Are you a millennial? If you’re born between 1981 and 1996 and are 23 to 38 years old, then you are a member of this generation.
Millennials frequently make media headlines in all types of media because they are the fastest-growing consumer group in the United States.
Millennials are the first generation to live with tech, with most teenagers having access to cellphones and the internet. However, millennials are also a product of a new financial regime – the fiat US Dollar.
Millennials and the Dollar
The Bretton Woods system monetary policy officially ended in 1963, ending the ties of money to precious metals. The American economy was preparing to fight a war, and they needed access to funding. By using the fiat standard, the Federal Reserve and US government were able to finance the wars in Korea and Vietnam.
The establishment of a fiat world reserve currency started to open up avenues in speculative finance, and the Great Credit Cycle started. Over the coming three decades, the baby boomer generation was at the threshold of economic expansion that saw a dramatic increase in living standards across the developed world.
The financial markets went through the 1997 capital market crash, as well as the tech bubble in 2000, and finally, the Great Financial Crisis of 2008. Throughout these financial crisis’s, governments and central banks continued fiat monetary policy to a point where they were handing out “free money” to bankers.
Millennials and the Economy
Unfortunately, the chicken has come home to roost. With America’s national debt at a colossal $22-trillion, someone is going to have to pay for all that spending and debt.
The results of the financial mismanagement of the world’s fiat currencies are starting to show all over America. Rising levels of homelessness and poverty continue to ravage the world’s largest economy and its citizens.
For millennials, credit is affordable, and it is everywhere you turn. Lenders are willing to throw money at you for everything from student loans to credit cards and auto loans. Currently, there is over 23-billion in consumer debt outstanding, and millennials are responsible for a significant portion.
Currently, the American economy sits poised on the brink of a recession. During an economic downturn, jobs dry up as companies close down and stop expanding. Wages remain flat, and there’s less credit available for spending. All these factors make it hard on millennials finances, forcing them deeper into debt, with little prospect for economic recovery.
Decades of evolving monetary policy created money-making machines out of financial vehicles designed to help average Americans. Student loans are an excellent example.
The Elephant in the Room – Student Debt
The cost of a college education has nearly tripled over the last two decades. Government is willing to take a chance on its youth, and they offer potential college students loans to receive higher education. However, changes in monetary policy meant that governments had to find another source of income, without putting more tax pressure on the citizens. Thus, they moved into student loans, escalating the costs of education with the college campuses.
As a result, many of America’s college graduates leave campus with not only a degree but over $36,000 in student loan debt as well. All student loans are Federally guaranteed. If the student defaults on their student loans, they don’t go away after a few years like other forms of defaulted consumer debt. Federal loans are active for your entire life as an American citizen.
The only way to escape student loan debt is to leave America and never come back. If you do return, you could face legal punishment. Surprisingly, many young Americans choose this option and leave the country to escape the debt loads. Emerging markets in Asia and Africa offer an affordable standard of living out of the reach of the US government.
Studies show that student loan debt is impacting millennials, starting their adult lives. As a result of swelling debt levels., more millennials are choosing to live at home for longer. Some politicians state that they would wipe out all student debt if they took office.
This idea seems promising and would help the millennial generation get out from under the thumb of federal debt. However, it would spark and new financial crisis, as the Federal government would lose more than $1.6-trillion in outstanding loans.
The Millennial Job Market
A large percentage of millennials are college graduates. With student loans readily available on tap from the government, getting an education is a priority. More than 3.9-milli9on Americans graduate college every year, and then find their way into the job market with the hope of starting a career.
Unfortunately, the behavioral sciences are becoming more popular with millennials. Fewer youths from this generation are choosing the STEM (Science, Tech, Engineering, and Math) fields. As a result, the generation is graduating more students in areas like psychology and art, and fewer in medicine and engineering.
As a result, the nation is developing highly educated people that can think deep thoughts about why they are standing in the unemployment line.
When it comes to finding a job, most millennials resort to taking part in the “gig economy” where they sell services online to the highest bidder. Jobs like design work, content creation, and video editing are all accessible on sites like Freelancer and Fiverr.
Other work as baristas of food delivery people, but very few end up starting a decent career.
Real Estate Ownership and Millennials
Real estate ownership is another area of the economy where millennials are under-represented. With substantial student loans and low-income opportunities available to millennials, more are turning into lifetime renters. The American dream of property ownership is becoming a misty future when we consider the stagnant wages and low economic expansion in the coming years.
The slow growth of homeownership among millennials means that the generation is missing out on one of the cornerstones of any person’s finances – a home. However, it doesn’t look like these trends are going to change any time soon. Most millennials can look forward to an endless cycle of renting and scraping by to pay the bills.
