How Are Millennials Doing Financially?
The US Census Bureau defines a millennial as anyone born between 1982 and 2000. They represent one of America’s largest generations, consisting of 80 million people. How are these 17-to-35-year-olds doing financially? Are they buying homes, saving and investing?
Jobs and Income
When the Great Recession occurred (December 2007-June 2009), most millennials were just graduating from college and entering the job market. Jobs became scarce, and the economic downturn lingered for years after the Recession ended. Most millennials had a hard time finding a good job. So, how are they faring now?
The NCES tracked 15,000 millennials for 10 years and recorded their behaviors, employment, and financial markers. The economic situation has forced many to take less-than-desirable jobs in order to cover expenses and student loan payments. 25% said they had to work more than one job, 36% said they worked more hours than they wanted to, and 37% couldn’t get a job in their field of study.
Business Insider analyzed the average annual income for millennials in every state for 2016. The results showed that the average annual income for millennials ranged from $18,000 in Montana to a high of $43,000 in Washington, D.C. The average annual income is around $35,000.
The cost of higher education is rising faster than the inflation rate and the rate of increase in personal incomes. The College Board indicates that, over the past 10 years, prices at public universities have risen an average of 5% every year. As a result, many millennials borrowed money with student loans. That debt has impacted their lifestyles in several ways.
34 percent of millennials hold a bachelor’s degree, and two-thirds of them borrowed an average of $30,000 to pay for their education. 6% of college-educated millennials are living in poverty, which is double the amount of college-educated Baby Boomers or Generation-Xers. 23% of millennials live with their parents in order to cover expenses and pay their student loans.
Owning a home is part of the “American Dream.” Many people spend years saving up so they can own the house of their dreams because it provides stability and equity, and even status. How are millennials doing with home ownership?
The number of millennials who own their own home is at a record low for several reasons. After the housing market bust, the requirements to obtain a mortgage became stricter. On average to buy a home, you need to save up about 20% of the price in cash for a down payment, have a good-paying job, good credit, and be stable enough to stay in one place for a few years to make the investment worth it.
However, many millennials are not making as much income as they may like, and since many are struggling to pay off student loans, renting makes more sense. Renting provides the flexibility to pick up and move to a new city if offered a better job. For those still working to build credit and save up for a down payment, renting may be the only option.
Another factor is that more millennials are single. 31% of millennials are married, and 33% have at least one child. In contrast, 46% of people born 10 years earlier than the millennial generation were married at the same age. Buying a home is a bigger priority for married people or people with children than for those who are still living the single life. Married people account for 77% of all homeowners.
Millennials have faced some tough challenges. A sluggish economy, student-loan debt, and stricter mortgage requirements have affected them more than their earlier predecessors. However, millennials are still young, more educated than their older peers, and they seem to have a bright future ahead of them.