Bank of the West 2018 Millennial Study · Executive Summary • Six in ten Millennials believe that the American Dream is attainable today.Top ingredients to the American Dream are:

Bank of the West 2018

Millennial StudyResults

July 2018

Table of Contents

• Executive Summary 3

• Key Findings 5

– The Millennial Mindset

• The American Dream 6

• Homeownership 9

• Relationship with Debt 17

• Investing for Retirement 21

• Additional Data

– The Millennial Mindset: Gender Differences 27

– The Millennial Mindset: California Millennials 31

• Appendix

– Methodology 34

– Additional Data 36

2

Bank of the West 2018 Millennial Study: Executive Summary

Executive Summary

• Six in ten Millennials believe that the American Dream is attainable today. Top ingredients to the American Dream are: owning a home, becoming debt-free, and retiring comfortably.

• Owning a home (56%) takes precedence over paying off debt or retiring comfortably for Millennials. In fact, nearly 1 in 3 Millennial homeowners have dipped into retirement funds for down payments.

• 68% of Millennial homeowners have regrets about buying a home, wishing they had been more prepared going into the purchase. They cited putting more money down and better inspecting the house as steps they wish they’d taken.

• Millennials have a complicated relationship with debt: while 69% feel they’ve made it whenthey are debt-free, they also say they’re comfortable carrying debt. They also understand that they need to take on a mortgage to become homeowners and are comfortable with this kind of “rite of passage” debt.

• More Millennials feel confident in their understanding of financial products than Gen Xers and Boomers, but are mistrusting of the markets due to having come of age during the financial crisis. In fact, 66% say they feel safest keeping most of their savings out of the market. This may hinder them as they prepare for retirement.

5

Bank of the West 2018 Millennial Study: Key Findings

The Millennial Mindset:The American Dream

57%

54%

23%

13%

7%

3%

57%

53%

25%

9%

9%

4%

62%

46%

28%

7%

2%

16%

58%

52%

25%

11%

7%

6%

NET: I have already attained theAmerican Dream/The American

Dream is still attainable today

The American Dream is stillattainable today

I once believed in the AmericanDream, but I no longer do

I never believed in the AmericanDream

The American Dream wasnever/will never be attainable

I have already attained theAmerican Dream

Millennials

Generation X

Baby Boomers

All

Nearly six in ten Millennials believe in the American Dream.

7Base: Total=1,014; Millennials=609; Generation X=204; Baby Boomers=201. Q13. Which best describes how you feel about the American Dream?

Which best describes how you feel about The American Dream

The most popular ingredients of Millennials’ American Dream areowning a home, being debt-free, retiring comfortably, and pursuing a passion.

8

Top Ingredients in American Dream

Base: Total=1,014; Millennials=609; Generation X=204; Baby Boomers=201. Q14. Please select the most important ingredients from the following list that describe your American Dream.

56%

51%

49%

47%

41%

41%

41%

38%

4%

59%

50%

59%

29%

47%

38%

37%

43%

7%

68%

61%

73%

27%

36%

35%

34%

42%

4%

59%

53%

56%

39%

41%

39%

39%

40%

4%

Owning a home

Being debt-free

Retiring comfortably

Pursuing my passion

Having children

Getting married

Making it on my own

Owning a car

I don't have an American Dream

Millennials

Generation X

Baby Boomers

All

The Millennial Mindset:Homeownership

Four in ten Millennials are homeowners already. Top motivators include feeling stability, feeling homeownership makes financial sense, and being able to modify a home.

10Base: Total=1,014; Millennials=609; Generation X=204; Baby Boomers=201. Q4. Where do you currently live? Base: Non-homeowners=467; Millennials=355; Generation X=64; Baby Boomers=48. Q9: What reasons, if any, would motivate you to buy your own home?

