Millennials are regularly blamed for the death of virtually every product on the market and every industry in existence. From canned tuna and napkins to hotels and chain restaurants, the vilified generation has become a convenient scapegoat for downward trends. Some of the claims aren’t even necessarily true; experts say millennials are responsible for negative real estate trends, but the facts show that 32% of those looking to buy new homes are first-time buyers — and Millennials may actually be driving the market at this point, rather than being responsible for its downfall. And now, a new study from the Federal Reserve is sending a message loud and clear: stop blaming millennials for their lack of spending. They’re just too broke to contribute to the economy.
The words for “silver” and “money” are the same in at least 14 languages, but no matter your preferred term, it’s clear that millennials don’t have much of it to call their own. Federal Reserve data shows that it’s not irresponsible spending habits that got us here; it’s actually the fact that millennials simply have a lot less of the green stuff than previous generations did. The study found that “millennials are less well-off than members of earlier generations when they were young, with lower earnings, fewer assets, and less wealth.” And if they have less money to start with, they’re not going to be able to spend that much.
The study revealed that Gen Xers and Baby Boomers have family incomes that are 11% and 14% higher, respectively, than comparable millennial households. A separate 2016 Pew Research poll found that nearly 20% of senior citizens were still working full-time jobs and were unable to retire — a percentage that will likely rise quite a bit as millennials age. Recent research showed that the median millennial has only $2,430 in savings, with a growing percentage of millennials having nothing saved at all. The majority of American adults between the ages of 21 and 37 actually receive financial assistance from their parents, found a report from Country Financial.
It’s not surprising, then, that millennials have had to make financial sacrifices to even afford basic services. They have to pay substantially more for health insurance, even when it’s employee sponsored, which may cause some millennials to opt out entirely or neglect the care they desperately need. While 27% of U.S. patients visited an urgent care center between 2014 and 2016, the percentage of millennials who opt for urgent care over primary care is staggering. A recent study found that 45% of adults aged 18 to 29 do not have a primary care provider, with millennials opting for urgent care due to convenience and lower costs. Telemedicine and retail clinics are also popular options for these same reasons. As a result, the urgent care industry is experiencing substantial growth — so at least they can’t argue that millennials are having detrimental effects on their businesses.
The reality is that millennials would actually like to spend their money in ways that mirror those of previous generations. Unfortunately, they just don’t have it to spend. This generation came of age during a financial crisis and have struggled to earn and save due to low wages and higher costs of living. It’s really not their love of avocado toast or hatred of breakfast cereal that’s the problem; it’s a failure to pay a living wage and an emphasis on higher education (and subsequent student loans) that should really bear the blame.
What Can Millennials Do?
Grant Sabatier of Millennial Money gives us this piece of advice: “Most people think that what matters most is your income – how much money you are making. But actually the most important number in your financial life, the one determines how quickly you can retire is your savings rate, which is the percentage of your income you’re saving. Increase your savings rate from 3% (the average in the U.S) to 25% and you can retire up to 15 years sooner!”
Are you a millennial looking for ways to achieve financial independence? According to Brittany Kline, “In order to be in complete control over your time/money and become financially free, you must first win the internal battles that are holding you back.” Check out Kelan and Brittany Kline’s site, The Savvy Couple!