Millennials and Money

Millenials_savings

It is often the stigma that millennials, those ages 20 to 34, are unaware of basic financial literacy skills and that it is a generation rooted in spending rather than saving.  Millennials are the most educated generation and having grown up in the age of technology, have all the tools available to them to lead a successful and financially secure life.  Why then do they decide to buy all the latest and greatest rather than put their money into savings?

A research study at George Washington University of more than 25,000 millennials reported the following results:

  • More than 70% have at least one source of long term debt
  • 90% have a checking account, 25% of whom overdrew within the past 12 months
  • Over half of Millennials who have a credit card engage in some form of expensive credit card behavior
  • Only one-quarter of respondents show basic financial literacy

For a majority, accumulated debt far surpasses net wealth in assets making it even more difficult to acquire savings.  As compared to when baby boomers were young adults, millennials have half as much wealth.  Boomers earned higher incomes, held more assets, and owned homes sooner.  Millennial workers today earn 20% less than young adults in 1989 meaning there’s some catching up to do.

Millenial_savins2

According to a report by Beth Ann Bovino, Standard & Poor’s U.S. chief economist, the millennial generation could potentially hurt the U.S. economy in the next five to ten years.  By deciding to marry and have kids later on, live in cities instead of owning cars, and renting homes rather than buying could significantly stunt GDP growth in consumption.  Since millennials, who number 80 million people, occupy such a large portion of the population, it is essential that they become more educated about basic financial skills for the sake of their own futures as well as the U.S. economy.

https://www.forbes.com/sites/laurashin/2015/04/30/how-the-millennial-generation-could-affect-the-economy-over-the-next-five-years/#717227e132e1

http://www.freep.com/story/money/personal-finance/susan-tompor/2017/02/22/millennial-money-mortgages-credit/97895082/

http://elitedaily.com/money/study-millennials-savings-finances/1317924/

http://www.cnbc.com/2015/04/20/are-millennials-lazy-entitled-narcissists.html

http://eig.org/millennial#1474313647159-51dfa545-f84c

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7 thoughts on “Millennials and Money

  1. lukemadden19

    This topic is relatively intimidating, but nice to know. It is certainly a shock to see how little our generation is prepared for the future and it is as wake up call to get our financial standings in order.

    Reply
    1. jackmccabe53

      I agree with the intimidation factor Luke. Our generation has been given so much education about saving money throughout the years, but I guess our modern habits of always wanting the latest and greatest things will ultimately be the downfall of us.

      Reply
  2. laurenlyman4

    This is very interesting, people these days do tend to prefer city life rather than owning a car and establishing themselves before settling down and having a family. Never did I think about how the lifestyle of the millennial would end up impacting the GDP. Also, I think college becoming more of a necessity in order to get a well paying job has an effect. As you mentioned, about 70% have long term debt, my guess is a lot of that is student loans since college is not expensive and yet most millennials seem to have a college education.

    Reply
  3. evanmegan

    I was shocked by that figure showing over half of millennials have less than $1000, it is surprising that the most educated generation isn’t as financially literate. I wonder what solutions to this could be; I’m curious how many schools have incorporated mandatory financial workshops like the Salt Money one from Freshman year? It sounds like its not only important for individual well-being, but to our nation as a whole that our generation is financially literate.

    Reply
  4. nickcolangelo94

    I agree with Evan, I struggle to wrap my head around how this has happened to millennials. I certainly understand that we as a generation are reliant on instant gratification (often through material things, which we spend money on frequently) but the fact that half of millennial have less than $1,000 saved is shocking. I’ve always been a strong supporter of educating people in the realm of personal finances, yet at a liberal arts school like Holy Cross, a course like that just will not be offered.

    Reply
  5. petercampito15

    I feel like much of this debt could be attributed to the amount of money millennials borrow for student loans. Today the average tuition can cost up to $50,000 a year while 30 years ago it ranged between $10-20,000. The average American is generally unable to pay for these high tuition payments and is forced into carrying this debt. This most likely leaves millennials with very little spending money as the article shows.

    Reply
  6. Victor Matheson

    So… without having any data about the financial habits of older people, I have a hard time concluding much about “kids these days”. While I don’t doubt that over half of Millennials who have a credit card engage in some form of expensive credit card behavior and that only one-quarter of respondents show basic financial literacy, I wouldn’t be surprised if the numbers are similar for people my age.

    Reply

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