Young adults in Metro Detroit own homes and save more than nationwide peers

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Young adults in Metro Detroit own homes and save more than nationwide peers, but most still don’t feel “Life Ready”

Bank of America/USA TODAY Better Money Habits Report Shows Economic Issues Top Social Issues As Young Voters Head to Polls

DETROIT – A newly released Bank of America/USA TODAY Better Money Habits® report finds that for 18- to 26-year-olds in metro Detroit, the definition of adulthood has changed: it is less about age and more about financial independence. In fact, the majority (60 percent) did not feel like adults when they turned 18.

When asked to define adulthood, this age group, which includes the youngest millennials as well as the oldest members of Generation Z, responded “working or having a full time job” as the top answer. Additionally:

• Roughly one in three (34 percent) define adulthood as having achieved a financial milestone such as buying a house or car, compared to having achieved traditional life milestones, such as getting married/starting a family (8 percent) or graduating from high school/college (7 percent).
• For those who feel like adults, the majority (62 percent) say it’s because parents helped prepare them. For those who do not feel like adults, almost half say it’s because they still rely on their parents.

In fact, many still rely on others to help with financial responsibilities: only 30 percent of young adults do their own taxes and just over half (51 percent) pay their own cell phone bills. At the same time, 63 percent say they are setting aside money as savings and 27 percent are contributing to a 401(k). Also of note: nearly one in five (18 percent) own a home – a figure that is 11 percentage points higher than the national average.

“The fact that so many young adults are in a place where they can buy homes is impressive, and it’s great to see that so many are saving,” said Carol Guyton, market sales manager, Bank of America. “This shows a degree of financial responsibility that not all young people possess. At the same time, it is important that they strike the right balances between managing short-term costs while investing in the future.”

The need for additional support and resources is what inspired Bank of America to partner with Khan Academy to create Better Money Habits, a free educational resource aimed at empowering people to be more confident in their financial decision making. The site delivers easy-to-understand information on a wide range of personal finance topics from retirement and taxes to buying a home.

Majority are cautiously optimistic about their finances

While nearly three-quarters (73 percent) of young adults in metro Detroit feel somewhat or very optimistic about their financial prospects, they cite the economy (60 percent) and job market (41 percent) as poor. Additionally, a majority (71 percent) report being worried about finding a career path that will support the lifestyle they’ve envisioned for themselves – 12 percentage points higher than the national average.

Majority wish they learned more about personal finance in school

While striving for financial independence, young adults in metro Detroit say they did not learn enough about practical money matters in school. Though their education has set them up for success in other ways, young Detroit-area residents are not necessarily feeling “life ready” upon graduating. Only 40 percent said their high school education did a good job teaching them strong financial habits.

When asked what they wish they had learned more about in school, nearly all named topics related to personal finance, more so than any other life-readiness skill:

• Forty-six percent wish they had learned how to do taxes.
• Forty-one percent wish they had learned how to invest.
• Thirty-five percent wish they had learned how to manage student loans.

A lack of practical knowledge has left some graduates feeling less than prepared for the road ahead. Of those who attended or are attending college, 40 percent had doubts about whether it prepared or is preparing them for the “real world.”

Pragmatism at the polls: young voters prioritizing pocketbook issues

With the campaigns in the home stretch, the report also surveyed young, first- and second-time voters in the Detroit area. Contrary to the narrative that this age group is overly idealistic, young voters in the area are actually quite pragmatic: the majority (65 percent) said that economic issues are more important to them than social issues (34 percent) in how they vote. Additionally, 79 percent of those with student debt say it will impact the way they vote.

While concerned about their pocketbooks, if forced to choose between two candidates – one who is best for their personal finances and one who is best for the country – the majority (83 percent) would prioritize what’s best for the country.

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