While many millennials are often praised for earning more than what their parents did make. Their financial literacy is often put to question. Repeatedly maligned, to be exact. However, it is not all doom for them; at least they are open about their money compared to baby boomers.
For instance, a considerable population of millennial women earns more than their male counterparts. Millennials live in better houses compared to baby boomers. Several factors make millennials stand out compared to baby boomers. However, there are specific surprising facts about baby boomers’ finances that you didn’t know. Below are some of them:
They Carry More Student Loan Debt
Millennials don’t only carry more student loans compared to baby boomers, but they also don’t have \n idea on how to repay them. According to statistics by the federal reserve report, millennials have a median student loan debt of close to $20, 000.
These numbers are not for a few millennials, but rather a majority (more than one third) are strapped in student loans compared to previous generations. The worst part is that the same student doesn’t know if they’ll ever pay off the student loan before third death. One in five millennials believes they will die while in debt and can seem to figure out payment options available.
They aren’t Saving Enough for Retirement
A recent report by the American National Institute of Retirement Security shows that two-thirds of millennials have nothing saved for retirement. Even those who have saved are behind on what they ought to have kept aside going by their age. This research is based on tax-deferred retirement accounts like the 401(k)s and the likes.
A staggering 95% of millennials are behind on savings compared to baby boomers who only 3 out of 10 had nothing saved for retirement. Waiting for long before one starts saving is a mistake that will haunt most of the millennials. To make matters even worse, those millennials with 401(k) still make withdrawals from their plans, notwithstanding the penalties.
They Don’t Invest in The Stock Market
Unfortunately, less than 25% of millennials believe the stock market is a safe investment haven, according to St. Louis Federal Reserve. Millennials are wary of stock, and even those with savings account don’t’ consider it an option. The great recession and the bear and bull dynamics at play make the stock market look like a gamble for long term investment for some millennial.
They are blind to investing in the markets like the S & P 500 index fund tracking with dividends reinvested to double or even quadruple their money in the long term. Sure, they are risks involved with the markets. Nevertheless, Millennials are losing money by failing to invest in the stock markets.
Getting into Debt to Finance Luxury
From credit card debts to even withdrawing from their 401(K0 to pay for vacations and other expensive purchases. Many millennials are in debt up to their necks (they are just short of drowning). The trap of living in the moment and spending at the rate of their earnings seems appealing.
When a millennial gets more money, they upgrade to a bigger apartment, plan for expensive vacations, go on a date to exotic places. And if the fund doesn’t allow it, they have credit cards to cater for that. They don’t see the need to continue living small and save to buy a house, the moment warrants a bigger apartment, and they end up spending more on rent.
Don’t Have A Rainy-Day/ Emergency Fund
It is usually advised that one should have at least six months’ worth of living expenses saved. Plus, an additional emergency fund where you withdraw in case of emergencies and replenish the same back to the target amount as soon as possible. However, most young people don’t have a plan for a rainy-day fund.
The future is always full of the unexpected, but not for millennials. Millennials are confident a better future dawns, and some have settled to live from hand to mouth, having little to nothing saved in their coffers. That is how millennials are ending up in an endless circle of debt after debt. Because when there is an emergency, the immediate option available to them is to borrow.