Fewer than one in 10 millennials have hit their financial goals

A study of 4,000 adults found 40 per cent of those born between 1981 and 1996 thought they'd have built up more in savings by this stage.

But four in 10 agreed ‘lifestyle inflation’ - a tendency to spend more as income rises - has impacted their ability to save.

Rather than putting more money away as their earnings increased, they've made upgrading their lifestyle their focus.

A further 30 per cent agreed they’d prioritised other goals, overreaching financial milestones.

On average, millennials find they are £25,000 short of where they envisaged they would be – as the high cost of living (65 per cent) and unexpected expenses (44 per cent) curtailed their saving power.

It also emerged 30 per cent expected to be earning more than they currently are – but one in three of these ultimately decided to prioritise their work/life balance over chasing a higher income, according to the research commissioned by first direct.

A quarter had forecast to be on the property ladder by now as well – however, on average, they remain four years away from owning their first house.

Over four in ten (44 per cent) blame rising property prices for delaying their plans, while for 36 per cent, their income has been too unstable over the years to purchase property.

But despite the setbacks, 73 per cent of millennials are still determined to reach all their financial goals.

And 61 per cent feel like they have become more financially resilient in recent years after being faced with several economic challenges.

Rising cost of living

Carl Watchorn, head of banking at first direct, which commissioned the research to mark its35th anniversary, said: “As a millennial bank marking its 35th anniversary, we understand the challenges faced by the millennial generation.

"Our research shows millennial and Gen Z savers are reaching big milestones later than their parents and grandparents.

"This is of course compounded by tough economic conditions in recent years.

“However, it is precisely these obstacles that have forged millennials into one of the most financially resilient generations.

“Their ability to adapt and navigate through adversity means they are now better equipped than ever to move forward and secure their financial futures.”

Half of those surveyed aged between 28 and 42 believe overall the rising cost of living – such as housing, utilities and food – is the main reason they have been held back in the last five years.

While economic uncertainty has made it more difficult financially for 28 per cent.

And 27 per cent found stagnating wages have made it more challenging to get to where they wanted to be with their money.

What’s more, 21 per cent have been impacted by the increased cost of childcare.

The research, which was conducted via OnePoll, went on to further explore the impact of ‘lifestyle inflation’ had has on all generations.

Nearly a quarter (32 per cent) treat themselves more regularly when they get an increase in their salary, 17 per cent go on more holidays, and 14 per cent will go on more expensive trips.

Carl Watchorn added: “In the current environment, we are seeing younger generations in particular report that they expected to be in a better financial position by now than they are.

"It’s therefore understandable that people are prioritising enjoying the here and now over saving for financial milestones that may feel a touch out of reach.

“Our research does indeed show that lifestyle inflation is a common trend, with higher incomes often being funnelled into increased spending, rather than put aside for the long-term.”