Where Millennials Live Motivators to Buy a Home, Among Non-Homeowners

Rent, 46%

Own, 42%

Stay with parents/family,

11%Stay with

friends, 1%

49%

47%

47%

44%

40%

38%

30%

30%

17%

11%

8%

4%

34%

36%

22%

31%

25%

13%

14%

20%

13%

6%

20%

8%

31%

25%

21%

19%

23%

2%

4%

6%

19%

2%

46%

4%

45%

43%

41%

40%

36%

31%

25%

26%

16%

9%

13%

4%

To feel a sense of stability

It makes more financial sense toown my home versus renting

So I can modify it and make itmy own

Wanted more space

It’s a good financial investment

Having children

Getting married

Moving in with a significantother

Tax breaks

I wanted to invest in mycommunity

I have no interest in owning myown home

Other

Millennials

Generation X

Baby Boomers

All

Putting down roots: most Millennials see themselves staying in the same area for the next 10 years.

11

I can see myself living in the same area for the next 10 years(% Completely/Somewhat Agree)

76%

87%

74%

Millennials Generation X BabyBoomers

All

69%

Base: Total=1,014; Millennials=609; Generation X=204; Baby Boomers=201. Q2: To what extent do you agree or disagree with the following statements?

When picking a place to live, Millennials most commonly cite cost of living, proximity to family, and career opportunities as key factors.

12Base: Total=1,014; Millennials=609; Generation X=204; Baby Boomers=201. Q3: When picking a place to live, what are the top three factors most important to you?

Top Ten Factors When Considering a Place to Live(Respondents chose three)

54%

42%

40%

26%

23%

18%

18%

16%

15%

14%

71%

42%

30%

34%

33%

18%

14%

13%

12%

17%

72%

44%

11%

7%

54%

32%

11%

13%

10%

18%

61%

42%

32%

24%

31%

21%

16%

15%

14%

15%

Cost of living

Proximity to family

Career opportunities

Good schools

Weather

Real estate prices

Earning potential

Proximity to friends

Access to cultural experiences

Shared values

Millennials

Generation X

Baby Boomers

All

Bigger houses, safer neighborhoods, and better school systems would motivate current Millennial homeowners to move to a newhome.

13Base: Homeowners at Q4; Millennials=254; Generation X=140; Baby Boomers=153. Q7: Which of the following factors, if any, would make you want to move to a different home?

Factors That Would Make Homeowners Want to Move to a Different Home

46%

36%

33%

27%

27%

24%

19%

17%

13%

13%

4%

3%

32%

42%

23%

21%

27%

29%

19%

21%

14%

13%

7%

6%

6%

29%

2%

12%

18%

25%

10%

27%

35%

8%

23%

7%

31%

36%

22%

21%

24%

25%

17%

20%

19%

11%

10%

5%

Need a bigger house

Safety of neighborhood

Quality of school systems

Home increased in value

I want to be closer to loved ones

Property taxes

I don’t see myself living in this area long term

My house is difficult to maintain

Need a smaller house

My home value declined

None of the above

Other

Millennials

Generation X

Baby Boomers

All

Millennials view homeownership as a financial investment.

14Base: Total=1,014; Millennials=609; Generation X=204; Baby Boomers=201. Q9: What reasons, if any, would motivate you to buy your own home?

Motivators for Homeownership

45%44%

43%

51%

39% 39%

35%

40%

All Millennials Generation X Baby Boomers

Makes more financial sense to own my home vs. renting It’s a good financial investment

59% 58% 62%

Nearly half say it makes

more financial sense to own

versus to rent and over

one-third believe it’s a good

investment, which is

consistent across

generations.

Two in ten Millennials who plan to buy a home expect to dip into retirement accounts to fund their purchase; three in ten who are currently homeowners have already done so.

15

Base: Interested in buying a home=405; Millennials=328; Generation X=51; Baby Boomers=26. Q10. How, if at all, are you planning to finance your down payment for a home purchase?Base: Already own a home=547; Millennials=254; Generation X=140; Baby Boomers=153. Q10. How, if at all, did you finance your down payment for a home purchase?

