While many consumers turn to investing as an avenue to reach their retirement goals, a new survey suggests many millennials and Gen Zers, in particular, are looking at how investing can help them to achieve more short-term priorities.
Ally Invest, a division of financial services company Ally Financial, commissioned a survey of 2,248 adults to learn what their priorities were when it came to saving and investing. Achieving financial freedom was the top motivating factor across all generations, with 47% of respondents naming that as their No. 1 priority for amassing funds.
However, some younger consumers seem smitten with the idea of using saving and investing to reach their travel goals. Nearly half (47%) of Gen Zers as well as 42% of millennials say they are saving and investing today so they will be able to travel more tomorrow.
Young Americans aren’t the only ones who value travel and are willing to make financial sacrifices to do it. Across all generations, travel was the second most-cited motivating factor for saving and investing, chosen by 38% of respondents. As mentioned above, securing financial freedom was the No. 1 motivating factor for 47% of respondents. Other reasons survey respondents save and invest include:
- To be able to care for a spouse or partner (32%)
- To pay for health care costs (30%)
- To fund their children’s future (30%)
- For early retirement (28%)
- To finance a child’s education (21%)
- To take care of pets (14%)
- To be able to start a business (11%)
Recent studies have shown that Americans are paying more for pet care than ever before, and younger consumers, in particular, appear to be focused on making sure they have enough to take care of their furry friends. Among Gen Z and millennial survey respondents, 20% said they save and invest today to pay for future pet care expenses.
The idea of retiring early is most appealing to millennials and Generation X. Among respondents, 35% of millennials and 32% of Gen Xers said they save and invest now so they can retire early. An early retirement was less on the radar for other generations, with only 24% of Gen Zers and 23% of baby boomers citing it as a motivating factor.
Some survey respondents are more motivated by spending their money today than putting it away for future needs. In fact, half of respondents said they would like to save and invest more, but they enjoy spending their money too much now to do so. Younger consumers were most likely to feel this way, with 63% of Gen Zers and 62% of millennials admitting to spending rather than saving. Among Gen X respondents, 47% admitted to a preference for spending over saving followed by 36% of boomers.
Others are not able to invest much today because of their current expenses, the survey found. Among respondents, 74% of millennials, 73% of Gen Zers, 68% of Gen Xers and 57% of boomers said their living expenses take up too much of their budget for them to allot much to investing today.
An ideal budget covers your daily expenses and allocates funds for saving and investing. The amount you should be saving may vary based on your age and stage of life. While saving for luxuries such as travel and entertainment can be tempting, make sure your retirement goals are on track first.