**Financial Regrets: Stress and Anxiety Among Young Adults**
Young adults are increasingly experiencing stress and anxiety due to their financial regrets, according to a recent survey conducted by Bankrate. The survey revealed that nearly three-quarters of Americans have some form of financial regret, with Gen Zers and millennials feeling the most stressed. This article explores the top financial regrets of young adults, the importance of emergency savings, and the growing concerns about retirement.
**Insufficient Emergency Savings: A Major Regret**
The survey found that the top financial regret among millennials and Gen Zers is not having enough money saved for emergency expenses. This regret is understandable considering that most young adults feel financially insecure and uncertain about their ability to cover expenses in case of a job loss. Younger workers struggle more than older workers to build an emergency fund due to the challenges they have faced, such as economic recessions, the COVID-19 pandemic, an unforgiving housing market, and a student debt crisis. In fact, over 30% of Gen Zers have no emergency savings at all.
**The Growing Need for Emergency Funds**
Several studies have highlighted the growing importance of having an emergency fund, especially in the wake of the pandemic. Over half of Americans now believe that an emergency fund is more crucial than ever before. Additionally, a significant number of Americans admit that they would be unable to afford a $1,000 emergency expense at the moment. The need to establish and grow emergency savings has become a pressing concern for individuals of all ages.
**Other Financial Regrets Among Young Adults**
In addition to insufficient emergency savings, young adults also express regret about taking on too much credit card debt. This is the second most common financial regret for both millennials and Gen Zers. Millennials also regret not saving for retirement early enough, while Gen Zers regret taking on excessive student debt. Despite these regrets, the survey found that savings-related regrets still outweigh debt-related regrets among Americans. Saving money is a higher priority for individuals than paying off their mortgage, education, or credit card debt.
**Retirement Concerns and Inadequate Savings**
The survey revealed that the largest share of adults with financial regrets regret not saving for retirement earlier in their careers. This regret is more prominent among boomers and Gen Xers, who are currently in or approaching the retirement stage. However, even boomers, who benefited from a stronger economy, feel that their retirement savings are insufficient. This has worrying implications for younger generations who have faced more financial challenges and are less financially independent. Many young workers still rely on financial support from their boomer parents. Additionally, a BlackRock report found that the share of workers who lack confidence in their ability to retire comfortably has more than doubled, with Gen Zers feeling the least confident.
**The Power of Compounding Regrets**
Greg McBride, Bankrate’s Chief Financial Analyst, stressed the power of compounding regrets over time. He explained that missed savings opportunities become more noticeable as individuals realize the potential growth they could have achieved. For example, he highlighted that every dollar invested in one’s twenties could become $17 by the time of retirement, assuming a modest 6.5% annual return. McBride emphasized that every dollar not invested in one’s twenties represents $17 that will be missing in retirement.
**Young Workers Building a Solid Foundation**
Despite having less saved up, young workers are actively working to build a solid financial foundation. Gen Z workers are more likely to invest in their company’s retirement plan compared to older generations at the same age in 2021. This indicates that Gen Z is more future-minded and financially conscious than they give themselves credit for.
In conclusion, the financial regrets of young adults are causing significant stress and anxiety. The top regrets include insufficient emergency savings, excessive credit card debt, and inadequate savings for retirement. The need for emergency funds has become increasingly apparent in the wake of economic uncertainties, and a significant number of Americans admit they would struggle to cover unexpected expenses. By understanding and addressing these financial regrets, young adults can work towards building a more secure financial future.