HomeMoneyMillennials Aren’t So Bad with Money After All

Millennials Aren’t So Bad with Money After All

Millennials Aren’t So Bad with Money After AllIt seems like every other day you read an article bashing millennials. Entitled, lazy, and clueless are just a few of the pejoratives lazy journalists use to describe young Americans. However, this 21st century version of the old, “kids these days” refrain misses an important point. On the topic of money, there is definitely positive news.

Saving Early for Retirement

When it comes to retirement savings, millennials are off to a great start. A study by the Transamerica Center for Retirement Studies found that Millennials started saving in a 401(K) or IRA account at an average age of 22. This fact means that Millennials are off to a much earlier start than Gen Xers (27) or Baby Boomers (35), and they are more likely to reap the benefits of growth.

There is a theory as to why Millennials are such eager beavers with retirement savings. Younger Americans have both read about and seen the disappearance of traditional pension plans. Millennials are more concerned than people in other age groups that Social Security will not be there to meet their financial needs. No wonder the Transamerica study found that 66% of millennials expect their retirement income to come from self-funded sources. They have been paying attention.

Credit Card Debt

Millennials are also shying away from credit cards. A study found that the majority of Millennials carried no credit cards and only 8% of Millennials had more than one card. When you consider that the average fixed rate on a credit card is 13.02% and the average variable rate is 15.7%, it makes sense to be averse to this kind of debt.

Credit cards are beneficial for building your credit score if you pay them off on-time, every month. If you don’t think you can manage credit cards well, you are better off using prepaid debit cards. There’s nothing wrong with knowing your financial management limits.

The One Dark Spot

There is one dark cloud in this picture- student loan debt. The stories about fast-growing student debt are true. The Project on Student Debt found that graduates of nonprofit (public or private) universities had an average of $28,400 in debt upon graduation. That amount equates to the cost of a new car.

There are steps people can take to limit this type of debt. In many states, students can take general education courses at a local community college and then transfer the credits toward a degree at a four year university. You can also investigate programs where loans are forgiven in exchange for public service. Also, you hope that parents, students, and taxpayers (in the case of public universities) come together to make sure that universities are run in the most efficient manner possible.

Don’t Let Stereotypes Fool You

The stereotype of flailing millennials is not only insulting, it is just wrong. In addition to good news on retirement savings and limiting consumer debt, FICO found that the number of Americans 18-29 with excellent credit scores (760+) has gone up since the end of the Great Recession. Many young people are clearly on the right path with their money.

Bad information about millennials can also lead to costly business mistakes. The retirement study cited earlier found that 90% of millennials view retirement benefits such as a 401(k) as an important consideration for whether or not to accept a new position. If an employer offers no or meager retirement benefits, that company risks losing out on talent.

Your 40-something co-workers and aunts laugh at the negative press millennials receive and remember when they read these same stereotypes about themselves. Just remember, money is no laughing matter. If you’re saving for the future and limiting debt, keep up those great habits.



  1. There is always has been and there always will be intergenerational trash talking. Every generation believes the following generation will bring down the world! It has been this way since the beginning of time:

    “The children now love luxury; they have bad manners, contempt for authority; they show disrespect for elders and love chatter in place of exercise. Children are now tyrants, not the servants of their households. They no longer rise when elders enter the room. They contradict their parents, chatter before company, gobble up dainties at the table, cross their legs, and tyrannize their teachers.”

    – Written by Socrates a few hundred years before 1AD!

  2. One thing that struck me here was the student loans being the same as a new car. Yes, that’s a rediculous amount of debt that will take most years (decades?) to pay off. But the surprising part for me was that 4 years of education that can completely change a person’s life ended up with the same bill as a car. Just a car.

    • Good point, but…the cost isn’t the same, only the amount of debt the average student takes on to get it. My degree cost over $100,000, but I left with just over $25,000 in student loan debt. Thanks to my great parents!

  3. I have read a few of articles on this topic recently and three questions come to mind.

    Q1: Is this a long-term shift in thinking?

    A1: Quite possibly.

    Q2: What are the contributing factors that caused this change in thinking?

    A2: Millennials have had a front row seat to their parents and grandparents needing to work much later in life to make ends meet as a result of insufficient retirement savings.

    Q3: How have millennials been able to save despite significantly higher student loan debt and worse job prospects than prior generations?

    A3: Home ownership for under 35s is the lowest it has been since the Census started tracking it in 1982. In other words, rather than dump money into real estate, many millennials have chosen to rent, forego massive amount of debt (in addition to their student loans), and fund their retirement instead.

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