Make Ends Meet: Debt and Millennials
LOUISVILLE, Ky. (WAVE) - Millennials say a conversation will begin about who they are and what they stand for.
One of the nicknames they’ve been given is “Generation Me” for what many label as entitled or selfish traits.
A recent study by Clever Real Estate showed when “Millennials” talk about how it is tougher for them than it was for their parents, and they may just be right.
Matt Brannon is a Data Analyst for Clever Real Estate and a millennial. He poured through the data to see what millennials were saying and how they were feeling about their finances and their lives.
“Most define millennials as people born between 1981 and 1996, which these days mean you’re about 27 to 32 years old,” Brannon said.
The oldest children of this generation reached adulthood at the turn of the millennium, thus the name millennials.
“They came into adulthood as the most educated generation in American history,” Brannon said. “Unfortunately getting them there costs a boatload of money.”
With the president’s student loan forgiveness plan now null and void, so are many millennials’ plans of getting out of debt.
”To put it into perspective, in 1980 one year of tuition in a public college cost $800, now that same year of tuition cost $9000,” Brannon said. “It goes up to $33,000 for private schools”
That is $9,000 or $33,000 for just one year. Millennial debt doesn’t stop at student loans.
”The most defining characteristic of millennials is how much money they owe,” Brannon said. “Fifty-six percent of millennials told us they struggle to pay their bills.”
That is bills of all kinds. Some of that debt included credit card debt, auto loan debt, medical debt, student loan debt and other debt all on their shoulders.
“44% of millennials told us they would not be able to afford an emergency $500 expense out of pocket which really speaks to how little millennials have saved and how many are living on the line,” Brannon said. “53% say it’s not possible to have no debt as a millennial in today’s day and age. 12% of millennials say they got into debt because of medical costs. 31% said they got into debt because of their job loss.”
According to the World Economic Forum, millennials will be the first generation to earn less than their parents.
“With the increasing amount of student loan debt and credit card debt and the higher cost of living, 36% of millennials say they’re at risk of bankruptcy,” Brannon said.
As bleak as the economic picture may seem, the steps to success are the same for anyone hoping to gain financial freedom.
”The first step is to make a budget,” Brannon said to those who want to get their financial life in line.
Calculate your net income. Track your spending. Set realistic goals for paying off your debt. Make a plan. Adjust your plan and you’re spending to stay on budget.
“Another would be to invest,” Brannon said.
Getting rid of debt and building an emergency fund is first, but when you can start investing, it is an effective way to put your money to work for you and potentially build wealth that will keep you in your later years.
”One of the biggest regrets for millennials was 32% said that they regret not investing sooner.” Brannon said.
Although some millennials’ financial struggles can be attributed to harsh economic conditions, many admitted to some unnecessary spending. About 59% of millennials dine out once a week or more, and more than 1 in 10, that’s 11% say they must stop for that cup of coffee every day, 51% shop too much online and 44% surveyed admitted to making impulse purchases.
For more on this new study on Millennial debt, click or tap here.
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