New study by Laurel Road finds shifted personal goals and past money regrets are driving new financial mindset
New York, NY — December 1, 2020 — Seven in 10 (70%) millennials and Gen-Zers say COVID-19 has prompted them to reset and reevaluate how they handle their personal finances, according to a new study by Laurel Road, a digital lending platform and brand of KeyBank, which looked to understand the impact of the COVID-19 pandemic and 2020 as a whole on their personal finances.
The study, which surveyed 1,000 millennials and 1,000 Gen Z Americans, found that over half (52%) of respondents regret not handling their money more efficiently during 2020. Millennials, however, are more likely than their Gen Z counterparts to feel like they handled their money poorly, at 59% compared to 46%. That said, those with student loans (approximately 1,500 respondents) utilized federal relief to help them, as almost two-thirds (62%) noted that federal student loan forbearance made an impact on their ability to save during the pandemic.
Despite the circumstances of 2020, nearly seven in 10 (69%) shared they’ve effectively budgeted their money as best they could. In fact, 37% said that during COVID-19 they’ve made more of an effort to save money, with 33% creating a budget and 25% even speaking to a financial adviser about their situations. A further 20% of those polled shared they refinanced their student loans and 19% consolidated their student loans as a savings strategy.
When reflecting on COVID-19, the top reasons for a financial reset include new personal goals (33%), changes to personal life (32%) and new financial goals (30%).
“COVID-19 has been challenging for us all. For millennials and Gen Z-ers, they too have faced many challenges, but in turn, the pandemic has also prompted an opportunity for a financial reset,” said Alyssa Schaefer, Chief Experience Officer at Laurel Road. “What’s encouraging to see from our survey results is that so many people have used this time to prioritize their personal finances, including by refinancing their student loans, and actively sought learn new ways to budget and save.”
Getting Smart on Student Debt
Student loans have been a priority for Gen Z and millennials during the pandemic. Of those surveyed who have student loans, almost two-thirds (62%) shared that quarantine finally allowed them the time to think about their student loan financing options.
Reflecting on the year ahead, 59% of this age group with student loans plan to pay off more of their debt in 2021, which they’ll do by refinancing (20%), consolidating (30%) and negotiating a lower interest rate (28%).
Mental Wealth Comes First
The survey results also revealed that 60% wish they could improve their budgeting skills, they just don’t know where to begin. Still, they’re putting in the time and effort to figure it out, with 58% spending over 5 hours per week managing their personal finances due to the pandemic.
Saving has been top of mind for millennials and Gen-Z, with the survey finding this group has saved the most by eating at restaurants less frequently (32%), not going to the movies (30%), not buying new clothing or shoes (26%) and not going to bars (26%).
Of note, these groups have shifted their spending to personal well-being, with 32% putting money toward personal wellness and 25% investing in their professional development by getting certified in additional skills. Additionally, a quarter (25%) of respondents also shared they’ve put more money toward mental health resources as well as attending webinars or online courses to progress their professional development (24%).
All of these changes seem to be working, as the average Gen Z respondent saved nearly $600 and the average millennial respondent saved just over $1,000 specifically during the pandemic.
“Investing in personal well-being is always important and something we believe in strongly at Laurel Road,” Schaefer added. “Right now, it’s never been more crucial to focus on our ‘mental wealth’ – daily personal, professional and financial decisions that support our peace of mind. Making impactful changes to financial planning, such as student loan refinance, can create beneficial savings opportunities, and we’re proud to provide options that do this for our customers.”
Holiday Savings Mean A Happy New Year
As we approach the holiday season, 61% are counting on getting cash for the holidays to be more financially stable going into the new year. Looking ahead to next year, one in five respondents shared that if they had an extra $1,000 to spend in 2021 – they’d use it to pay off more of their student loans. Additionally, a quarter of respondents said they would invest in their personal wellness and even in the stock market.”
These results were taken from a random double-opt in survey of 1,000 Gen Zers (respondents aged 18-24) and 1,000 Millennials (respondents aged 25-39) conducted by OnePoll and commissioned by Laurel Road between October 19, 2020 and October 23, 2020. OnePoll is a corporate member of the AAPOR and adheres to the AAPOR Code of Professional Ethics and Practice.
About Laurel Road
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $7 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products, mortgages and personal loans that helps simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. For more information, visit www.laurelroad.com. Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. The mortgage product is not offered in Puerto Rico. KeyBank is a Member FDIC, Equal Housing Lender. NMLS ID # 399797.
KWT Global for Laurel Road