Millennials say they use extra income from tax cuts to save and invest
- About 90% of Americans have seen their take home pay rise since the new tax law came into effect in early February.
- Millennials are more likely to spend the extra money on savings, investing and paying off debt, according to a Bank of America survey.
- Generation X is more likely to use the additional income for daily expenses.
What would you do if you suddenly had more money in your pocket?
If you are a millennial the answer can probably be “save him”.
The tax bill that President Trump signed in December resulted in an increase in take-home pay for about 90% of Americans starting in February, according to the IRS.
With more money in their pockets, workers spend it mostly on saving or paying off debts, according to one Bank of America survey approximately 1,200 American employees.
But there is a difference between the behaviors of Generation X and Generation Y which suggests “a greater sense of responsibility than that often credited” to the latter.
A higher proportion of millennials, respondents aged 22 to 37, reported saving (20%), investing (17%) or paying off debts (8%) thanks to the windfall of tax reform, while more than Gen Xers than Millennials said they used the money for living expenses (11% vs. 8%).
Interestingly, around 20% of millennials and millennials said they didn’t get a tax cut, but Bank of America guess some people just didn’t notice the difference. , or that it has been delayed.
Business Insider previously calculated how the change in tax brackets affects single, childless workers who get paid bi-weekly (26 paychecks per year). The new tax law has resulted in increases ranging from $ 7.78 per paycheck for a worker earning $ 20,000 per year, to $ 118.45 per paycheck for someone earning $ 269,600 per year.
The amounts were based on new guidelines released in January by the IRS, known as withholding tax tables, which help employers calculate the amount of tax to withdraw from employee paychecks.
In many ways, Generation X is worse off financially than Generation Y; their saving and spending habits and lack of retirement planning are “regarding. “Non-mortgage debt has increased for Gen Xers, from an average of $ 20,000 in 2014 to $ 23,000 in 2017, according to a 2017 report of Allianz Life Insurance Company.
The same report revealed 41% of millennials help save every month, compared to 36% of Gen X. Incredibly, both generations have about $ 35,000 saved for retirement, despite being up to 15 years of age difference.