September 1, 2015 in Smart Money

Quiz: Savings and investing for millennials

If you’re like many millennials, you think the safest way to handle money is keeping it in cash. For those 21 to 36 years old, it’s seen as a better choice than sinking it into the stock market, according to a 1st-quarter 2014 UBS Investor Watch report.

If you’re a millennial, you’re from the generation that’s been scarred by the Great Recession, making you part of the most financially conservative generation since the Great Depression, the survey found.

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Although you like cash, you’re probably not carrying around stacks of it to pay your bills. So, how do you compare with other generations when it comes to banking? And what do you really know about investing that hard-earned cash? Take our quiz and find out how “millennial” you are with your money.

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Next Question
A. Who needs a bank branch? I do everything online.
B. I go to the bank with the closest branch.
Answer: A. About 9 in 10 millennials bank online, and 72% are active users of mobile banking, according to the 2014 North America Consumer Digital Banking Survey conducted by Accenture. Millennials also are more likely than other generations to be willing to switch to banks with no branch locations.
Next Question
A. I have a wallet full of credit cards and use them regularly when I shop.
B. I'm happy with my debit card. I already have enough debt.
Answer: B. Millennials have fewer credit cards, on average, than other generations -- about 1.5 credit cards per person, according to Experian -- and they carry lower amounts of debt on those cards. But, you've got plenty of other kinds of debt, such as school loans and car loans.
Next Question
A. Who can save? Everything I earn goes to pay my bills.
B. I'm nearing the 6-month mark of emergency savings.
Answer: B. Experts say you should have 3 to 6 months' worth of expenses set aside for emergency savings, but one-quarter of Americans haven't managed to save a dime.

So, it will probably come as a shock to older generations that 18- to 30-year-olds are most likely to have 5 months' worth of emergency savings squirreled away. Bankrate's chief financial analyst Greg McBride, CFA, says that's because many millennials have lower expenses and are still in college, or live with roomies or Mom and Dad.
Next Question
A. I still have a long way to go, but I'm off to a strong start.
B. I'll never be able to retire.
Answer: A. Because millennials have seen the toll that the Great Recession took on their parents, many are already socking away money for retirement. And they're starting early -- at age 22.

A 2014 survey by the Transamerica Center for Retirement Studies found that 70% of millennials are saving for retirement in an employer-sponsored plan and/or outside of work. They're contributing a median 8% of their income to 401(k)s or similar plans each year and the median household retirement savings is already $32,000.
Next Question
A. I'd go out and purchase hot stocks.
B. Any extra cash goes to paying off my debt.
Answer: B. Millennials tend to be overloaded with debt. In fact, a student who graduated from college in 2013 was burdened with an average of $28,400 in school loans, the Project on Student Debt and College InSight found.

A survey by financial services company UBS found more than 4 in 10 millennials would use a windfall to pay off debt, compared with just 15% of non-millennials. Only 12% would invest it in the market compared with one-third of those from other generations.
Next Question
A. I trust my financial adviser to look out for my best interests.
B. Father knows best. Let me talk to my parents, my spouse or friends.
Answer: B. Millennials have great faith in their family and friends to give them the best financial advice. A UBS survey found that 41% of millennials will seek advice from their parents. Meanwhile, just 14% of millennials will seek advice from a financial adviser, compared with 40% of respondents from other generations.
Next Question
A. I keep a hefty balance in my checking account so I can avoid monthly service fees.
B. I won't bank at a financial institution that charges monthly fees.
Answer: B. The era of free checking accounts at big banks is nearly dead, which is anathema to millennials. About 83% say fees are a key consideration when choosing a bank or credit union, according to th!nk Finance, a Texas data company that serves lenders.