Tying it All Together – The Millennial Financial Mess
When we look at the substantial consumer debt loads, low career opportunities, and student loan debacle – It’s easy to understand why millennials have a hard time with saving anything they earn. When you’re grinding every day at McDonald’s for minimum wage, it’s challenging to put anything aside, and you end up living from month to month.
A recent survey shows that over 60-percent of Americans are ling paycheck-to-paycheck, with millennials accounting for the largest generation in this range. Living from hand to mouth is no way to start a family to increase your career prospects.
Some millennials are even finding it challenging to start a family. Debt is the primary motivation for putting off having kids. With Gen X’ers, the average age of having children was 24-years old for women. Today, that figure is now closer to 29-years old.
The primary driver behind the millennial savings crisis is income. With massive debt and low income, millennials trap themselves in a never-ending cycle of paying the bills, with very little money left over to save and invest. Statistics show that more than 70-percent of millennials have less than $500 available for an emergency expense like a medical bill.
The Millennial Mindset – Experiences Over Savings
Apart from the financial and economic difficulties facing millennials, they also have issues with how they manage the money they do have in their bank accounts. This generation is the first to grow up with social media. While Gen X’ers are on social media, they don’t spend the same amount of time on the platforms as millennials.
Millennials are also more likely to take advantage of e-commerce opportunities and digital mediums of making income. However, for many that don’t use the internet to make a living, they are still hopelessly addicted to their social media profiles.
Instagram currently has over 1.3-billion users, and it’s on track to outpace Facebook in the future. Millennials are bombarded continuously by users on Instagram telling them to “live their best life.” As a result, millennials are more inclined to value life experiences over financial security in retirement. They tend to spend their money on travel and going out, more than living a frugal lifestyle devoid of unnecessary expenses.
Millennials and Mental Health
Currently, more than 140-million Americans are dealing with some form of mental health issue. Sleep disorders, high-anxiety, elevated stress, and depression are all at a peak in the millennial generation. Surveys suggest that millennials are struggling to deal with the financial pressure in their lives.
Stressing about the bills, what people are saying about you online and in your social circles, is more common with millennials. However, it’s getting worse with the post-millennial generation. People with mental health issues struggle with making clear decisions.
As a result, more millennials are turning to medication to help them manage their situation and mental health. While drugs are meant to help people deal with psychological issues, many millennials end up developing a dangerous drug addiction.
Prescription drugs like OxyContin and Xanax help cure pain and anxiety in patients. However, many millennials choose to use them for recreational purposes as well. The boom of cough syrup consumption inspired by millennial hip hop culture also is to blame for rising levels of addiction. Overdose is now the leading cause of death for Americans under the age of 50-years old.
Millennials and Investing
People work their entire lives with the hope of retiring one day in the future. During their retirement, they imagine that they will have enough money to cover the rest of their days on earth. In the past, boomers and some Gen X’ers received pensions when they left their company.
However, today, companies no longer offer employees pensions, and what pension schemes that are left are under threat of government mismanagement. Today, millennials need to fund their pensions by themselves. Many companies offer 401(k) plans, but few millennials chose to take their employers up on this offer.
Millennials have a distrust with the government and the financial system. They also do not value financial security in the same light as previous generations. Today, most college campuses have more students interested in social events and political issues. They prefer arguing with each other over learning financial literacy and taking career paths in the STEM fields.
Very few millennials have a handle on investing. With living from paycheck-to-paycheck, and valuing life experiences over savings, it’s not surprising to find that millennials are the lowest represented generation in the investment market.
Millennials and the Rising Cost of Living
The Federal Reserve states that inflation data currently sits at 2-percent. However, anyone who takes a trip to the grocery store will tell you otherwise. With the ongoing trade wars sparked by the Trump administration, the cost of food and imports continues to soar.
High prices at the grocery store and gas pump mean that millennials dollars don’t go as far as previous generations. Inflation is rapidly eating away at the purchasing power of the dollar. Since its advent in 1913 as the nation’s monetary authority, the Federal Reserve has lost over 98-percent of the purchasing power of the US dollar.
A Way Out – Millennials and Financial Literacy
Millennials sit at a crossroads of a new financial system and a new way of making income. The internet revolutionized the world and gave anyone with bandwidth the opportunity to access information. It’s this change in technology that offers the most significant opportunity for the millennial generation.
Millennials have the world at their fingertips; all they have to do is type into the Google browser on their smartphone. With free education available on platforms like YouTube, Millennials have access to a wealth of mentors that can help them increase their financial literacy.
By enhancing your financial literacy, you discover more opportunities in the modern economy. Give yourself an edge and break free from the economic struggle of the millennial generation.