There are so many opinions about millennials and how they are either shaping or destroying our economy.
Recent news headlines suggest millennials are being too thrifty, and thereby killing consumerism. Others say millennials are ruining their chances of buying a home and incur more debt by overspending on luxuries, lattes and avocado toast.
While overgeneralizing a select group is rarely accurate, in order to understand millennial spending habits and risks, we have to examine the actual age range and economic climate surrounding the individuals called “millennials.”
Let's talk about the millennial age range a little more and why there are flocking to services like:
Who Qualifies As a Millennial? / Who Are The Millennials?
There are conflicting opinions about the actual age range of millennials. Some say that people born between the early 1980s – early 2000s are categorized as millennials, while the majority agrees that those born between the 1980s- mid 1990s are millennials.
Census bureau results provide that that the millennial generation is the generation of children born between 1982 and 2002, some 81 million children who have taken over K-12, have already entered college and the workforce. This generation will replace the Baby-boomers as they retire. Other sources suggest that the cutoff date for millennial is 2000.
We put the exact date range of millennials as those who are 18-38 today - basically today's college students to 38 year olds. That's a big, big range.
Although there is no consensus on the exact years the actual generations begin and end, millennials are usually born between 1982 through 2002. They were born before computers and cell phones became widespread. But it's important to note that there are really three groups of millennials: those that graduated before the Great Recession, those that graduated during the Great Recession, and post-recession graduates. This has directly impacted the average millennial net worth.
Aside from technology and the recession of 2008, the events of September 11, 2001, also known as “9/11” was the most generation defining moment for millennials in the United States. The reasoning for the cut off date of millennials stems from the theory that individuals born after 2002 were not old enough to understand or be impacted by 9/11.
Millennials have a tendency to spend money on experiences rather than material possessions. These “experience” centered spending habits have allowed for the creation and growth of businesses such as Airbnb, which are centered around avoiding high hotel costs.
Also, millennials are willing to forego some of the basic luxuries in order to stretch their dollar for spending on experiences by using ride share services such as Uber. Aside from ensuring safety while enjoying the nightlife, rideshare services help reduce transportation costs while being mindful of deceasing the carbon footprint.
Millennials are also big side hustlers. They embrace the work from where ever, when ever mentality, and are great at using the online economy to their benefit.
Common Stereotypes About Millennial Financial Habits
There are numerous conflicting stereotypes surrounding the financial habits of millennials, as this continues to be a hot topic:
- Millennials are big spenders. Historically, the "younger" generation has always been seen as frivolous and spending too much. This is not the first time that the older generation points the finger at the younger generation. Some experts suggest that high spending and debt combined is causing millennials to move in with their parents.
- Millennials don't save enough. Millenials are actually good savers, saving over 5% of their salary for various reasons such as emergencies, big purchases, as well as retirement. The recession is probably a huge motivating factor in saving for the future. Recent studies from Transamerica Center show that 75% of millennials save for retirement.
- Millennials don't spend enough. Many retailers complain that millennials are responsible for the decline of the retail industry and closure of department stores. The majority of millennials came of age during the great recession of 2008 and as a result, frugal habits have ingrained in their psyche out of fear and unrest faced during this financial crisis.
- Millennials are drowning in debt. Americans owe more than $1.4 trillion in student loans and the majority of that debt belongs to millennials, according to a survey of 1,000 Millennials by ORC International. While millennials may be saving their money, the majority of their income is spent on repaying debt, resulting in depleted savings and lower disposable income. That's why we recommend services like Pathrise that help millennials get higher paying jobs earlier in their career.
- Millennials are financially unable to purchase a home. While millennials are saving their money for retirement and their first home, debt makes it difficult for millennials to buy their first home right away. Aside from that, many millennials are waiting to buy their first home until they are financially stable, even before they get married. While the rise of debt is one factor in the delay to buy property, many millennials have a desire to discover one's true self and search for identity and meaning before settling down.
Millennials and Student Loan Debt
This relates directly to whether most millennials go to college, and more importantly, whether or not they complete their college education.
The risk for accumulating debt at an alarming rate is especially high for those who do not complete college because traditional jobs in the higher pay range generally require some college education. At the same time, many millennials regret their pursuit of a college education.
While some studies suggest that most millennials have a good handle on student loan debt, the majority of millennials have some of the highest student loan debt rates in history.
Check out our study on the average student loan debt by graduating class.
