Many Americans grew up hearing their parents talk about a similar dream: “I hope you do better than me.” Whether that meant obtaining higher education or leaving behind more for their kids, many generations of Americans were able to fulfill that aspiration and “do better” than their parents – until today.
Research shows that today’s millennial generation – those around ages 30-40 – are lagging far behind their parents and grandparents in accumulating wealth. In fact, they hold just 4.6% of U.S. wealth today, while their parent’s generation are 10x wealthier. Between the Great Recession and the coronavirus pandemic upending the job and housing markets, many millennials are facing the real possibility that they won’t be able to support their families as their own parents supported them.
This is the first in a series of five blog posts detailing the big financial milestones Americans need to start saving for – like homeownership and retirement – and some tips on how to navigate them in order to beat the odds and “do better” than their parents.
DEBT
Higher education has become more important than ever: Today’s millennials earn 113% more when they have a bachelor’s degree, while their parents made only 57% more than non-college educated peers.
But that degree comes at a high cost. More millennials took out loans to pay for college than any other previous generation – and their loans are even bigger. They paid an average of $5,000 more per year to attend college than their parents, and they often struggle to pay off student loans after graduating.
Paying off student debt early is one of the best ways millennials can kickstart their financial future and beat the odds. Enrolling in autopay and paying a bit more than what you owe each month – even an extra $100 – is a great way to ensure you’ll be debt-free faster, owe less in interest, and stick to good habits. Using “found” money towards your student loans, like a year-end bonus or an unexpected gift, can also make payoff quicker.
Finding a Financial Advisor you trust is a great way to help keep you on track as you weigh repaying your student loans against saving for big future purchases. Today, doing better than your parents is an uphill battle – and realistically, many millennials won’t. But by consulting with a financial professional who can help you maximize your investments and balance your expenses, millennials can reverse the wealth trend and pass down even more to their families.