Survey: COVID-19 Prompts Millennial and Gen-Z Financial Reset

Like most things in 2020, the pandemic has shifted attitudes and priorities on almost everything – from online groceries to long-term remote work. For many millennials and Gen-Zers, this also includes how they view their personal finances. According to a new study by Laurel Road, 7 in 10 (70%) millennials and Gen-Zers say that COVID-19, specifically, has made them realize they need to reset and reevaluate how they handle their money.

The new 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.

Getting budget savvy

Despite the circumstances of 2020, nearly seven in ten (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 included new personal goals (33%), changes to personal life (32%) and new financial goals (30%).

Shifting financial habits 

Most survey participants said they made at least one change to their regular saving or spending habits during COVID-19.

1. Made more of an effort to save money – 37%
2. Created a budget – 33%
3. Canceled subscription services they don’t frequently use – 31%
4. Spoken to a financial advisor – 25%
5. Refinanced their student loans – 20%
6. Consolidated their student loans – 19%

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%).

“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.”

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.

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%).

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.

About the survey
The survey was conducted by OnePoll and commissioned by Laurel Road between October 19, 2020 and October 23, 2020 and 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). OnePoll is a corporate member of the AAPOR and adheres to the AAPOR Code of Professional Ethics and Practice. 

To learn more, view the survey results infographic here.