Are millennials less likely to be in debt than their parents?

The millennial generation – people aged between 18 and 34 – may be less likely to find themselves in debt than their parents, according to new research.

'Millennial Me & My Money', a report published by Experian, reveals that almost half (45 per cent) of this generation makes an effort to save at least 25 per cent of their income each month, in comparison to just 35 per cent of their parents' generation, which is often referred to as Generation X.

So, why are millennials more saving savvy than their parents? And where do their downfalls lie?

Why millennials are saving more

Generation Y are likely to be saving more than their parents due to the uncertain economic climate they grew up in. Many millennials came of age in the midst of the recession, meaning they were exposed to a whole host of reports and concerns on how hard it will be for them to climb the property ladder and retire at a reasonable age.

What's more, many appear to have learnt from their parents' monetary mistakes, with respondents who believe their mums and dads have had a positive influence on their spending habits typically saving more than those who did not receive adequate financial advice during their upbringing.

Clive Lawson, managing director at Experian, commented: "It's striking to see just how much of an impact parental influence can have on the financial wellbeing of millennials in adulthood.

"What this research made clear to me was the opportunity that we as parents have to set foundations by helping our children learn from both our experiences and our mistakes in managing money."

Saving pitfalls

The report found that 18 to 34-year-olds who had not received adequate monetary advice from their parents were more likely to be in debt.

One-third (33 per cent) of this group had an overdraft, in comparison to 19 per cent of those with a financially-sound upbringing, while they were also twice as likely to have missed a credit repayment deadline.

In addition, 43 per cent of millennials raised without financial stability had run out of money before their next pay day in the past, compared to just 21 per cent of those who had received extensive monetary advice from their parents.

Furthermore, ten per cent of Generation Y had defaulted on a credit account in comparison to four per cent of those who had been coached on financial management from a young age, while there were also five times more likely to have a debt-related County Court Judgement in their name.

Mr Lawson continued: "As it stands, it appears that millennials already surpass older generations when it comes to money management and this is good to see. However, there are still a few lessons to be learnt."

For example, the lax approach many millennials have to shopping around for the best deal and the fact that they tend not to regularly check their credit reports and bank statements could be preventing them from saving even more money.

Overall, it appears that it is how an individual is brought up that helps to determine how likely they are to get into debt when they begin managing their own finances, rather than the generation to which they belong.