How COVID-19 has turned some young adults into ‘unintentional savers’
A Wells Fargo survey shows millennials and Gen Zers are getting a jump on saving for the future by staying in, and staying together, during the pandemic.
COVID-19 has redefined the typical “night out” for young adults. Now, instead of summoning a rideshare service, then having dinner and libations at a local restaurant, for instance, four young men in Atlanta are cooking steak dinners and cracking a few beers at their shared home for the evening’s entertainment. And to top it all off: They are savoring the cost savings.
“It’s a huge benefit I can only begin to quantify,” said Hunter Jackson, who opted to share a two-story house with his friends Luke Mixon, Will McLaughlin, and Nick Romyns in the early months of the pandemic.
The group is an example of the new “unintentional savers,” a term being used by Wells Fargo Wealth and Investment Management to describe millennial and Generation Z populations who are benefiting from a financial boost in the downtime imposed by the pandemic.
“They are saving more now than they were before the pandemic,” said Regional Wealth Planning Manager for Wells Fargo Private Bank Stefanie Lewis, noting a finding of the Wells Fargo retirement survey released in October 2020. In particular, future-focused Gen Z workers have started saving at an earlier age.
By combining households, the young men in Atlanta avoid the social isolation that the pandemic may have caused them, while they spend less money on things like rent and utilities. This can be similar for others their age who have been able to return home to live with their families.
“The four of us talk a lot about the importance of growing wealth while we are younger. Definitely the time value of money is super important. The more you can start saving when you are younger, the better.” — Luke Mixon
Mixon and Romyns said their rent savings alone amounts to hundreds of dollars a month, in addition to the money they are saving by pooling for things like groceries, cleaning supplies, internet, and streaming services. That equals tidy sums they can put toward the goal of eventually buying their own homes.
As the pandemic wears on, even minor cost savings help them inch toward their goals, they noted. On their group outings to hike in Georgia’s Stone Mountain Park, for instance, they can save on park passes and split the cost of gas.
“It’s kind of like they say — if you have a leaky faucet, drip by drip, it eventually amounts to gallons of water,” McLaughlin said. “Even the smaller things we do will really add up over the long term.”
The Atlanta roommates are already thinking about how their saving habits today could affect them later in life. The October survey, conducted by Harris Poll, asked participants about retirement. It uncovered that 52% of Gen Z workers were uncertain about their ability to save enough to retire because of COVID-19.
Jackson, McLaughlin, Mixon, and Romyns are acting on that concern by developing a planning mindset, they said, whether they are talking about purchasing homes or other investment prospects.
“The four of us talk a lot about the importance of growing wealth while we are younger,” said Mixon. “Definitely the time value of money is super important. The more you can start saving when you are younger, the better.”
“It’s kind of like they say — if you have a leaky faucet, drip by drip, it eventually amounts to gallons of water. Even the smaller things we do will really add up over the long term.” — Will McLaughlin
The group said that almost all of their peers are currently in similar living situations and seeing similar savings, although not all may be as intentional in thinking about the long-term financial benefits.
“This is a moment where (young people) can take this circumstance that has appeared, due to the pandemic, and create a new mindset geared toward saving and preparing for the future,” Lewis said. “I think this is a huge opportunity for people who can do this right now.”
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About the Survey
On behalf of Wells Fargo’s Wealth & Investment Management division, The Harris Poll conducted 4,590 online interviews including 2,660 working Americans age 18-76 whose employment was not impacted by COVID-19, 725 Americans age 18-76 whose employment was impacted by COVID-19, 200 high net worth American workers age 18-76, and 1,005 retired Americans, surveying attitudes and behaviors around planning their finances, saving, and investing for retirement. The survey was conducted from August 4 – August 24, 2020. Working Americans are 18-76 and working full time (or at least 20 hours if they are working part time) or are self-employed and whose employment has not been impacted by COVID-19. Americans whose employment was impacted by COVID-19 are age 18-76 and selected that they personally experience at least one of the following due to the coronavirus pandemic: laid off from a job, furloughed from a job, started working a reduced or staggered schedule, been given a zero-hour schedule, or taken a pay cut. High net worth workers are age 18-76 and have at least $1 million in household investable assets. Retired Americans self-identified as retired regardless of age. All respondents are the primary or joint financial decision-maker for their household. Data are weighted where necessary by age by gender, race/ethnicity, region, education, income, marital status, employment, household size, and propensity to be online to bring them into line with their actual proportions in the population.