Millennial Money: Why this tech-savvy, social media, passionate generation may have difficulty saving for the future

The stereotype is millennials are lazy and entitled. But, that’s far from the truth. In fact, this group of tech gurus, social media specialists who have a knack for food and culture are driven to making a difference in the world. Our way of living and doing business has dramatically changed due to the technology inspired and developed by this largest living generation. But, when it comes to finances, millennials may experience some challenges to building a nest egg.

What do we mean? For example, 66% of millennials (anyone born between 1981-1996) have yet to start saving money for retirement. Here’s more food for thought. The average millennial has over $46,700 in debt. So, why might this generation of 77 million people struggle to achieve financial success?

Student Loans

The biggest hurdle for millennials to overcome to date (besides mastering a fidget spinner) has to be student loans. Yes, graduating with a post-secondary education can lead to a better job with more pay. But, it also means tackling a mountain of debt right out of the gate. In 2016, Americans owned a total of $1.31 trillion in student loan debt, which equates to nearly $49,000 per household. That’s more than auto loans and credit card debt. Good news, there is a silver lining! Student loan debt is beginning its descent as the latest data reveals it grew by 6.3% in a one-year period, the slowest growth rate in 15 years.


We were all affected by the Great Recession (2007-2009), and while it’s been nearly a decade since the worst economic downturn, there are some who continue to feel the effects. That’s because graduating during or immediately after this global financial crisis meant higher unemployment and stagnant wages for young graduates fortunate enough to get their foot in the door. It’s been a slow go, but millennial wages are rising 5.8% annually thanks to a boosting economy.


When looking at the millennial group as a whole, the fact that there is nearly a 15-year age gap between the youngest and oldest of that generation can often get lost. A 23-year-old is going to look at saving money differently than a 38-year-old would – and the numbers back that up.

In a study conducted by LendEdu, 1,000 Americans between the ages of 23 and 38 were surveyed about their investing habits. In the chart below, you can see the difference in average retirement savings in the “By Age” tab.

The 33-38-year-old age group has an average savings more than five times that of the 23-27-year-old age group. Assuming that an older individual would have more income available to contribute to a savings makes sense, however, this chart also shows that’s not necessarily the case.  Under the “By Income” tab, you can see that the difference between an income of $49,999 or less and $100,000 or more only equates to an insignificant average savings increase of 0.71%. This shows that age in the millennial group weighs more heavily on saving habits than income. LendEdu attributes this to two things: compound interest – with the older group having the advantage of saving their money sooner and earning interest, and also that high-earning millennials are simply not contributing as high of a percentage of income.

Cost of Living

Another factor that can be hampering an individual’s ability to save lies in the cost of living. Many millennials decide after graduation to look for work in bigger cities, which can naturally cost more. For example, cities like Sewickley, PA, Moon Twp., PA, and Robinson Twp., PA have median home prices of more than $200,000 ($284,900, $220,000, and $211,100, respectively). Those cities would likely have a higher monthly mortgage payment than a metro area like Youngstown-Warren, for example, which has a median home price of $97,600, according to NAR.


Are you familiar with the FOMO? It stands for Fear of Missing Out, and before you ask, yes, it’s a real term that can be found in the dictionary. In today’s social world of tweeting and snapping, it’s easier than ever to have anxiety over feeling left out. As a result, a millennial’s buying habits may be more based on wants instead of needs. Almost 40% of millennials reported spending money they did not have in order to keep up with their friends. Whether it’s a night out on the town, vacation or clothes shopping, there are some who may have a hard time saying “no” with the FOMO on something special.

The good news is there’s a cure to FOMO! One of which is having a budget. By developing a spending plan, one can determine in advance whether they have enough money to do the things they need or would like to do. Plus, carefully following a budget ensures you will always have enough money for the important things such as shelter, food and utilities and more tequila.

For Realtors®

Most Realtors® are seeing this demographic on a daily basis, as 37% of the home buying market is made up of the millennial generation – with the older half of millennials accounting for the highest percentage of buyers across all generations (26%, according to NAR). Even further, the younger half of the millennial generation has the highest share of any generation that uses a Realtor® to purchase a home, at an astounding 92%. With that being said, it is important that Realtors® keep these figures in mind, and also be educated on the loan offerings available to clients who may not have much of a savings or much of a down payment available.

With loans like the USDA New Construction loan, buyers can qualify for as little as no money down – a potential relief for buyers who think that they need 20% down to purchase a home – and also design and build the home of their dreams. Other loans, like the FHA 203k Home Renovation Loan, allow buyers to finance the cost of renovations to a home into their monthly mortgage payment, for as little as 3.5% down.

Even informing your clients about grant and financial assistance programs available to them can make the difference between someone being able to purchase a home and feel confident, or not buying at all. You can help be the difference and ultimately close more deals and gain more referrals. Contact us if you’d like to learn more about low down payment mortgage lending options.




*Not all borrowers will qualify. Contact us for more information on fees and terms. Down payment and terms shown are for informational purposes only and are not intended as an advertisement or commitment to lend.