The Personal Finance Obstacles Facing Millennials

The U.S. Department of Labor only lists 50 jobs that the average millennial will not be qualified for in 2020, yet millennials are expected to comprise half of their workforce by 2025. To give a better understanding on how some millennials manage financially and what they expect out of life it is important to understand why financial struggles exist in this generation, as well as whether or not they’re getting through them successfully.(

The “millennials’ financial problems” are a result of their financial independence. They have to deal with the consequences of not having a large amount of money, such as being unable to afford an expensive home or car.

Together we can do it vintage military poster.

Over the last several years, much ink has been written on the dire financial condition that Millennials (those born between the early 1980s and the late 1990s) find themselves in. My generation is in debt, underemployed, and has less money than our Baby Boomer parents had at the same age, according to statistics.

Articles discussing Generation Y’s financial concerns usually follow one of two narratives:

1) Millennials are entitled, lazy narcissists who have caused their own difficulties by not being ambitious, hardworking, or self-sufficient enough.


2) Millennials grew up amid the worst financial crisis since the Great Depression (caused, of course, by the arrogance of entitled, narcissistic Baby Boomers), are burdened with large college debts, and consequently face an impossible task. (And if they’re a touch spoiled, who brought them up that way?)

The first story blames Millennials completely, while the second essentially absolves them of any responsibility.

While these neat explanations make for wonderful clickbait and the pleasurable release of righteous outrage, they, like all narratives, leave out a lot of detail for the sake of a good tale.

They also overlook certain crucial (and more positive) options.

Generation Y is dealing with a loaded deck. However, this may be both a benefit and a burden.

Millennials might very well be the next Greatest Generation of personal finance, rather than a generation of peers who will be renowned for their indolence and luxury.

The Great Depression, the Great Recession, and the Turning of a Generational Cycle

Similar geopolitical and economic events, as well as generational archetypes, repeat themselves about every 80 years, according to the Strauss-Howe theory of history.

Within that 80-year cycle (or “saeculum”), there are 20-year mini-cycles (or “turnings”), each of which sees a different set of events and cultural moods. They’re most simply compared to the four seasons of the year: The first turning (“spring”) occurs during a “High” phase marked by strong institutions, optimism, unity, and development. The “Awakening” phase is the second turning (“summer”), which aims to revitalize the inner worlds of art, religion, and morals. The “Unraveling” is the third stage, which occurs when the culture fractures and institutions become dysfunctional. The fourth turning represents a historical winter – a “Crisis” time marked by economic upheaval and conflict. Then spring arrives again.

Four generational archetypes (Artist, Prophet, Nomad, and Hero) go through these four seasons, their qualities altered by the turnings they experience as they grow up. During a fourth turning, for example, the Artist generation consists of small children, the Hero generation consists of young people who serve as “foot soldiers” in the battle, middle-aged Nomads guide Heroes, and elder Prophets give vision and principles for navigating the Crisis.

The Great Depression and WWII fueled the last Crisis, which started in 1929 and lasted through the 1940s. The final Hero generation was made up of young people who grew up in poverty and fought the fight on the ground.


The wheel has spun round for the fourth time in the last eight decades, and we are once again in the fourth turning. According to Neil Howe, co-inventor of the generational cycle hypothesis, this one started with the 2008 financial crisis.

The generation that is coming of age during this Crisis is, of course, the Millennials, who find themselves in the role of the new Hero generation.

To others, Gen Y’s “heroic” status may seem to be a reach. “Remember that no one mentioned anything about the GIs being the Greatest Generation until the very end of the final fourth turning,” Howe stated in my interview. Nobody believed the previous Hero generation was particularly noteworthy at the time; it was only after they had completely met the challenges of their time that they were revered.

While the 2008 recession, whose impacts are still being felt, was not as bad as the Great Depression, it posed a tremendous economic challenge for Millennials, one that may eventually instill the same type of responsible morals and strong frugality that their grandparents were known for.

The Economic “Big One” That Millennials Will Face

It’s easy to downplay the economic difficulties that Generation Y has faced; after all, some analysts have attributed our financial woes on our inability to cope.

However, the fact is that Generation Y is fighting an economic uphill battle. Here’s the less-than-rosy picture:

The income of millennials is staying the same… Millennials were not only the worst impacted by the 2008 crisis, but they have also gained the least from the recovery. According to research, they are still earning up to 20% less than Baby Boomers and Gen Xers were at the same age.

Inflation-adjusted incomes for young males, in particular, have been declining since the 1970s, well before the 2008 crisis. As the quality of well-paying positions has deteriorated, male involvement in the workforce has decreased. In 1960, 80 percent of males aged 18 to 34 were working; now, just 71 percent are.

…and will most likely stay unchanged for the next two decades. According to Yale University’s Lisa Kahn’s study, the negative financial consequences of coming of age during a recession aren’t simply temporary; they’re chronic and may continue up to twenty years. Men who graduate from college during a downturn “earn 6 to 8% less in their first year on the job for each percentage-point rise in the unemployment rate,” according to a research article.