How was Home Purchase Financed

From IRA or 401(k) loan or withdrawal

From my cash savings

Apply for a loan prior to a mortgage

Profits from selling other assets

Inheriting money or receiving money as a gift

From my brokerage account or investments

Borrowing from a family member

I'm not—I plan to inherit a home

9%

11%

13%

15%

13%

44%

58%

17%

13%

3%

5%

7%

22%

22%

46%

7%

11%

10%

8%

6%

14%

28%

55%

11%

5%

16%

17%

20%

22%

28%

50%

29%19%6%

8%18%

64%37%

31%50%

48%25%

38%27%

16%12%

8%13%

14%8%

4%12%

13%12%12%

20%

12%12%

4%11%

5%22%

23%9%

Plan to Buy a Home Already Own a Home

Millennials Generation X Baby Boomers All

Generation X: 55%

Top regrets:

• Costly to maintain (23%)

• Stretched too thin financially (19%)

• Feel stuck in one place (18%)

Over two-thirds of Millennials have regrets about how prepared they were for the home buying process—a far higher proportion than their older counterparts.

16Base: Already own a home=547; Millennials=254; Generation X=140; Baby Boomers=153. Q8. Which of the following regrets, if any, do you have after buying your home?

Percentage of Homeowners With Regrets

All: 55%

Millennials: 68%

Top regrets:


• Realized there was damage after moving in (20%)

• Space doesn’t work well (19%)

• Should have put down more money from the start (19%)

Baby Boomers: 35%

Top regrets:


• Stretched too thin financially (10%)

The Millennial Mindset:Relationship with Debt

While Millennials feel strongly that being debt-free is a key ingredient to the American Dream, they are still willing to take on debt.

18

“You’ve Only Really ‘Made It’ When You’re Debt-Free”(% Completely/Somewhat Agree)

Base: Total=1,014; Millennials=609; Generation X=204; Baby Boomers=201. Q2: To what extent do you agree or disagree with the following statements?

“I am Comfortable Carrying Debt”(% Completely/Somewhat Agree)

69%

71%

66%

69%


69%

41%

32%

40%


44%

Most Millennials (58%) pay their credit card bills in full each month.

19

Base: Own a credit card at Q18=738; Millennials=433; Generation X=144; Baby Boomers=161. Q22: In a typical month, which of the following describes how you handle your credit card bill or bills?Base: Revolve credit card balances at Q22=336; Millennials=184; Generation X=81; Baby Boomers=71. Q23: How comfortable do you feel about revolving your credit when you do not pay off your credit card bills in full each month?

Monthly Handling of Credit Card Bills

58%

34%

7%2%

44% 44%

10%

1%

56%

35%

9%

1%

54%

36%

8%1%

I pay the balancein full each month

I pay off as much asI can each month

I pay only the minimumbalance each month

I have missed paymentson my monthly bills


Comfort with Revolving Credit(% Very/Somewhat comfortable)

58%

59%

58%

56%

57%


When paying for everyday purchases, Millennials are split between using debit cards and credit cards when paying in person, but favor using credit cards online.

20

Paying for Everyday Purchases Online(Among credit and debit card holders)

Base: Own a credit or debit card at Q18=895; Millennials=526; Generation X=181; Baby Boomers=188. Q24A: When making everyday purchases online, which payment type do you prefer? Q24B: When making everyday purchases in-person, which payment type do you prefer?

Paying for Everyday Purchases In Person(Among credit and debit card holders)

43%

39%

13%

3%

2%

0%

Debit card

Credit card

Credit card with cash back orpoints rewards

Mobile wallet credit card withcash back or points rewards

Mobile wallet debit card

Mobile wallet credit card

Millennials

38%

24%

18%

14%

3%

3%

Debit card

Credit card

Cash

Credit card with cash back orpoints rewards

Check

Direct transfer from checking orsavings account

Millennials

Total in-

person

credit card

usage:

38%

Total online

credit card

usage: 52%

The Millennial Mindset:Investing for Retirement

Millennials feel confident in their understanding of financial products.

22Base: Total=1,014; Millennials=609; Generation X=204; Baby Boomers=201. Q20: Consider the investment types listed below. How confident would you say you feel in your ability to invest in each of them?

