With Generation Z just beginning to enter the workforce, perhaps we’ll finally stop talking about millennials — but not just yet. The millennial generation is probably the most talked about demographic in modern society, with plenty of stereotypes attached from different sides surrounding the challenges those aged 23-38 face.
To some, millennials are a group facing the worst economic hurdles in living memory — underpaid, overstretched and fighting an unwinnable financial battle. To others, they are a lazy, hyper-privileged group who don’t understand what hard work is.
But who’s right? There’s no doubt younger generations are dealing with turbulent financial times, but just how financially savvy are millennials?
A debt crisis, but whose fault is it?
Student loan repayments, credit card debts and hefty rent arrears are all prevalent among the younger generations. January research from the Trades Union Congress show unsecured household debt at £15,385 and rising, with a YouGov project finding more than one in five 25-to-34-year-olds losing 60% of their income to direct debits on the day it arrives in their account. Indeed, the Organisation for Economic Cooperation and Development (OECD) found a third of middle-income households struggled to make ends meet.
Undoubtedly, the millennial generation are in trouble, but why? The answer lies primarily in a stall in income potential over the last ten years, coupled with a continued rise in the cost of living. The Office for National Statistics (ONS) suggests average weekly earnings are still £18 below their peak before the 2008 financial crisis, while living costs have continued to drive on.
There’s no doubt many young adults are living among climbing debt, but it would appear for many that that is merely a matter of circumstance, rather than a result of their own actions.
Reckless spenders or savvy savers?
With the above said, millennials have definitely shown less of a propensity towards long term savings goals than older generations. The rise of easy access, 24/7 retail and an abundance of spending choice means short-term and indulgent spending is far more prevalent among younger adults than ever before.
Domestically, savings figures are a huge cause for concern among UK millennials. Late last year, it was reported over half of 22-29-year-olds had no savings to their name whatsoever. Whether this is down to poor choices or unfortunate circumstances is a big question. At the start of 2018, the Resolution Foundation claimed UK millennials were the second worst-hit group financially in the developed world, only behind those in cash-strapped Greece. Job scarcity, depressed incomes and slumping home ownership were all noted as factors.
Some perceptions are not all doom and gloom, however. A few months back, Revolut put together a study that claimed seven in ten young adults were regularly putting money aside, with £174 a month being saved on average. It would appear you can build a perception one way or another, depending on which study you believe.
Overall, it would seem much of the traditional finger pointing of the older generations is somewhat mislead. With plenty of studies highlighting problems in income and living cost disparities, not to mention spiralling debts and the difficulties in getting onto the property ladder, it’s fair to say that millennials are more a product of their environment rather than financially unsavvy.
However, the practices of millennials are not completely blameless. A willingness to spend now rather than save for later will no doubt play its part in the financial debacle, while monthly overspending has definitely become more of an issue. Still, plenty of millennials seem to be willing to remain financially organised, save money and set financial goals for the future, even in spite of the economic climate.
So, how financially savvy are millennials? The answer is probably more than they’re given credit for.