Men who graduate during a period of economic growth are more likely to get recruited to a higher-level, better-paying job immediately away, putting them in a better position to advance steadily up their preferred career ladder. They have more opportunity to enhance their abilities and get more expertise in their career right from the start, and their raises and bonuses are based on their higher beginning wage. It’s a positive feedback loop now.

Men who graduate during an economic crisis, on the other hand, not only earn less money right now, but they also make $100,000 less over the following two decades than those who graduate at more advantageous periods. It’s a negative feedback cycle for them: since they graduated in a tight job market, they’re more likely to be compelled to choose a lower-level, lower-paying position that’s typically unrelated to their planned career path. Unfortunately, even if these people do get back on track, they’ve already fallen behind in their industry, and the increases they get are less since their beginning wage was lower to begin with.


Coming of age amid a recession has a psychological influence on an individual’s economic prospects. Those who graduate during a slump are more risk-averse, so they’re more likely to stay with their present employment and less likely to hunt for better and higher-paying chances once the economy rebounds.

Millennials have a lot of debt. Millennials are entering adulthood as one of the most debt-ridden groups in American history, because to increasing school expenditures. Between 1996 and 2006, graduate debt more than quadrupled, and the typical college-educated Millennial enters adulthood with a $35,000 debt burden. If they attended a private school or obtained a post-graduate degree, that number may skyrocket.

According to a PwC poll, student debts not only affect Millennials’ financially, but also their mental health: The capacity to repay their debt is a worry for 54% of those surveyed.

Generation Y took on that debt in the expectation of turning their degree into a well-paying job; unfortunately, they entered the worst recession in eighty years as soon as they graduated. While statistics demonstrate that a college degree enhances earning potential in the long term, many Millennials have put off life aspirations like getting married or purchasing a house because of their financial burden.

Millennials rely on their parents for financial support. Many Millennials, although being in their 20s and 30s, still depend on their parents for housing and other essentials. According to Pew Research, more young people between the ages of 18 and 35 (including a whopping 35% of young males) are living with their parents now than at any point since the 1940s.

The financial situation of millennials is precarious. Many Millennials lack a financial safety net due to stagnating wages and significant debt. According to a Washington Post poll, 63 percent of people would struggle to handle a $500 unexpected bill. According to a PwC poll, roughly a third of Millennials said they often overdrew their bank accounts, implying they’re living paycheck to paycheck.

Because not all members of Generation Y can depend on their parents for financial assistance, an increasing number of them are resorting to alternative financial services such as payday loans and pawn shops to meet unforeseen bills. While those with a high school diploma or less are the most frequent consumers of such services, even college-educated Millennials are increasingly relying on payday loans to get by.

The ability to go up the economic ladder is dwindling. According to research conducted last year by a group of economists headed by Raj Chetty of Stanford University, persons born in 1950 had a 79 percent probability of producing more money than their parents. Over the last several decades, that percentage has rapidly declined, with individuals born in 1980 having just a 50% chance of out-earning their parents. Economists believe that a drop in the absolute worth of a college degree is to blame for diminishing economic mobility. Millennial college graduates have lower median wages than Generation X graduates, despite the fact that the expense of a college education has risen dramatically.


Signs that a New Heroic Personal Finance Generation is on the Rise

Given the severe issues stated above, some Millennials have expressed pessimism, despondency, and even resentment against the previous generations that have left us with this blemished economic environment.

While no one wants to come of age during a recession, there are certain benefits to being pushed into such a situation.

While many people have long appreciated how members of the Greatest Generation embraced ideals like responsibility, forethought, and thrift, they were not born from a separate, superior stock than the rest of us. Rather, they were formed by circumstances that brought out these traits – they lived during a very terrible moment in history and rose to face the difficulties that were thrown at them.

My fellow Millennials have been given a same chance, and there’s already evidence that it’s strengthening our backbones.

Millennials save more than previous generations. Sixty-six percent of Generation Y males identify as savers, according to a new Bankrate poll, and Millennials are actually saving more than previous age groups. When compared to previous age groups, fewer young adults between the ages of 18 and 29 say they save nothing, but more Millennials say they save up to a tenth of their income. And bear in mind that they’re saving more despite the financial difficulties that are disproportionately affecting this generation.

According to a separate poll, half of Millennials have begun to save for retirement (and almost half of these savers are socking away at least 6 percent of their income). The most common explanation given by these savers was that “they learned that beginning early might result in a larger nest egg later on.”

While half may not seem like much, the figure seems to be rather healthy when compared to the fact that 40% of Baby Boomers — who are decades away from retiring — have yet to save anything for retirement. “Millennials have a larger predisposition toward saving, for both emergencies and retirement, than prior generations,” says Greg McBride, Bankrate’s senior financial analyst.