Confident in Ability to Invest in the Following

68%

65%

55%

53%

47%

47%

47%

46%

45%

45%

44%

43%

38%

63%

54%

54%

50%

38%

39%

38%

38%

35%

37%

36%

29%

26%

67%

63%

61%

53%

28%

21%

38%

30%

38%

34%

27%

19%

11%

67%

63%

56%

52%

42%

40%

43%

41%

42%

41%

39%

36%

30%

Real estate

Stocks

Mutual funds

Government bonds

Private equity

Options and futures

High-yield bonds

Exchange-Traded Funds (ETFs)

Corporate bonds

Real Estate Investment Trusts (REITs)

Commodities

Foreign exchange

Derivatives

MillennialsGeneration XBaby BoomersAll

At least in theory, Millennials agree that the more time they have until retirement, the more aggressive they can be with their investing strategy.

23Base: Total=1,014; Millennials=609; Generation X=204; Baby Boomers=201. Q2: To what extent do you agree or disagree with the following statements?

The more time I have until retirement, the more aggressive I can be with my investment strategy

(% Completely/Somewhat Agree)

66%

64%

50%

69%


62%

56%

58%


However, they are reluctant to actually invest, saying they feel safest keeping most of their savings out of the market.


I feel safest keeping most of my savings out of the market (not invested)


66%

Nearly two-thirds of Millennials say that living through the financial crisis made them more conservative investors.


Living through the financial crisis has made me a more conservative investor


66%

71%

62%


65%

This reluctance to invest is demonstrated by Millennials’ under-utilization of investing accounts that could help them build wealth for retirement.

26Base: Total=1,014; Millennials=609; Generation X=204; Baby Boomers=201. Q18: Which of the following financial products or investment vehicles do you own or use?

Financial Products or Investment Vehicles Owned or Used

41%

26%

15%

14%

10%

19%

11%

9%

6%

5%

5%

3%

40%

23%

12%

14%

8%

14%

10%

10%

9%

7%

6%

4%

47%

25%

15%

8%

7%

23%

14%

13%

3%

2%

2%

3%

38%

35%

25%

19%

19%

30%

12%

5%

2%

2%

4%

1%

401 (k) or 403 (b)

IRA or Roth IRA

Brokerage account

Managed Account

Annuities

Real estate

CDs

529 College Savings Plan

Bitcoin

Commodities

Ownership or equity in a private company

None of these

AllMillennialsGeneration XBaby Boomers

The Millennial Mindset:Gender Differences

Millennial women tend to choose more “ingredients” for their American Dream than Millennial men do.

28Base: Millennials=609—Male=227; Female=382. Q14: Please select the most important ingredients from the following list that describe your American Dream.

4%

26%

25%

28%

22%

33%

34%

33%

33%

39%

36%

38%

35%

36%

36%

41%

37%

41%

49%

3%

19%

28%

26%

31%

41%

42%

46%

45%

42%

43%

43%

47%

48%

50%

51%

57%

58%

60%


Working for myself/owning a business

Being better off than the previous generation

Earning a big paycheck

Owning pet/s

Owning a car

Falling in love

Having children

Getting married

Making it on my own

Getting a good education

Building wealth

Making a difference

Building a satisfying career

Traveling the world

Pursuing my passion


Being debt-free

Owning a home

Millennial Women

Millennial Men

Ingredients in Millennials’ American Dream

Millennial men are significantly more confident than Millennial women in their ability to make financial investments.

29Base: Total Millennials; Millennial men=227; Millennial women=382. Q20: Consider the investment types listed below. How confident would you say you feel in your ability to invest in each of them?

62%

56%

44%

42%

34%

36%

34%

34%

33%

32%

30%

32%

28%

78%

81%

73%

72%

69%

64%

68%

67%

66%

67%

67%

62%

56%

Real estate

Stocks

Mutual funds

Government bonds

Private equity

Options and futures

High-yield bonds


Corporate bonds


Commodities

Foreign exchange

Derivatives

Millennial Women

Millennial Men


Millennial women are less likely to be homeowners, thus less likely to be taking the first step in their American Dream.

30

Base: Total Millennials; Millennial men=227; Millennial women=382. Q4. Where do you currently live? Base: First-time Millennial homeowners=208; Millennial men=94; Millennial women=114 Q6: Does the following statement describe your attitude toward your current home: I think of my home as a starter home—I plan to upgrade when I can.