When it comes to money, millennials do have some of the highest student loan debt rates of any generation in history. The average millennial has over $30,000 in student loans. Millennial student loan debt affects all of us because it has a direct impact on our economy.
Ultimately, these students in debt will see slower growth in their savings, causing further delays in starting a business, starting a family, or buying a home. Also, because the majority of these loans are federal loans, they will add to the overall national debt.
Some millennials have resorted to desperate measures, accepting jobs with low pay in hopes of student loan forgiveness, including seeking employment at Red Lobster in mistaken hopes of eliminating student debt. There are a wide variety of volunteer programs that offer student loan debt reduction, such as AmeriCorps, the Peace Corps, and career specific loan forgiveness programs. If you are serious about resolving your student loans and have aspirations for a public service career, then public service loan forgiveness training will be a huge asset to helping you get and maintain eligibility while you take control of your debt.
Final Word
Whether you believe millennials are financially responsible or not, the economic climate has created fertile ground for increasing amount of debt of all types, including student loan debt. While coming of age during a recession undoubtedly affects your spending habits, we have seen enough evidence on both sides to suggest that millennials are financially responsible and yet still encumbered by significant debt.
Also, share your experiences and questions in the comments section below.
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him here and here.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.
MammaM says
Not sure how my daughter and I can be classified as the same generation… except that the only “stereotype” I fit into with this article about millennial is that I have more than 30k in student loans. Literally nothing else on this list applies to me. Maybe that’s why I’ve never classified myself as a millennial.
Emily says
Most people my age (18) have boomer parents in their late 50s, but I know one who’s parents had them when they were very young around our age and they’re both technically classified into the same generation. But they identify with Gen X more for the same reason as you
Burgess Krell says
My experience in the workplace has caused me to distrust millennials based on the fact that without exception, every single one of them exhibits an attitude of “I am special” or worse, “I am entitled.” Something that drives this point home is that there are seminars for how to attract a millennial to your company and awards based upon what company is considered a “best company” for millennials to work. What these folks need to realize is that they are neither special nor entitled and that they need to make themselves attractive to companies, not the other way around. The attitude I have witnessed repeatedly gives me pause to dread growing older knowing they will inherit the nation and lead it’s direction.
Mike says
@Burgess Krell My experience with older generations leading the nation has made me distrust them. I look forward to the day that they’re all gone so have a chance to put integrity into our system. It’s hilarious how boomers, the most entitled generation ever, look at their children and wonder why they’re so messed up.
Ann says
Omg! Just last night I was frustrated by her narrow mind and said, “Thank God for Millennials ” they have no patients for old white people. They think they’ve majorly screwed things up and cant wait for them to die off so be nice
Mike says
Not all millennials have shit attitudes. I myself have a home and mortgage and a new truck as well as my wife. I’m 23 she is 22. We sure did not achieve this with an I am special attitude…
Alfred says
@Mike LOL! I am not like other millennials…my wife and I are special and different….what? haha! way to put yourself right smack dab in the middle of the “I am special” crowd.
Jon says
You are daft and missed his point entirely. He is saying, he worked for what he earned and didn’t go around acting entitled to it and like he “deserved” to have those things with little to no effort of his own. There is a distinct difference.
Kyle says
We kinda are special in a few ways but we are still humans just like the baby boomers. We are still facing the same problems as the baby boomers. While I admit, there is a lot of entitled mindsets among us. That is not how all of us think. I grew up poor in TN with nothing handed to me, never had a computer in the house as a child, and I never owned a cell phone until I was 16yrs old. I payed for it too. I go to college from 6-2:30 then to work from 3-to 12 at my job. Yea, I am so entitled.
Anje Gunter says
“Is a lot of entitled mindsets”—- take an ENC1101 class plz. I went to college earning a Master’s Degree pregnant, married, and working full-time. Still have $19,000 in student loan debt. 2 of my kids are mellinials: aged 22 with her BS and the other is 2 semesters away from a BSN at age 19 with no student loan debt due to scholarships and grants. They worked hard but are definitely a bit spoiled on their own accord. Proud to have a couple of them and good luck to you.
Dude says
My biggest problem with the current 40-60 yos is theyre starting top many wars for bullshit reasons. Get a grip amd accept change happens Nd stop killing innocent people over it.
