20 Facts Proving Why Millennials are Struggling Financially

Millennials get a bad wrap. They are often described as a lazy, entitled, selfish generation of people that love to eat avocado toast. Ouch. Then there’s the way millennials are changing society. From the Instagram culture to eschewing ownership in favour of having access. Older generations feel like now that millennials are here nothing will remain the same. But these stereotypes leave out something that is less frequently discussed. Millennials are struggling…. financially.

A report by the Federal Reserve Board found that: "millennials are less well off than members of earlier generations when they were young, with lower earnings, fewer assets, and less wealth."

The Fed also found that millennial spending habits are actually pretty similar to other generations. Like other generations millennials want to purchase big ticket items like homes and cars but they have to wait until they are older and can afford it.

If you aren’t already aware of the financial situation of the millennial generation I have collected some facts to bring you up to speed. I must admit I found these facts a little depressing. But I was comforted by the fact that the higher levels of education this cohort possesses in the long run will likely result in a better income trajectory than the generations that have come before them.

Here are 20 facts about millennial wealth that you need to know.

Fact #1: Millennials are part of the generation born between 1981 and 1996 (ages 23 to 38 in 2019). Those born in the 1980s entered the working world in the US at a time of high unemployment and low wage growth.

Fact #2: The median net worth of households headed by millennials in the US was approximately $12,500 in 2016 vs. $20,700 for baby boomer headed households when they were the same age back in 1983.

Fact #3: People born in the 1980s in the US have wealth levels that are 34% lower than if the financial crisis never happened. In contrast those born in the 70s are 18% worse off and those born in 1960s are 11% worse off dude to the financial crisis.

Fact #4: People aged 18 to 34 years old in the US have approximately $1 trillion in debt. Student loans make up the majority of the debt for those aged 19-29 and mortgage debt comes in second.

Fact #5: Millennials carry a median level of debt of $19,000 vs. Generation X which had a median debt level of $12,800 when they were the same age as millennials.

Fact #6: By the end of 2018 millennials in the US on average had $34,770 in student loan debt.

Fact #7: People that are under the age of 35 in the US and are college graduates are nearly 50% more likely than Gen X to have student loans; the median balance for a millennial’s student loan is approximately 40% higher than that of Gen X.

Fact #8: For Baby Boomers and Gen X the biggest source of debt is their mortgage. For millennials it is student loans.

Fact #9: Nearly 66% of millennials report that they are living paycheck to paycheck.

Fact #10: Given high debt loads and stagnant wage growth, 58% of millennials in the US on average have less than $5,000 in savings.

Fact #11: Home prices have increased at a faster rate than wages in the US making it difficult for millennials to purchase a home.

Fact #12: Homeownership rates for those between the ages of 24 to 32 declined by close to 9% between 2005 and 2014.

Fact #13: Less than 33% of millennials have a mortgage. That is the lowest level for those under 35 in history.

Fact #14: Surveys of millennials show that the primary reasons for their lack of home ownership is not that they don’t want to own assets but their debt levels are too high

Fact #15: Odeta Kushi, Deputy Chief Economist at real estate research firm First American says: "it's not that.. [millennials are] not going to buy homes. It's just that they'll purchase these homes later in life."

Fact #16: Unlike Baby Boomers that bought their first home on average at the age of 25 millennials are waiting nearly a decade more to buy their first home.

Fact #17: Economists from the Federal Reserve have concluded that lower home ownership rates within millennials is due income levels and affordability.

Fact #18: For every $1,000 increase in student loan debt there is a 1% to 2% decrease in homeownership rates for borrowers of student loans in their late 20s and early 30s.

Fact #19: Federal Reserve economists also found: “no evidence that millennials have preferences for vehicle purchases that are lower than those of earlier generations.”

Fact #20: Over the next ten years millennials will shift from discretionary spending to necessity spending. Which means they will prioritize spending on big ticket items like homes and cars.

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