They’re lazy, they’re entitled, they still live at home – leeching off their parents. Who are they? Millennials, of course. Well, that’s the perception anyway: a generation of “Peter Pans,” destined to never grow up, or move out.
Are all millennials idle do-nothings, expecting trophies for just showing up? Or, could this simply be a matter of bad press and a lack of bigger picture thinking? Let’s explore what makes this tribe of 20 and 30-somethings tick (and perhaps put some of these stereotypes to rest).
Financially, Millennials Are a Product of Our Society
What type of issues are millennials facing to keep them living at home, falling deep into debt, and borrowing money from their parents?
Born between 1981 and 1996, millennials were greatly affected by the economic downturn in 2008. Because of this, they shoulder a different (and bigger) financial burden than the Gen Xers and baby boomers.
In a lot of ways, millennials are a lost generation – struggling to be financially independent, but simultaneously drowning in bills. It is no wonder that over 53% of American millennials are borrowing money from mom and dad to put toward basic needs like cell phone bills, groceries, gas, health insurance, and rent.
Even though incomes have increased for millennials, many significant economic expenses such as the cost of buying a home and college tuition have increased at a faster rate— influencing the way millennials manage their money. These days, millennials are commonly found refinancing student loans, delaying home purchases, and looking for creative ways to earn more money through “side hustles.”
Here are a few societal factors that may account for this financial dependence:
1) Increasing Rent – While millennials have benefitted from a 67% rise in wages since 1970, the increase hasn’t kept up with the inflated cost of living. In 1960, the median gross rent was around $500, adjusting for inflation. Today, the current median US rent is a whopping $864.
2) Student-Loan Debt – These days, millennials have to pay more for a four-year college degree and are left with higher student-loan debt. In truth, college tuition was more affordable for older generations. From the late 1980s to the 2017-18 school year, the cost of an undergraduate degree rose by 213%, adjusting for inflation.
3) Unaffordable Childcare – For millennials with children, childcare is becoming more and more expensive. Because the average weekly cost to raise a child has increased from $84 in 1985 to $143 in 2011, along with the cost of childcare increasing by an average of 2.9% annually, it’s actually becoming more normalized to have one parent stay home as the primary caregiver to offset the childcare costs. That’s an entire income, but ultimately ends up saving money in the long run. Hello again, 1950’s.
4) Car Ownership – Even cars are more expensive for millennials. From November 2006 to November 2016, prices for new cars increased by 5%. In addition, the costs for motor vehicle insurance has increased by 50%, with maintenance and repair costs increasing by 27%.
5) Pricier Health Insurance Premiums – Once millennials hit 26, they are no longer eligible to stay on their parent’s health insurance. Unfortunately, we are in a time with higher health insurance costs than ever before, with the average worker shelling out $5,714 for a family health insurance plan annually. Compare that to $4,316 only five years ago! Insurance premiums keep increasing exponentially, and with the uncertainty and imminent nature of the Affordable Care Act (ACA), premiums may start to rise higher than ever.
Are you a millennial hoping to get a bump in pay to offset expenses? See how much you’re worth with Salary.com’s salary calculator.