% don’t know their credit limit
- Nearly half of respondents use more than 30% of their credit limit
- 34% revolve a balance each month
"Millennials haven't had it easy. They've been impacted by student loan debt, a recession and a difficult job market. Now, they face a global pandemic like nothing we've ever seen before," said Mike Kinane, Head of U.S. Bankcard at TD Bank. "Much of their financial situations has been out of their hands, but there are a few things they can control – how they budget, how they spend, if they choose to splurge and how they manage their debt."
Living in the Moment
Millennials continue to indulge on purchases during the pandemic, despite having less financial stability than older generations. Forty-two percent of millennials said they still splurge on themselves, higher than other generations, even though 26% admitted to hitting a negative balance in their checking or savings account.
Millennials reported the most overspending on online shopping or food delivery. Unsurprisingly, due to the COVID-19 pandemic, overspending in these areas has ticked up. What's more striking is that almost half (48%) of millennials do not keep a budget and out of those, more than a quarter still do not plan on starting one.
Conversely, 24% acknowledge the importance of budgeting, thus plan to start one in the coming year, with 35% adding that the pandemic has made them want to spend less on their living situation than they do now.
A few great first steps to building a budget are to:
- Determine net income
- Identify fixed and variable expenses, such as. utilities, rent/mortgage, credit card bills, student loan payments, groceries, mobile and internet
- Set realistic goals
- Track spending
- Adjust habits as needed
It's also a good time for consumers to review their credit score. Consumers can receive one free credit report per year from each of the three credit bureaus, which is useful in determining areas that need improving, like payment history and credit utilization.
To learn more about tools and resources for budgeting and saving money, visit www.td.com/us/en/personal-banking/finance/.
The study was conducted among a representative group of 1,009 consumers across the United States from June 9 -12, 2020. The survey was hosted by global research company MARU/Matchbox.
About TD Bank, America's Most Convenient Bank®
TD Bank, America's Most Convenient Bank, is one of the 10 largest banks in the U.S., providing more than 9.5 million customers with a full range of retail, small business and commercial banking products and services at more than 1,220 convenient locations throughout the Northeast, Mid-Atlantic, Metro D.C., the Carolinas and Florida. In addition, TD Bank and its subsidiaries offer customized private banking and wealth management services through TD Wealth®, and vehicle financing and dealer commercial services through TD Auto Finance. TD Bank is headquartered in Cherry Hill, N.J. To learn more, visit www.td.com/us. Find TD Bank on Facebook at www.facebook.com/TDBank and on Twitter at www.twitter.com/TDBank_US and www.twitter.com/TDNews_US.
TD Bank, America's Most Convenient Bank, is a member of TD Bank Group and a subsidiary of The Toronto-Dominion Bank of Toronto, Canada, a top 10 financial services company in North America. The Toronto-Dominion Bank trades on the New York and Toronto stock exchanges under the ticker symbol "TD". To learn more, visit www.td.com/us.