Millennials don't follow traditional financial trends

Millennials face unique challenges in personal finance and often buck traditional financial wisdom.

Millennials comprise a generation that come of age during the worst economic period in our country after the Great Depression. Growing up during and after the Great Recession gave has given them some unique perspectives on money. They saw their parents lose everything during the real estate collapse in 2008 and the subsequent 2009 stock market crash. The graduated from college with crushing student loan debt and limited employment opportunities in a weak job market. All of this changed how they view their financial world. The articles in this section follow current financial trends with America’s youngest breadwinners. You can see how Millennials are faring with student debt, credit and homeownership. Below the articles, you can find more information on the overarching trends that impact what is now the biggest consumer segment in the U.S.

5 Ways Millennials Buck Traditional Financial Trends

#1: Millennials are more averse to using credit cards

The Credit CARD Act of 2009 placed tight restrictions on how credit card issuers could market cards on college campuses. It also prohibited the approval of credit card applications to anyone under the age of 21. The goal was that Millennials would be less likely to rack up serious credit card debt during school. The side effect was a generation that was more wary of credit cards.

Roughly two in five (41%) of Millennials view credit cards with fear and over three quarters (76%) of Millennials don’t see credit cards as a status symbol. Oddly enough, however, when Millennials chose a credit card, they make some interesting choices. A credit card went “viral” in 2017 largely thanks to Millennials that had a $450 annual fee. Most experts tell you to avoid annual fee credit cards, but Millennial snapped this card up in droves.

#2: They stress more about money

More than half of Millennials (53%) report they have high anxiety about losing their job, compared to just 29% of all Americans. Then 67% stress about savings compared to 50% of the general population. Plus, over 23% say that financial stress makes them physically ill, while 20% say it contributes to their depression.

This higher level of financial stress may be attributed to how they grew up. The Great Recession saw many households lose their long-term saving strategy as 401(k) assets plummeted. Millennials also came of age during a period of historically high unemployment rates, particularly among youth. This environment likely created a great sense of urgency, as well as one of impending doom.

#3: They’re putting off major life goals because of student debt

Millennial consumers face record breaking challenges with student loan debt. The average student graduates with enough debt to purchase a nicely equipped sedan (to the tune of over $35,000).

This level of debt easily puts many entry level workers well above the debt-to-income ratio needed to qualify for significant financing. Purchasing a first home is out of the question in many cases, even if they get help with the down payment. They simply can’t afford the burden of mortgage payments plus student loans.

This has also led to lower rates of marriage for Millennials in the 20s. Millennials often delay starting a family because instead of the benefit of two incomes, they get the anchor of twice the student loan debt. When you consider that the estimated cost to raise a child to the age of 18 (without education costs) is over $250,000, it’s no wonder that many Millennials feel like they’re not in a position to start a family.

On the other hand, however, Millennials are more likely to cohabitate faster AND merge bank accounts into joint accounts. They’re doing this even before they get married.

#4: Life delays may also be tied to long-term goals

A 2017 study found that 90% of Millennials view saving for retirement as their primary goal, versus 40% who opt for starting a family. Remember, many Millennials saw how weak their parents’ retirement strategies were during the Great Recession. That dramatic loss of life savings left a serious impression; one that may have inspired Millennials to be more diligent about starting retirement savings in their 20s, instead of putting it off like many Baby Boomers and Gen Xers.

This isn’t necessarily a bad thing. Financial experts have been telling people for years that they need to start saving more earlier. They also advise taking a more active role in your own financial planning and being aware of how investments like mutual funds work. If this really has sunk in with Millennials, then we could see a decreasing trend in the retirement crisis and Millennials grow older.

#5: Money isn’t always the end-goal of employment

You’d think given all the uphill battles with finance that Millennials have, they’d be completely devoted to achieving the highest income possible. But multiple pools, surveys and employment data studies show that the bottom line isn’t most Millennials’ bottom line.

Millennials want jobs that make a difference. They want perks that make them happy and comfortable at work instead of offering any financial benefit. In fact, one survey found that a majority of Millennials would look more favorably on an employer if one of the benefits they offered was allowing pets in the office. Millennials want a happy, fun and socially interactive work environment, even if it might not pay as well as a cubicle job.

This creates a bit of a financial paradox. Millennials don’t want to be married to a job because it has a nice paycheck, but they’re also more stressed than any other generation about money. They want to live for today, but put all their financial focus on ensuring they’re not destitute later in life. It will be interesting to see as Millennials grow older (and hopefully wiser) how their financial perspective will evolve. Will they fall in line with Gen Xers and Boomers or continue to march to the beat of their own financial drum?