Young Americans Struggle To Save. Can The Marriage of Technology and Banking Help?

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The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

Millennials are in a financial bind. More and more young Americans carry higher and higher amounts of debt and live in cities where home prices are soaring. 

Where previous generations began building wealth almost immediately upon graduation, many millennials spend a decade or more climbing their way out of debt. The daily cost of living has far outpaced the increase in wages. In fact, adjusted for inflation, the average millennial salary is 20% lower than for the average baby boomer at the same age. The Washington Post reported that the net worth of Americans ages 18 to 35 has decreased 34% since 1996.

In 1970, according to the U.S. Census Bureau, the median home price was $17,000 while the median household income — still mostly single earners at the time —  was $8,734, meaning a home was a little less than 2 times your annual salary. In 2020, the median price was $407,700 while the median income — now often from 2 earners — was $67,521, making a home over 6 times household income. 

Another way to look at the numbers is that the median home costs almost 24 times what it did 50 years ago, while the median household — about 60% of which is comprised of 2 salaries — makes just shy of 8 times what 1 person did 50 years ago. 

There are additional troubling statistics as well: a recent study by the research firm PYMNTS found that 60% of millennials earning 6 figures or more live paycheck to paycheck with little to no savings or hard assets. Yet another April 2021 study, conducted by FINRA’s Investor Education Foundation and the Global Financial Literacy Foundation, found that as much as 60% of adults said they felt anxious talking and thinking about their finances and consequently reluctantly dealt with issues that breed such stress. High debt, low financial literacy, and money management challenges were top reasons for financial anxiety.

Americans, especially young Americans, need significant help navigating these murky financial waters. Barring real systemic change that sees parity between income, home prices, student loan debt and the cost of everyday goods, how can millennials maintain financial health and start to build wealth?

One promising aid is the rise in artificial intelligence (AI) tools for personal finance. Artificial intelligence is being integrated into the world of fintech, and many products and apps — from big players like Bank of America Corp. BAC and Wells Fargo & Co. WFC to innovative startups like Envel — are being released that can help young Americans gain some sense of financial autonomy. However, Envel is different because of its automated budgeting and saving features, so that users can save for specific goals without having to actively think about it on a day-to-day basis.

AI has the power to help people who lack the time, effort, or knowledge to manage their money, thus saving a great deal of stress and time that they can use for other endeavors. These AI services, with freemium models like Envel, are accessible to people of all backgrounds and income levels so that everyone can be financially aware. 

When crafting a budget and staying true to that budget, AI can be an invaluable tool. This is because budgets are highly unique to the individual — what their desired lifestyle is like, what their goals are — many factors are at play. What's more, AI can help to optimize in real-time. Spending habits can be analyzed, and limits and goals can be adjusted to keep people on track with a budget that is both attainable and beneficial to long-term savings goals.

If you’re interested in learning more about some of these tools, check out Envel’s website here.

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.