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The running joke – for years now – is that millennials are too busy buying avocado toast over becoming homeowners. But we know the truth.
Turns out, Millennials might be turning the idea of the American dream on its head, and for good reason; Despite all the jokes, Millennials are some of the most financially savvy people out there, despite growing up in economic disasters such as the housing crash of 2008 and the post-pandemic recession.
But the same global economic events have shaped the millennial mindset to be more mindful of their savings, even if their earning power isn’t quite the same as the boomers before them.
Millennials have very different goals from those that came before them, and here’s how they are tackling everything finance-related. We’re discussing:
- Why Millennials Are Changing The Traditional American Dream
- The Millennial Distrust Fuelling Financial Literacy
- Millennials Shaping The Future For The Next Generations
The Past: A Tumultuous Economic Climate
Millennials have had it rough. Also known as the Y generation, people born between 1981 and 1996 have seen their fair share of life-changing events, not all good.
In their time, millennials saw the dawn of the Digital Age and the rise of social media. They saw the first black president elected, 9/11, and natural disasters like Hurricane Katrina and the Tsunami of 2005 wreaking havoc on what they knew was stable.
Then came the Great Recession of 2007, which directly led to the housing crisis of 2008. Millennials were the first generation for who graduating from college with a $100,000 debt became normal. And let’s not forget the 2020 pandemic, the echoes of which are still rippling through today’s economic climate.
It’s because of these events that millennials are so invested in focusing on themselves now. The past has shaped their present, leading them to be more proactive about their financial choices. Millennials know they can weather another financial storm, because they’ve done it multiple times before.
Present: Saving Like Their Lives Depend On It (Because It Does)
This is where millennials stand apart from the generations that came before them. Millennials are much more focused on saving the money they earn for rainy days because they were so heavily affected by financially trying times growing up.
It’s why many of firmly believe that they can get through tough times. Millennials started saving money before the previous generations began thinking of doing so, some as early as their 20s.
It’s also why millennials have a more secure future ahead of them, helped through with employer-provided retirement options and more money in their 401(k) accounts. They are simply better prepared than the 25% of pre-retirees who are delaying retirement right now.
Their spending and borrowing habits are also proof of how serious they are; Credit cards have now become the number one way to pay for anything in the U.S., yet Millennials have about 1/3rd of the credit card debt that their parents did, leading to more responsible financial habits when compared.
It’s why the American dream of a white picket fence house with kids never worked for them. The average millennials can’t expect even to own a home until their late 30s, so that’s out of the picture.
Around 50% of millennials have reported feeling confused about parenthood or not wanting it altogether. And while there are many reasons for that decision, a massive chunk of it is financially motivated.
Raising kids is costly and time-consuming, and it’s not like the country offers any particular benefits to those wanting to become parents, such as countries like South Korea or Ireland. Lacking maternity/paternity leave, no Parent’s Benefit payments or subsidized welfare, negligible free education until adulthood, and the like.
So, why should American millennials take the plunge?
Instead, millennials are living for the present and spending their money on themselves. A reported 46% of millennials chose to spend their finances on life experiences such as travelling and learning skill sets vs buying consumer goods. It’s not an impulsive decision; Airfare and travel is actually cheaper than it used to be a decade ago, and millennials are spending less per trip than their predecessors.
All of this while they are making steady headway into their retirement plans, with many of them having budget plans to stick with and even an emergency fund.
80% of millennials are worried about a recession, but all of them are taking measures not to get caught by surprise. And they still want to learn more, with 71% being open to financial advising and 59% consulting a financial advisor.
Millennials aren’t the wealthiest generation, not by a long shot – but they are the most optimistic about the future, whatever that may be.
Future: Shaping Up The Next Generations
Gen Z and Gen Alpha might make fun of millennials for their ‘corny humor’, but out of all the previous generations they have the younger ones’ backs.
Millennials achieved some stellar things during their time, empowering those that came after. 58% of millennial women feel more confident in their financial dealings compared to those before them, creating more space for women to excel in financial independence.
And because Gen Z has seen what millennials went through with student loan debts and more, they have become more fiscally responsible and determined not to incur the same debts. Their average debt is already less than any generation before them, at $9,000 only.
Millennials have often remarked about all the life-changing events that took place within their time, and how they moved past them. Gen Z learns as they see, realizing that they might always be on a financial cliff, and how to stay stable throughout it all.
Sure, neither generation has quite the same assets that their predecessors did. But it doesn’t matter because at least they have the financial acumen to budget themselves better than the rest.
For Millennials and Gen Z, everything is uncertain, be it politics or the climate. But because they are some of the most educated, the most socially aware, and the most traumatized but outspoken of their experiences? They know where to right their wrongs.
Maybe they aren’t living that traditional American Dream, but the kids are trying to be alright.
