Oftentimes, you hear this term from the older generation, referring to individuals born between the early 1980s to the mid-1990s or early 2000s. In other words, young adults these days are considered as millennials.
While millennials are dubbed as hardworking, persevering, and goal-driven individuals, most of the young adults these days are having issues financially. In fact, having a bachelor’s degree won’t guarantee employment or high-paying jobs that you will love. The Bureau of Labor Statistics also reported that millennials between 20 and 24 have a 6.9 percent unemployment rate as of July 2018.
What could be the reason behind the financial issues experienced by many millennials? Let’s find out.
Blame It On Social Media
Who doesn’t have a social media account? Surely, the majority of people not just in America but also around the world have at least one social media account. While it allows people to connect with someone regardless of the distance, social media comes with crippling effects too.
Did you know that this is partly to blame as to why many millennials are broke? It’s not surprising why.
Social media is a platform that allows users to “share” what’s happening with their lives – vacation trips, new gadgets, recent purchases, you name it. Millennials may be defensive about it, but seeing these posts made them feel envious and pressured to keep up. They ended up spending money either “for the sake of posting” or “because everyone is buying it” even if it would hurt their savings. They also tend to spend beyond their means, have a carefully curated lifestyle, and worry about retirement or emergency fund later in exchange for followers.
After all, they wouldn’t know how much you owe and how much money is left in the bank, right?
Just In Time For Most Difficult Economic Climate Since The Great Depression
Aside from social media, there are also other factors that led to millennials being broke. One of them is the current economic climate, which is clearly out of millennials’ control.
How does the current economic condition affect millennials financial standing?
Millennials graduated from high school or college just as the economy was experiencing one of the worst recessions in American history. This is something millennial parents did not experience during their time. There are limited jobs fit for their skills and educational attainment, which is also the reason why millennials are settling for lower-wage jobs just to make ends meet.
As a result, millennials are unable to start early in terms of saving and purchasing of home among other investments. Once you start late, you end late as well, which means you could be paying for your house when you’re supposed to enjoy your retirement.
A college diploma won’t always guarantee a better life and future, but there’s nothing wrong with dreaming and trying, don’t you think?
Poor Financial Decision-Making
How familiar are you with financial terms? Where did you learn the concepts of stocks, bonds, credit score, refinancing, and the return of investment among many others? Usually, these concepts should be learned at home and taught as early as possible.
Surprisingly, millennial parents are not as helpful as they should be. According to the 2016 U.S. Bank Parent Financial Survey, parents don’t go beyond the basics when it comes to financial education. The concept of saving with the help of a piggy bank was taught but not investing and retirement among others. Apparently, this could affect one’s attitude towards money as s/he grows up.
Failure to understand financial management leads to poor financial decision-making; hence crippling your financial standing. You tend to prioritize travel, going out, and investing in experience rather than making your money grow as early as possible.
Still, don’t stop yourself from learning. Take advantage of the Internet and keep yourself informed about the different financial terms. The more you know, the better it will be for you in making financial decisions.
Three Words: Student Loan Debt
The truth is not everyone can afford a college education. Even if your parents can pay the tuition fee, daily expenses in college could still hurt their budget.
What’s your last resort? Student loan. Believe it or not, the millennial generation took a higher percentage of student loan compared to their parents.
According to Harvard Kennedy School Institute of Politics, two in five millennials between 18 and 29 years old have student loan debt. The existence of debt even before they started working makes most millennials felt trapped in their current financial situation. Instead of giving them a clean slate after college, the younger generation has to worry about how to pay their ballooning debt. Combine this with low-income jobs that are only enough to survive daily life and you got a generation of feeling financially helpless.
Nonetheless, don’t let these reasons stop you from reversing your current financial situation. You may be “broke” now with no sufficient savings but with few tweaks in how you handle your money, investing your money in the right investment channels, and living a simple lifestyle, you can say goodbye to poor millennial life. Are you ready to leave that life?