When it comes to money, millennials often get a bad rap. Thanks to things like student loans and a struggling economy, plus common misconceptions that 20- and 30-somethings often make poor financial decisions, it can seem like they're pretty much set up to fail. Yet in reality, millennials aren’t financially doomed. Fun fact, they'e doing just as well, if not better, than other generations when it comes to saving money and setting themselves up for the future.
In a recent survey by Bank of America of 1,500 people, researchers found that 54% of millennials keep budgets, the same amount as Gen Xers. Fifty-seven percent of millennials, meanwhile, have a savings goal, compared to just 42% of Gen Xers and Baby Boomers. Young people may be frequently associated with poor financial habits, but insight from financial experts proves otherwise.
“This generation has faced many obstacles upon graduating from college" including higher student loan debt and limited employment opportunities, explains consumer savings expert Andrea Woroch. Additionally, “many millennials struggled — or watched their families struggle — through the 2008 recession. As a result, they understand the importance of saving money and spending it on things they value," she adds.
Need more proof that millennials are better at managing money than it seems? Let's dive in.
1. They prioritize experiences over material goods
A common misconception is that millennials spend too much money on trivial things — you know, prioritizing avocado toast over home ownership, for instance. In actuality, many millennials are choosing to put their money towards valuable life experiences, such as vacations and self-care, rather than material goods.
“It’s almost as if we live more with the fear that tomorrow isn’t promised — we want to live and take advantage of each opportunity,” explains Stephanie Troiano, 34. “So if something comes along that seems like it presents a better or more exciting opportunity, the justification is that it’s worth it.”
Troiano thinks that this mindset comes from the fact that she and many others her age experienced the worst recession since the Great Depression after they graduated college, and so while they understand the importance of money, they also don't see the point in waiting to splurge on enlightening or enjoyable opportunities. "Building a life that gives you joy and future financial stability seems to be our focus," Troiano explains.
And no, this isn't a bad thing. “You can’t pinch every penny or you’re going to burn out — it’s much more important to focus on the big stuff,” says Ted Rossman, industry analyst for credit research company CreditCards.com. “It’s healthy to go out and have fun and spend some money — without going overboard, of course.”
2. They live at home to save money, not because they're lazy
Although it's often said that some millennials move back in with their parents because they’re lazy or spoiled, this is typically not the case, says Rossman. Rather, people who are able to move back home tend to do it because it's a great way to save up while planning ahead — especially since the cost of housing in many big cities today is substantially higher than in the past.
“Living with your parents could save you thousands of dollars per month in expensive areas, which you should save and dedicate toward future housing or car costs,” Rossman explains.
Alicia Barnes, 29, agrees. “Whenever I chat with friends or family around my age, the goal with money is always about saving to purchase a home or building up a nest egg for the future,” she tells Mic. “These days, I think we are willing and able to live at home longer to save up for those goals.”
The same attitude goes for living with roommates, even into your 30s or beyond. Paying for a one-bedroom by yourself can be quite pricey, so splitting the rent on a two- or three-bedroom with a few pals is often a wise way to save up.
3. They understand the risks of buying a home
As of 2015, only 37% of millennials owned homes compared to 45% of Gen Xers and Baby Boomers when they were the same age, according to a report by Urban Institute. Having lived through a major housing crisis, millennials realize how risky owning a home can be, and as such are not rushing into the decision.
“Homes are expensive and [they're] liquid assets,” explains Rossman, adding that between closing costs and moving fees, ownership is a large enough investment that waiting to buy until later in life — or not buying at all — can be a fiscally responsible decision.
“There’s a lot of value in having a landlord pay for all repairs to your rental,” adds Sara Rathner, personal finance expert at finance advice company NerdWallet. “If you owned your home, you’d be on the hook for those costs, plus the precious weekend time it takes to do work around the house.”
Not owning a home can also free up money in your budget for other goals, as well as let you not feel tied down to a specific location. Millennials value their freedom in this way more than previous generations, says Rossman. Troiano echoes this, saying that many people she knows prefer the flexibility to move to different cities or travel frequently over real estate.
4. They diversify their career because they know their worth
Studies have found that millennials change careers more frequently than previous generations, but it's not because they're entitled or easily bored. Many have strong work ethics and understand the value they bring to their jobs, so they don't want to settle for less than they deserve. “Millennials know what they want and seek it out, even if that means moving around to different companies until they find it,” Woroch explains.
This attitude can seriously pay off. According to a 2019 Akumina survey of 1,051 millennial managers, 75% said they believed changing jobs every few years advanced their careers. “Although job-hopping used to make someone appear unstable, it can often lead to new opportunities and growth within a sector while also helping the individual discover their true passion and best skill set,” says Woroch.
Millennials' tendency to ask for more money, too — Bank of America's research found that 46% of millennials have asked for a raise in the past two years — is also a smart move. “Those who don’t have the confidence to ask will miss out on earning more, the true way to reach financial security,” explains Woroch.
And even if not every job search or raise request works out, some millennials say it's worth the risk. if an employer rejects the ask, it could be a sign that it's time to move on.
5. They successfully manage their (huge amounts of) debt
According to a survey by the Society of Actuaries of 2,001 U.S. adults, millennials are managing debt better than previous generations and even Gen Z, with 41 percent making efforts to get debt under control and 34 percent learning to use credit cards wisely — higher numbers than for other generations.
This is especially impressive considering how much debt young people have. Among all generations, millennials have the highest volume of student loans, with one in three young people reporting in the survey that they deal with the issue. And while 40 years ago, you could possibly pay off your education by working at a part-time job, the high costs of college and graduate school today makes it so that many 20- and 30-somethings are forced to be saddled with eye-popping amounts of debt for decades, says Rathner.
Additionally, “since many people opt to work for a few years before going to grad school, that means you may take on additional loans in your late 20s or later,” she notes.
In other words, the financial reality for millennials is pretty intense — but they're managing to succeed nonetheless.