Why Are Millennials Experiencing So Much Debt?

Why Are Millennials Experiencing So Much Debt?

Chances are that you’ve heard the term “millennial” thrown around the media a whole lot lately. But what actually is a millennial? Well, a millennial is generally considered to be anyone born between the early 1980s and the mid 1990s. Now, seeing as these individuals have all grown up in the same era, it is generally considered that they have similar views and values. More often than not, millennials are associated with socially liberal ideals and a penchant for avocados. However, things aren’t all rosy for the millennial generation. They are facing one of the worst financial futures of any generation to come recently before them. In fact, it is argued that they are experiencing the most financial difficulty since individuals growing up during the Great Depression. Why? Well, let’s take an in-depth look into the matter to find some answers.


The Facts

First of all, in order to get a more comprehensive understanding of the financial struggle that many millennials are facing, let’s take a look at some facts about the millennial generation.

  • One in five millennials are living in poverty.

  • Based on current rates of pay, the majority millennials wouldn’t realistically be able to retire until they are 75 years of age.

  • Millennials have experienced a 300% increase in the amount of student debt that they are experiencing compared to individuals of their parents’ generations. Baby boomers would have had to have dedicated just 306 days worth of minimum wage pay in order to afford a college education. A millennial, in comparison, would have to dedicate 4,459 days’ worth of pay. Over 63% of millennials have over $10,000 of student debt to their name.

  • Only half as many millennials are becoming homeowners in comparison to young adults in 1975.

  • Millennials are putting off major life events, such as marriage or having children, as they can’t afford these “luxuries” due to their debt.

  • The majority of single millennials either live with their parents or house share with others their own age. Many will spend over 50% of their overall salary on their rent alone.

These, of course, are just a few facts, but they should help you to see the current living conditions of millennials. Education is extortionate, home ownership seems a farfetched dream, rates of pay have decreased, and job stability is unlikely, with many employers offering zero hour contracts, or operating on a freelance basis, removing responsibility in regards to providing a salary, sick pay, annual leave, maternity pay, or a pension scheme.


The Consequences

The consequences of such poverty and financial struggle has resulted in more millennials finding themselves in increasing amounts of debt. Many reach out to unreliable lenders


Short-Term Fixes

Of course, this all seems pretty bleak, and the need for structural change in society is evident. However, for now, let’s focus on short-term fixes.


Borrowing Responsibly

In order to avoid crippling debt as best as possible, it is important that millennials are familiar with how to borrow money most effectively, and know what sort of schemes or lenders to rely on and which to avoid. Generally speaking, anyone who needs to borrow money is in a relatively vulnerable situation. This means that individuals in more comfortable positions are likely to take advantage of them. You see all sorts of payday loans companies advertised all across the television, radio, and media. They offer individuals with even the worst credit ratings access to immediate cash, however, in turn charge extortionate interest rates that can see individuals go bankrupt over initially small sums of borrowed money. Even worse, people may feel the need to turn to loan sharks. These illegal lenders have low standards when deciding who to lend money to, but again, charge unreasonable interest rates and even worse operate outside of the law, often using intimidation and violence to get what they want. It is important that any millennial looking to borrow cash, only does so through legitimate and regulated bodies. Find these through commercials such as Capital One commercials, or through comparison sites. If ever in doubt, it’s a good idea to contact financial advice services, who can give you a good idea of what’s best for your personal circumstances.


Budgeting Effectively

Everyone needs to budget. However, if you have a limited income and high rates of outgoings, budgeting becomes increasingly important. You can make a budget relatively easily. Just take a note of your total salary. Then deduct any taxes or mandatory contributions that you need to pay out of this. This will give you your take-home pay. Next, deduct any necessary expenses. These can include your rent payments, home energy bills, grocery shopping, and finance payments (perhaps repayments on existing credit cards or loans that you have). What’s left is your disposable income. You should use this wisely, and you should never exceed it. When you start exceeding it, you start slipping into further debt. If possible, you should look at areas where you can cut spending, even when it comes to the necessary expenses. Consider moving into cheaper accommodation if any comes up. Compare different home energy providers and opt for the cheapest. Choose unbranded goods over big name brands when doing your grocery shopping. Sure, this isn’t much fun. But it will prevent you from slipping into further debt, and will consequently keep the stress and hassle associated with this at bay. It’s more than worth the sacrifice.

As you can see, things aren’t looking all too great for the millennial generation. But, there are certain things that individuals can do to reduce the amount of stress that they will experience at the hands of simply being born at the wrong time.

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