Millennials are stupid, lazy and don’t save a penny!
As a Millennial myself I’d resent that tagline if I wasn’t too afraid to be labeled “soft” as well. I’m actually not here to argue. In fact, I’m willing to accept for a moment that generalizing the largest generation in history (made up of 85-90 million people) makes any kind of sense and spend my time trying to understand why Millennials have such a hard time saving.
For some quick context – a Moody’s Analytics study was released in 2014 re-igniting the cries of fiscal irresponsibility for Millennials (ignoring that -2% was actually a vast improvement over -15% in 2007). Let’s take a quick look at some of the factors contributing to Millennials’ failure to save.
The Job Market: It’s Hard Out There for a Millennial
40% of the unemployed in 2015 were Millennials and 44% of recent college graduates are under employed (they hold a job that doesn’t require a college degree). To make matters worse, the jobs Millennials are getting are worth less than they were a decade ago. According to Carnevale’s center at Georgetown, the average age a young adult reaches the median earnings rate increased from 26 to 30 from 1980 – 2012. So it’s harder to get a job and jobs now pay less – not exactly a recipe for savings success!
Cost of Living: Onwards and Upwards
If you live in any major U.S. city what I’m about to tell you probably won’t shock you: it’s expensive. Rents in cities across the country are spiraling out of control and that’s just your living situation. Cost of the essentials (food, utilities and your bar tab) are all increasing and combine to eat away at an already tight bank account.
A higher cost of living doesn’t warrant cries for help on its own, but when that higher cost is combined with a situation where wages aren’t growing and Millennials performing similar job functions to Baby Boomers are being paid less in real terms then you’ve got to cut us a break. Millennials are having a difficult time squirrelling money away from a rainy day because for many the “rainy day” is now.
Our Credit Crunch Continues
Friend A is a Millennial and he’s been a saver since Day 1 of joining the workforce. He is, and always has been debt free. What he doesn’t often mention is that his $60,000 per year college tuition was paid for by his parents.
Friend B is also a Millennial, but he hasn’t saved a dime since joining the workforce. He graduated with $90,000 in student loans. This friend worked through college and now works at a job where he regularly puts in 80 hours per week to help pay down the same college tuition.
There’s a reason one Friend A can save and Friend B can’t (Hint: It’s not because Friend B is stupid and/or lazy).
The reality of the situation is that Millennials want to save. In fact, the median age Millennials start trying to save for retirement is 22, a full 13 years earlier than Baby Boomers. The problem is that Millennials haven’t rebounded from the credit crisis in the same way that the more experienced generations have. Millennials still hold an average outstanding student loan balance of $33,000 and according to a Wells Fargo survey, 47% of Millennials spend over half their paycheck relieving debt. With out of control student lending and credit card rates, every spare dollar a debt ravaged Millennial gets their hand on goes toward relieving their debt burden.
A Shot at Another Tagline
Hopefully by now it’s clear why Millennials suck at saving, but to remove any doubt I’m going to try my hand at another catchy tagline. For a comparison (and to save you the hassle of scrolling up) I’ve also copied our original tagline below.
Take 1: Millennials are stupid, lazy and don’t save a penny!
Take 2: Millennials have an average distribution of intelligence; mostly work hard, but for less pay and with fewer job prospects compared to other generations; and would love to save, but are hampered by student loans and credit card debt they’re forced to take on as the cost of living rises and wages stagnate!
Yikes, clearly the tagline needs some work. Got something better? I’d love to hear it!