51%

36%

Men Women

Live in a Place they Own

In addition, first-time

Millennial men homeowners

are more likely to say that

their first home is a

“starter” home.

Think of Home as a Starter Home

96%

75%

4%

25%

Men Women

The Millennial Mindset:California Millennials

California Millennials are significantly more confident than those living outside California in their ability to make financial investments.

32

73%

72%

62%

60%

56%

57%

54%

54%

52%

52%

51%

52%

47%

66%

62%

52%

50%

43%

42%

43%

42%

42%

42%

41%

39%

34%

Real estate

Stocks

Mutual funds

Government bonds

Private equity

Options and futures

High-yield bonds


Corporate bonds


Commodities

Foreign exchange

Derivatives

CA Millennials

Non-CA Millennials


Base: Total Millennials; CA Millennials=203; Non-CA Millennials=406. Q20: Consider the investment types listed below. How confident would you say you feel in your ability to invest in each of them?

Millennials living in California are more likely than those living elsewhere to be comfortable carrying debt.

33Base: Have an American Dream at Q14. Millennials=569; CA=189; Non-CA=380. Q2: To what extent do you agree or disagree with the following statements?

41% 41%

53%

40%

45%

40%

35%32%

California Non-California

All Millennials Gen X Baby Boomers

I am comfortable carrying debt (i.e., mortgage, student loans, credit cards, auto loan/lease)(% Completely/Somewhat Agree)

Appendix: Methodology

Survey Methodology

This survey was conducted online within the United States by Maru|Matchbox on behalf of Bank of the West between November 1st – November 10th, 2017, among its proprietary Springboard America panel.

1,014 individuals aged 21-70 completed the survey, including 240 based in California.

• 609 Millennials (Ages 21-34)– 305 Age 21-27 Younger Millennials– 304 Age 28-34 Older Millennials

• 204 Generation X (Age 35-51)

• 201 Baby Boomers (Age 52-70 )

Gender, household income, and regional data is balanced to U.S. Census with a boost to the California market.

35

Appendix: Additional Data

Millennials’ American Dream begins with owning a home

37Base: Total=1,014; Millennials=609. Q14. Please select the most important ingredients from the following list that describe your American Dream.

4%

22%

27%

27%

28%

38%

39%

41%

41%

41%

41%

41%

42%

44%

45%

47%

49%

51%

56%


Working for myself/owning a business

Being better off than the previous generation

Earning a big paycheck

Owning pet/s

Owning a car

Falling in love

Having children

Getting married

Making it on my own

Getting a good education

Building wealth

Making a difference

Building a satisfying career

Traveling the world

Pursuing my passion


Being debt-free

Owning a home

Millennials

Ingredients of Millennials’ American Dream

Millennials are more likely than other generations to have regrets after buying a home.

Base: Already own a home=547; Millennials=254; Generation X=140; Baby Boomers=153. Q8. Which of the following regrets, if any, do you have after buying your home?

38

20%

20%

19%

19%

18%

14%

13%

13%

11%

8%

32%

11%

23%

14%

10%

16%

12%

19%

11%

14%

4%

45%

6%

16%

8%

3%

7%

3%

10%

2%

7%

2%

65%

14%

20%

14%

12%

14%

10%

14%

10%

10%

5%

45%

I realized there was damage to the houseafter I moved in

It is costly to maintain my home

The space doesn’t work well for my family

I should have put down more money from thestart

I feel stuck in one place

Homeownership is too much responsibility

I am stretched too thin financially

My home was not a good financial investment

I don’t like the neighborhood

I didn’t realize building an addition would be so expensive

I have no regrets

Millennials

Generation X

Baby Boomers

All

Regrets After Purchasing a Home

THANK YOU

Bank of the West180 Montgomery Street

San Francisco, CA 94104

Contact: Media Relations

[email protected]

b a n k o f t h e w e s t . c o m

Documents

Bank of the West 2018 Millennial Study · Executive Summary • Six in ten Millennials believe that the American Dream is attainable today.Top ingredients to the American Dream are: