Gen Y feels more confident, knowledgeable and in control of their finances than other generations since the 2008 financial crisis began, according to a Fidelity study.
When comparing Gen Y, those born between 1981 and 1988, against older generations, the study reveals 81 percent of Gen Yers now consider themselves more knowledgeable about their finances, compared with 66 percent of older generations. In addition, 55 percent of Gen Y versus 47 percent of older generations feel more confident as investors. And 64 percent of Gen Y versus 54 percent of their elders now saves more systematically.
“Rather than over-reacting, Gen Y has taken a more deliberate approach to their finances, recognizing the need to assume control of their spending and investing habits, and showing a willingness to do things differently,” said John Sweeney, executive vice president of retirement and investment strategies at Fidelity Investments. “These are important factors when it comes to weathering any financial challenge.”
Although 26 percent of Gen Y respondents said their personal debt increased these past five years, 71 percent of respondents started to maintain an emergency fund and 48 percent increased their emergency savings.
In comparison, while 21 percent of baby boomers (born from 1946 to 1964) saw their personal debt increase, slightly more than half (52 percent) started to maintain an emergency fund and only 29 percent increased their emergency savings.
The study also found that 50 percent of Gen Y versus 30 percent of Gen X (born from 1965 to 1980) said the economy is better now than it was five years ago. And 76 percent of Gen Y versus 56 percent of boomers believe their investments have fared better since then.
When making financial and investing decisions, 37 percent of Gen Y turned to family and friends for advice at the start of the financial crisis, versus 23 percent of Gen X and 25 percent of boomers, according to Fidelity.
In addition, the survey found that in the past five years, 34 percent of Gen Y respondents increased household liquid assets, and 39 percent of Gen Y increased contributions to a tax-advantaged retirement savings account.
“Time is a lever that uniquely belongs to young investors, and for Gen Y, time is on their side,” added Sweeney. “This research indicates they are saving early and often, which is a critical element for a successful retirement road map.”
GfK Public Affairs and Corporate Communication conducted the Fidelity "Five Years Later" study online among 1,154 adult investors during the period from February 12 to 25, 2013. The qualified respondent was at least 25 years old and a financial decision-maker for his or her household and held investments besides a savings account or certificate of deposit.