Most people have misguided views on how millennials handle money. Most assume millennials don’t know how to save money. It’s hard to argue the perspective. A large percentage of millennials still live at home despite working full-time jobs.
Here’s a statistic that’s hard to ignore. Millennials save 5% more of their income than Baby Boomers did. Millennials save on average 19% of their income where Baby Boomers only saved about 14%. So what’s different? Why do millennials have less wealth?
One key difference is the value of higher education. Millennials today are taking on massive amounts of student loan debt because they are taught the importance of a college education. The pay right out of college doesn’t pay off though. The average college graduate makes just over $1,000 more than a worker did in 1989 with no college education. Students are dropping $100,000 and more to get an education without the promise of higher pay.
Another factor is how savings are viewed between generations. Millennials tend to put less money aside for retirement and save more money on “living their desired life.” Baby Boomers put twice as much money away for retirement and only spent about a third of what millennials do on living their desired life.
Whether it’s the crushing amount of debt or the decisions on how to spend savings, millennials continue to face financial struggles. While you could argue the importance of enjoying life, a sensible approach to financial wellness might be to make a little more money and invest it for retirement. This will allow for a sound financial plan for today and tomorrow.
Curious to see how millennials stack up financially against other generations? Check out this infographic!