For years, millennials have been the subject of countless negative headlines and reports. This generation, born between 1981 and 1996, has been labeled lazy, entitled, and financially irresponsible. However, recent data suggests that the narrative of the broke millennial is more of a myth than reality.
As millennials age and take on greater financial responsibilities, they are proving to be more adept at handling money than previously thought. So why doesn’t it feel like they’re thriving?
The Myth of the Broke Millennial
A significant portion of the stereotype that millennials are broke stems from the fact that they came of age during the Great Recession. This period of economic hardship left many struggling to find jobs, saddled with student loan debt, and facing skyrocketing housing costs. But despite these challenges, millennials have not only survived but also adapted and thrived.
Growing financial resilience is evident in several key areas:
Savings and Investments: A Bank of America report found that 73% of millennials were saving for retirement, and 50% had at least $15,000 in savings. Furthermore, apps like Robinhood and Acorns have made investing more accessible to this generation, leading to increased participation in the stock market.
Debt Management: While student loan debt remains a significant burden for many, research shows that millennials are actively taking steps to pay down their debt. A study by Fidelity found that 43% of millennials were making extra payments on their student loans.
Homeownership: Despite high housing costs, a National Association of Realtors report showed that millennials made up the largest share of homebuyers for the eighth consecutive year, accounting for 37% of all buyers.
Entrepreneurship: Millennials are known for their entrepreneurial spirit, with many opting to create their own job opportunities. According to a Guidant Financial survey, millennials accounted for 22% of small business owners.
The Disconnect: Perception vs. Reality
Despite this financial progress, the perception of millennials as broke and financially irresponsible persists. There are several factors contributing to this disconnect:
Social Media: Millennials are the first generation to have their lives documented and shared on social media. The constant comparison to peers and their curated online personas can lead to feelings of inadequacy and financial stress, even when personal finances are in good shape.
Student Loan Debt: The burden of student loan debt cannot be overstated. The average student loan balance for millennials is over $30,000, which can make it difficult to feel financially secure, even when making progress in other areas.
Delayed Milestones: Millennials are getting married, starting families, and purchasing homes later in life compared to previous generations. This delay in traditional milestones may contribute to the feeling that they are not making progress.
What Financial Professionals Can Do
The myth of the broke millennial has been debunked by data showing that this generation is actively working to improve their financial situation. However, the perception of financial struggle persists.
As the financial services industry continues to evolve and cater to the needs of millennials, it is essential to recognize and support their financial progress, while also addressing the challenges they still face. By doing so, we can foster a more accurate understanding of this resilient and financially savvy generation.
Sources:
Bank of America – Better Money Habits® Millennial Report – Winter 2020
Washington Post – A New Report Shows that 1 in 6 Millennials Have $100000 in Savings
Fidelity – 7 Unconventional Ways to Pay Off Student Loans
Mortgage News Daily – Millennials Make Up Largest Share of Buyers for 8th Consecutive Year
Forbes – Advice And Insights For Millennial Entrepreneurs—From A Millennial Entrepreneur