Valerie Larson says
My older daughter just turned 34, has a doctorate, a top job with a college, a five year old child, very little student loan debt and owns a home worth almost $875,000. She doesn’t live above her means and is almost tenured at her college. My younger daughter is 27 and has two more classes to finish her college degree and has no student loan debt. She decided she would work and go to college part time to void building up student loan debt. After she graduates she plans to get her teaching credential and has saved over $10,000 to go through the program without going borrowing money to go through the program.
Sena Demiryaban says
Having seen many comments about the representation of millennials, there has been a set stereotype. The representation of millennials being unmotivated, unwilling to work, and being immodest and obscene, is taken through the inconsideration of not understanding the pressure they are being put through with the development of the world through many aspects. If many people took the time to evaluate the pressure through education, technology and media presence, social ability and the impact within the lifestyle has increased massively.
Through the pressure of education, there has been an increased set of expectations for an individual by people around them. It has been set to many students that not completing a course and getting an excellent qualification is a representation of failure and disapproval, socially and financially. Due to the increased pressure many students have dedicated a whole lot of their time to studying and achieving the results, however this is an unrealistic aspiration as many people have different sets of abilities. Many students are set to have physical and active talent within society, however the pressure of getting a higher level of qualification through education within specific retails such as an office job, has set a wrong tone leading to demotivation and increased defiance. Being an 18 year old, for some people I may not be classified as a millennial, however, I feel the pressure so imagine the generation above me. Through education I have finnished my Alevels and during that period of time I bombarded myself with huge amounts of study time, and had decreased the amount of social life I had, which lead to me having barely enough time to myself let alone my family that I live with.
This moves onto the social aspect of misrepresentation. Many millennials are seen to be obscene, immodest and quite cold. However, this sense of pressure in succeeding would and has tired and weared out the majority of people, which has caused a decreased in social abilities and impressions. Also adding onto the cold representation of many people has been to the distrust that has been set within social norms. Having this cheery and talkative representation has been set to represent an untrusting individual, while in fact is a personality of kindness and warmness to set to someone within their conversation. This has caused many people to become closed of to people outside and set a barrier with communication. Having this pressure had lead to people becoming unweary about individuals around them, and the disappearance of basic manners of thank you, hello, and goodbye. This has been a negative impact that needs to be re-evaluated and considerated by society, but has been developed due to the pressure and exhaustion.
Leading to technology and media presence this has been a massive issue, as it has become a platform for many people of sharing unrealistic happiness and experiences in life. Many people have become aware of how distressing it has become to view the unrealistic representation in life, making them feel unhappy and depressed about their life. This has a massive impact mentally on an individual which is hard to see as to the barrier developed. However, when people complain that millennials and the younger generation are obsessed with technology, it need to be thought out because it also has a positive impact. Technology has allowed many people to speak out about many topic that are relevant to the 21st century, such as ‘Blacklivesmatter’, ‘LGBTQ community’, the ‘Metoo’ movement and ‘the wage gap’. Having these topics being discussed also set another tone to many millannials and the oncoming community to have an impact and change the world.
Having read this myself it already creates pressure and tension, imagine the pressure millennials and the oncoming adults have, and please consider the stereotypes that’s are set, it’s inconsiderate and unthoughtfull.
Janis says
It’s disheartening to see so many comments sections devolve into arguments about which subset of Americans have it worse, and whose fault it is. It’s impossible to live perfectly responsible for what someone else might see as your charge. IMHO, it’s the older generation who’s responsible for teaching the younger generations what it means to be responsible, and how to do accomplish it. Conversely, learning isn’t passive. In the end, if America’s not doing it, we’re all to blame. The fault lies with the folk who are unwilling to introspect and make behavioral changes, learn, and continue to make changes based on perceived effectiveness, and stop the s* that isn’t effective.
Let me put it another way: if you’re busy online saying “poor me and it’s all your fault,” you’re the problem. Focus on something solvable, from rural elder-care to immigrant kids. There’s a world of choice. All we have to do, now, to pay back our debt, is figure out which billionaire wants to help older folks and sick kids.
Or we can seriously, thoughtfully, consider wealth inequality instead of pointing our fingers at various age groups.
WizeOld1 says
There are stereotypes regarding every generation, with each and every younger one on a mission to “ruin the world” and the older ones “being outdated.” Cookie cutter mentality is not beneficial. It takes all kinds of ideas, thoughts, and people of all ages to make the world go ’round.