Millennials Are In Worse Financial Health Than Previous Generations
And It’s making them Pessimistic About Their Lives
Fewer Millennials in their 20s were “Middle Class” than Boomer and GenX in the same period of their lives.
62% of millennials say they’re living paycheck to paycheck
More than 60% of Millennials are living precariously economically, essentially paycheck to paycheck and only 38% feel financially stable, according to a new survey from Charles Schwab.
Is it any wonder Millennials and GenZ are reporting more pessimism?
Deloitte has released its Global Millennial Survey of 13,416 Millennials (born between 1983 and 1994) spread across 42 countries and 3,009 Gen Z respondents (born between 1995 and 2012) from 10 countries. The firm has conducted the survey for the past eight years.
Millennials are in some ways a generation disrupted who live in a different world than Baby boomers or GenX. They share the planet but have inherited things like less economic equality and global warming.
Millennial are Financially Insecure
Millennials, more than any other generation surveyed by Schwab, feel the most insecure when it comes to their finances. That’s according to roughly 380 millennials (ages 23 to 38) surveyed for Schwab’s 2019 Modern Wealth report.
In Deloitte's study, Economic and social/political optimism is at record lows. Respondents express a strong lack of faith in traditional societal institutions, including mass media, and are pessimistic about social progress. This leads to less trust in social institutions like capitalism, democracy, the government, banks and technology companies, for example. These are basically seen as corrupt institutions by many young people.
In America, Millennials are forced to move to smaller cities often for economic reasons. Millennials can afford just 10% of the homes in Dallas, 13% in Boston and barely 2% in San Diego. We think of Millennials as global citizens who love to travel and eat their avocado toast, but it’s not all roses and Instagram selfies. Millennials just don’t have it that great.
Millennials Don’t Trust the System
Millennials and Gen Z are more prone to being disillusioned.They’re not particularly satisfied with their lives, their financial situations, their jobs, government and business leaders, social media, or the way their data is used. Global warming, privacy violations by tech companies, and the threat of a rising wealth gap seems to really turn them off.
Millennials say they live paycheck to paycheck more than other generations, and it’s likely not by choice. Millennials also are known to invest less in the stock market and Wall Street. It’s partially due to low trust but also having less disposable income to invest in the first place.
Yet millennials also say they spend an average of $478 a month on “nonessential” purchases, such as dining out, entertainment, luxury items and vacations. That’s less than the $587 Gen Xers report spending, but more than the $359 spent by baby boomers. Perhaps Millennials need to “treat themselves” more to actually cope with the less optimistic world they have inherited?
Millennials are likely More Nihilistic
Millennials are behind financially and it’s likely skewed their world view. They don’t trust capitalism as we can see with their support of democratic socialism and characters like Bernie Sanders and AOC.
In many ways the great recession of 2008 affected all generations, but it delayed millennials’ ability to start building wealth. Many of them will likely never recover, some of them are completely a lost generation.
As a generation, millennials also are facing systemic financial issues that can feel overwhelming. They generally carry more debt than previous generations did at their age, for example. Debt and living paycheck to paycheck impacts how you are able to envision your future. It delays having children or owning a home, and for many makes dating and career paths more difficult.
A difficult economy for Millennials means every aspect of their life is impacted. While we know Millennials aspire to travel and help their communities more than starting families or their own businesses, even that is difficult to accomplish for many of them given their daily economic realities. Being experiential is fine, if you have the funds to live your dreams.
Millennials in Worse Shape
It’s not hard to imagine how Millennials have actually had it. Millennials got a slow start to building wealth because of the Great Recession, and a rising cost of living has made it harder for them to save. Living paycheck to paycheck, how they use credit and credit cards changed their ability to manage well the little money they do have.
Student debt also cripples their ability to save and plan accordingly. Many of their college degrees didn’t materialize into stable careers. Only one third of Millennials own a home, even as they get on in life. This is often with the help of their parents practically speaking.
Millennials Care more about the Environment, Global Warming and Planetary Stewardship
Millennials also internalize climate and environmental concerns differently than older generations who were more instrumental in causing these conditions. Income and wealth inequality also deeply impact how Millennials see society and capitalism. Millennials feel dis-empowered and at times helpless by these two great concerns.
Millennials are less wealthy than previous generations were at their age at any point between 1989 and 2007, according to The Economist, which cited a recent paper by the Brookings Institution. In spite of their goodwill and social concern, many don’t feel very positive about society or their economic future.
In Deloitte’s study, female Millennials are also different. For example, interestingly, women (62 percent) are more interested in seeing the world than are men (51 percent). Female Millennials are more likely to be travel enthusiasts. Many female Millennials invested successfully in higher education, though it doesn’t always translate into financial security.
Millennials have Different Values
However good we think the U.S. economy is in 2019, Millennial and Gen Z confidence in the economy, media and government has actually declined under Trump. While Millennials’ ambitions have evolved, or at least been delayed, by financial or other constraints, they are a somewhat conflicted generation that’s perhaps a transitional generation where values have shifted due to circumstances and more struggle.
Due to their unique financial press and career instability, many Millennials have a more customized value system that are pretty alternative and more open to new forms of lifestyle personalization. Millennials have fundamentally different values as compared with older GenX or Baby Boomers due to what they have experienced. Work-life balance and community involvement rank high on their concerns.
The reality is that just under half, 44%, of millennials (ages 22 to 37) say they have an emergency savings fund that can cover at least three months of living expenses. That’s a scary figure.
All in all, Millennials are poorer and own less property than previous generations, despite having more education. Capitalism hasn’t been kind to them and they and GenZ (23 & younger) will have to work hard to get the benefits of it.