A snapshot of millennial and Gen Z finances

How the ‘brokest generation’ and the ‘internet generation’ are changing the status quo

Millennials and Gen Z may enjoy a friendly rivalry online (don’t worry, we won’t be debating the merits of side vs. middle parts in this article) but they have at least one thing in common: the pressure of facing economic instability and financial anxiety in early adulthood.   

These experiences have led to a shift in priorities compared to previous generations, as they strive to overcome unique challenges that their parents simply never had to deal with. 

Millennials aren’t avocado toast eating industry killers and Gen Z aren’t meme stock trading tech addicts — those are stereotypes that misrepresent the hardships these generations have been shaped by.

We can get a better view of what’s going on in our economy and work towards meaningful change by being empathetic to the financial challenges of young people. It’s important to listen to them — they are the future after all!

In this blog, we break down the characteristics and priorities of the average millennial and Gen Zer and identify the major problems they’re facing. We also have some tips in store for anyone who belongs to these generations (we won’t tell you to skip your daily latte, we promise).

Millennials

Characteristics

Born between 1981 and 1996, millennials (also known as Generation Y) have consistently faced economic uncertainty. They experienced both the 2008 financial crisis and the 2020 COVID-19 pandemic, and have felt the effects on employment and cost of living.

Following the 2008 recession, many millennials decided to broaden their earning capacity by taking out student loans and going back to school. Now, 1 in 3 American millennials have student loan debt — more than any other generation.

These conditions are the reason millennials have been called “the brokest generation” (ouch…). Dealing with crisis after crisis has unfortunately left them with less money to spend than the generations before them.

Millennials are also the first generation to grow up with the internet, which has heavily influenced the way they manage their money. For example, millennials popularised digital finance tools like budgeting apps and use mobile banking more than any other generation.

Priorities

When you put all this together, it honestly makes sense that millennials have developed different priorities than their parents and grandparents. They often see their career and retirement trajectory differently. Instead of putting off enjoyment until retirement, they’re pursuing ambitions now — going for a dream job, starting a business, or travelling while holding off on buying a home, marriage, and kids. Millennials value a life with balance, so they don’t have to wait to do the things many people wait until they’re retired for — like travelling, volunteering, and pursuing hobbies.

But just because some millennials are holding off on buying a home, it doesn’t mean they don’t want to. According to a Bankrate survey, most want to own a home someday, or even right now. The top barriers to home ownership were cited as inadequate income, high home prices, and not being able to afford a down payment. 

Challenges millennials face

Poor economic conditions & an abundance of debt

Thanks to consistent economic uncertainty, many millennials feel like they’re a few steps behind. Those who entered the workforce during the Great Recession had fewer job opportunities and lower wages than previous generations. At the same time, the cost of tuition was rising, leading to high levels of student loan debt.

Despite being more educated, millennials earn 20% less than baby boomers did at their age. Wage stagnation has had a long-term impact on this generation’s ability to accumulate wealth and afford milestone purchases like their first home. Add high levels of inflation into the mix and the prospect of ever owning a home gets pushed even further away.

The housing market itself also presents a challenge to millennials as the prices of homes become unaffordable to them. Rising demand has caused home prices to skyrocket since the start of the pandemic. Recently, there’s been signs of cooling, but home ownership is still a challenging goal for young people to achieve.

Read the full article.