Millennials, those aged 18 to 34, have a pretty bad reputation — especially when it comes to their finances. They’re accused of having too much debt, not having any money management skills, spending money with abandon and not caring whether their lifestyle is affordable or not. But, those might be cheap shots as some could now argue that millennials are actually more responsible with their money than one would think.
A recent GOBankingRates survey revealed some interesting insights about this group that now numbers about 75 million people. This survey looked at how millennials balanced their finances — or lack thereof — with social responsibilities. And although the findings show that some millennials will spend money they don’t have to enjoy a social event, a significant portion of them are more afraid of putting themselves in financial strain than of missing out on social events.
Many Millennials Resist Social Peer Pressure to Avoid Financial Strain
More millennials believe being financially strained in order not to miss a social event is worse than missing out on something because they can’t afford it, found the GOBankingRates survey. In fact, a surprising one-third of millennials said they have never gone out and spent money with friends if they couldn’t afford it.
“This does not surprise me because millennials are becoming more practical as they get older, take on more responsibility and have more experience,” said Jason Dorsey, a millennial researcher and co-founder of The Center for Generational Kinetics, a millennial and Gen Z research and consulting firm. “While the media may not like this answer because it’s not sensational … I find it a great insight into millennials moving in a direction of overcoming the stereotypes so often forced upon [them].”
The millennials’ survey responses also challenge the “selfish” stereotype older generations have given them. The majority of survey respondents (about three in five) said that if attending a social event would result in financial strain on their family or significant other, it would not be worth it. This selflessness might surprise some people — but not Dorsey.
“The fact that these millennials still won’t put their family in jeopardy is a testament to millennials becoming older, wiser and seeing that their decisions have outcomes,” he said.
And when asked when it’s not worth it to put themselves in financial strain in order to attend a social event, millennials most often answered “when the cost exceeds $50.” According to Dorsey, this is a reflection of millennials’ combination of economic reality and practicality, in addition to their willingness to seek out free events.
But Some Millennials Still Suffer From ‘FOMO’ — And Will Turn to Credit Cards
FOMO, which stands for the “fear of missing out,” is still very real for some millennials, however. Although most respondents in this survey understand that putting themselves in financial stress in order to go out with friends or attend a social event is a bad idea, a large portion of them will do it anyways.
Nearly 67 percent of survey respondents said they have gone out to spend money with friends — even though they couldn’t afford it. In fact, some are even willing to whip out a credit card to avoid missing out on an experience. About one-third of millennials (32 percent) who paid for a social event they couldn’t afford said they used their credit card to pay for it and avoid overdraft charges.
Anytime a credit card is used, there’s a chance the cardholder could fall into the credit card debt trap. But interestingly enough, millennials who carry a lot of debt are mostly dealing with student loans, said Michael Parrish DuDell, a best-selling business author and millennial research expert.
“You’ll find that Gen X has more credit card debt,” said DuDell. “[Millennials] only carry more overall debt because of college loans.”
A recent TD Bank Consumer Spending Index survey found that millennials charge 22 percent less to their credit cards than the average consumer, which could explain why they have less credit card debt than other generations. Dorsey said millennials are also shunning credit cards and are opting for debit cards instead.
“This is great in terms of budgeting,” he said, “but [it’s] creating a significant problem when it comes to millennials making major purchases, like homes and cars, as they don’t have a significant credit history.”
Millennials Are Optimistic About Their Ability to Make More Money
Besides resorting to various resources — like a credit card — to afford social events, there’s another reason why some millennials are willing to put themselves in financial strain: In the survey, more than a third of those who feel comfortable experiencing financial strain to attend a social event said it’s because they know they’ll make more money in the future.
But in reality, millennials aren’t making as much as you’d think — at least, not as much as young adults in the past. The U.S. Census Bureau discovered young adults today earn less than young people in previous generations. For example, the median earning for today’s full-time workers aged 18 to 34 is $2,000 less than the median earning for full-time workers of the same age group in 1980.
DuDell said this is one reason he finds millennials’ optimism about making more money worrisome. “[Millennials] were raised in the mid-90s in this incredible prosperous economy,” he said. “[They’re] taught everything and anything is possible. Other generations were not raised that way, and I think [millennials] should be a little more cautious.”
When It Comes to Spending Money, Millennials Value Experiences
If millennials are willing to spend money they really don’t have, it’s likely it will be on experiences instead of material things. More than half (56 percent) said they spent money on food and drink when money was tight. Meanwhile, nearly 30 percent went to a close friend’s celebration, 22 percent spent the money on another special event and 9 percent went on a last-minute getaway.
“[Millennials] spend money on something they can partake in instead of possessions, as opposed to how crazy everyone went in the ’90s with the McMansions and all the cars,” said DuDell. “This generation believes life is for the living.”
The good news, though: They also seem smart enough to know not to live it up too much.
Keep Reading: 58% of Millennials Still Prefer to Get Paid With Cash
Methodology: Survey conducted by Survata, an independent research firm. Survata interviewed 501 adults ages 18 to 34 from May 5, 2016, to May 7, 2016. No monetary compensation was given.