Are Millennials Bad with Money?

you may have heard someone over 50 say something like Millennials are extravagant and irresponsible they can't save a pretty thing because they spent all our money on iPhone apps an avocado tow and then of course a millennial respond with it's not our fault we can't save anything you boomers left us a broken economic system it seems like this generational boxing match heats up more and more every day with both sides saying the other just doesn't get it so who's right one thing's for sure America's relationship with money has changed a lot in the last several decades when baby boomers were young adults it was possible to support a family and buy a house on one income without a college degree today that sounds about as realistic as a comeback by Blockbuster Video there are many reasons for this but mainly it's that the cost of living has been increasing over the last few decades much faster than wages can keep up this is especially true of three major expenses housing health care and education and you can see the results of that inflation in many generational trends the percentage of Millennials who own homes is around 8 points lower than it was for Gen Xers and baby boomers at the same age Millennials tend to value city life over suburbia more than previous generations so it makes sense that they're more likely to be renters but it's wrong to assume that they don't recognize the importance of home ownership most Millennials say they want to own a home some day it's just that they have to wait longer to do it the median home price now outweighs the median income by so much that in many places it can take ten years or more to save up enough for a down payment we're just now starting to see millennial homeownership rise as people in their 30s have finally saved enough money and paid off enough debt to think about settling down but less than a third managed to put down the recommended 20% meaning higher mortgage payments and longer loan terms almost half of millennial homeowners expressed something that buyer's remorse much more than it may be astir nation's because the costs including interest taxes maintenance turn out to be higher than they were expecting thanks to a changing labor market and our eyes and freelance work the percentage of Americans who rely on employer-based health care has gone from around 84% in 1980 to around 58% today unfortunately for Millennials who now make up the largest segment of the workforce that coincides with an epic increase in medical costs this has forced Millennials to be frugal consumers when it comes to health care services there are more likely to research costs and compare reviews of providers online and they're more willing to use telemedicine and walk-in clinics as cheaper alternatives to visiting a hospital they're also more likely to forego health insurance altogether which as we covered in a previous video is not recommended seriously check it out and then there's the big dark cloud hanging over so many members of this generation student debt tuition has skyrocketed in the last 30 years and combined with a competitive job market many young people felt they had no choice but to take out huge college loans in the hope that someday someday they'd earn enough to pay them back according to a 2017 survey 63 percent of Millennials reported having over $10,000 in student debt and more than one-third had over 30,000 older Millennials in their mid to late 30s had the double misfortune of graduating just as the Great Recession of 2008 is starting which led to essentially a lost decade of low wages and accumulating debt this burden pressured many to delay big life milestones like getting married having kids or buying house today one in five Millennials expects to die without ever getting out of debt so yeah there's no doubt that Millennials face some unique historical challenges to achieving the same level of financial health as older generations however there are some tendencies of this age group that aren't making things any easier for one thing it is true that Millennials love to go out for the first time in history Americans spend more money on bars and restaurants than on groceries the average millennial eats out five times a week almost half spend more money at bars and restaurants than they put into savings accounts over one-quarter spend more on coffee than they say Millennials also tend to value experiences over things meaning they'd rather spend their money on interesting food travel and music than cars houses and are less willing to work the same job for a lifetime some people attribute this to social media induced FOMO that drives young people to stockpile shareable memories like currency while others would say it's a more spiritual reaction to an overly materialistic society whatever the cause attempts millenials away from prioritizing long term investments like IRAs and homeownership but if there is a solid criticism to be made of Millennials it's this even though they are generally more educated than previous generations they have the lowest level of financial education in a study by George Washington University less than a quarter of Millennials could demonstrate basic financial literacy including economic concepts like compound interest inflation and risk diversification only 8% demonstrated high financial literacy what's more they're not asking for help only 27% had ever sought professional advice for saving and investment and only 12% for debt management this might explain why Millennials are more likely to make illogical financial decisions like racking up debt on a high interest credit card while trying to pay off a low interest student loan hello this is really all part of the larger economic shift 30 years ago employers essentially held workers hands through their financial lives a decent job could last a lifetime and typically came with health care and a company pension today young workers are expected to figure it out all for themselves and at no point did anyone think of actually teaching them how to do it so our Millennials justifying their completes for the most part yes but justified or not no one else is likely to help them out of this mess so they're going to have to start educating themselves now I don't as our two cents thanks to our patrons for keeping two cents financially healthy click the link in the description if you would like to support us on patreon what are some other financial hardships that are unique to your generation tell us about it in the comments you you [Music]

Channel: Two Cents

Views: 363,293

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Keywords: pbsds, pbs digital studios, pbs two cents, pbs 2 cents, two cents, money, millennials, personal finance, inflation, health care, education, homeownership, ok boomer

Id: jbsBNPddn4o

Length: 7min 0sec (420 seconds)

Published: Wed Oct 30 2019