When it comes to credit card debt, millennials are more cautious. Generation Y members may frequently lament the amount of debt they took on to pay for college, but the experience has apparently taught them not to take on other types of debt. While total household debt climbed in 2016 (to $12.29 trillion), the proportion of Americans under 35 with credit card debt fell to its lowest level since 1989, according to the Federal Reserve. According to a New York Times study of the data:

“No other age group has seen a faster reduction in the share of people with credit card debt than young Americans… In 2013, the most recent year for which data from the Survey of Consumer Finances is available, just 37% of American households headed by someone aged 35 and under had credit card debt, down about a quarter from the year before the financial crisis.”


Millennials are also taking out fewer auto and house loans, indicating both a struggle to get ahead and a determination to live within their means.

According to the NYT piece, it’s not only student debt that has made young people weary of credit cards; it’s also witnessing family members and friends abuse them and suffer the repercussions, particularly during the recession. “It’s quite evident that young people are not interested in being indebted in the manner that their parents are or were,” David Robertson, editor of The Nilson Report, a payment industry journal, told the New York Times.

Millennials questioned for the article agreed with this idea, citing a wish to avoid being tempted to spend their money carelessly. “I don’t want to go out and buy, buy, buy,” one said, “even if that’s what society expects of me.” I want to put money aside and invest for the long haul.”

Millennial entrepreneurs have a long-term, legacy-oriented approach to their businesses. Generation Y is often chastised for being impulsive. Millennial business owners, on the other hand, want to build something that will last, and are more likely than older business owners to say they hope to pass their business down to their children one day, despite the fact that many of the respondents don’t even have children yet, according to a Wells Fargo survey. Only 20% of respondents want to sell their company in order to pursue other opportunities.

Traditional status markers are less appealing to millennials. Millennials, unlike their Generation X and Baby Boomer forefathers, are less interested in conventional status symbols such as vehicles, large houses, and fancy apparel. They are, for example, 29% less likely than Gen Xers to acquire an automobile. Furthermore, conventional status symbols’ brands aren’t as significant to them, and they don’t want logos on their swag.

Generation Y is also finding less expensive methods to occupy themselves, such as sitting at home and watching Netflix (which costs $8.99 per month) or creating a homemade dinner they spotted on Pinterest.

Overall, Millennials are content with what they have; 9 out of 10 think they presently have enough money.

To put it another way, humility and economy have resurfaced as fashionable.

Will Millennials Be the Next Greatest Personal Finance Generation?

The current fourth turning approximately mirrors the previous one’s 1937-1939 (turnings may be longer/shorter; slower/faster; less or more severe). (It’s worth mentioning that, although output, earnings, and wages had rebounded to pre-crash levels by 1937, the economy was once again in recession at this time.) Many young people had made significant sacrifices at this time, including being farmed out to live with relatives, skipping school to work to support their families, and joining the Civilian Conversation Corps to cut trails and pave roads for cash that was sent back home. Today’s “Hero” generation hasn’t had to make as many sacrifices, and to be told, there are still far too many people in our ranks who choose to cope with economic issues by moaning and blaming.


However, our recession has not been as terrible, we have been asked to do less, and we have been given fewer chances to serve like the CCCers of old. Similarly, there are fewer cultural norms that mandate a stoic and resilient reaction to adversity these days.

Despite the fact that the conditions are different and the reaction has been more subdued, I am optimistic that my generation will utilize our troubles as an opportunity to restore sobriety and maturity to our personal finances as well as the economy as a whole. There are evidence that we’re already heading in that way, and we may speed things up by deciding to strengthen our commitment to these (re)emerging ideals.

Because, although the Greatest Generation’s devotion to caution and frugality sprang from the circumstances that were thrust upon them, how they carried these responsibilities, rather than being crushed by them, was a question of choice. Virtue does not come naturally from need, but it may be cultivated through it.

Millennials are steadfastly hopeful about the future, despite the economic hardships they confront. According to one research, 67% “think they will reach a higher quality of life than their parents,” while 72% “say they feel in charge of their destiny and believe they can accomplish their objectives.” (It’s worth noting that Strauss and Howe foresaw Generation Y’s distinctive optimism more than two decades ago.) That may seem foolish, but they have good reason to be optimistic. If the Strauss-Howe hypothesis is correct, and we are able to effectively navigate through this Crisis phase, we will be in the middle of another High in approximately a decade. After twenty years of misery and struggle, a time of economic growth like the 1950s, which the last Heroes experienced.

That doesn’t imply we should just sit around and wait for 2028 to arrive. Developing and strengthening a commitment to strong personal financial principles today will not only help us weather the present storm, but will also prepare us for what is, in many respects, a larger challenge: sustained prosperity.

Next month, we’ll provide options for how our generation can achieve precisely that, as well as overcome the aforementioned obstacles. ‘ Until then, keep living simply and conserving money, and remember the phrase that helped our ancestors get through the winter and into spring: We’ve done it before, and we’ll do it again.



Millennials are faced with a variety of obstacles when it comes to their personal finances. This includes the cost of living, student debt, and other financial obligations. Reference: millennial finance trends.

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