Employers that offer a 401(k) plan and other investment vehicles should take note of a new study about Millennial women. Findings also have implications for employee recruitment and retention.
The study, from SoFi, a finance company, and Levo, a community for Millennial women, explores the spending behaviors and investment habits of Millennial women. It finds the biggest driver of the investment gap between men and women isn’t knowledge or other financial obligations, but fear.
Fear and Confusion
Despite the cultural narrative around Millennials and financial planning, the study finds young women to be incredibly active and prudent managers of their personal finances, with the cash flow to pay off debt, save money, and invest for the future. However, while Millennial women are extremely active in managing their financial status, and more than half have the means to invest each month, the study finds the majority of Millennial women do not invest due to fear.
The study also indicates that Millennial women do not invest because they don’t know where to start and because they are paying down their debt.
“There is an incredible opportunity to increase the level of comfort and education around investing for the Millennial woman,” says Libby Leffler, vice president of membership at SoFi.
Levo surveyed a national sample of 2,050 female consumers ages 18-34 with an average salary of $50k+ in annual income. A few key themes emerged from the study:
- Millennial women are active managers of their personal finances. A majority of respondents, 53 percent, do have an emergency savings fund covering three to six months of housing and necessities. In addition, a strong majority of respondents, 70 percent, are reviewing their bank accounts once per week or more.
- Millennial women have the resources to invest, but say fear holds them back from investing. The majority of respondents, 57 percent, have extra money after paying their bills to invest. However, a majority, 56 percent, say fear holds them back from investing.
- A portion of Millennial women find investing to be “a total mystery.” In terms of approach to investing, one in four women, 25 percent, say this is the case. If they are not currently investing their money, the top two reasons are because they don’t know where to start, 25 percent, or because they are paying down their debt first, 25 percent.
- Millennial women would pay down their debts at the first bonus opportunity. Almost half of respondents would pay down their debts faster if given a $10K bonus.
- Millennial women say “stability for my future” is their top investment goal. While stability emerges clearly as the top investment goal (more than 85 percent), almost 61 percent of respondents also prioritize wealth as a way to pursue outside passions and interests.