The Millennial Difference
Millennials, the largest age demographic in U.S. history, are turning out to be distinctly different from the generations that preceded them, even when it comes to their finances. The people born from 1981 to 1996 are more racially diverse, better educated, and more internet savvy than their elders. Their formative experiences include the 911 terrorist attacks, the 2008-2009 Great Recession, and the COVID-19 pandemic. They have lived through severe real estate and stock market fluctuations, and to this day they carry large student loan debt balances. Unsurprisingly, their outlook and behaviors differ greatly from their elders as well.
Key Takeaways
Millennials are confronting distinct financial challenges including high student loan debt balances, a more expensive housing market, and growing credit card debt.
Millennials are actively saving and investing for their future, but may also worry they are not doing enough.
The average net worth of millennials continues to lag significantly behind that of the previous generation.
The Wealth Gap
The average net worth of millennials was about $334,000 in 2024. The average net worth of Gen X individuals was about $1.13 million.
Millennial Wealth
Millennials have had relatively difficult financial experiences. The 2008 financial crisis, which struck when they were in their teens to late 20s, hit them especially hard. A 2019 paper found that the average millennial lost about 13% of their earnings during the Great Recession. The average net worth of millennials continues to lag well behind that of their immediate predecessors in Gen X. Millennials made a substantial leap in 2024, adding 12.74% to their average net worth to reach an average of $333,096. Gen X gained 6.5% in 2024 for a total of $1,132,089.
Debt Burden
One reason why millennials are behind on saving for retirement is their debt load, which outpaces that of other generations. The millennial debt crisis was founded on student loan debt and exacerbated by credit debt. The average millennial student loan borrower still owed $40,438 in 2024. Millennials overall owed an average of $30,558 in non-mortgage debt, far higher than the $24,668 median across all generations.
Spending Habits
Millennials have never quite shaken off a reputation for financial recklessness. It has been more than a decade since Time Magazine published the notorious cover story, “Millennials: The Me Me Me Generation.” Since then, those teens and 20-somethings have experienced a fundamentally different workforce, housing market, and financial ecosystem than any generation before them.
Where the Money Goes
Millennials spend an average of $85 a day, accounting for 28% of all daily consumer spending in the United States. This number is expected to climb as high as 35% over the next 15 years. Much like the generations before them, their top three spending categories are housing, healthcare, and insurance.
Investing Behaviors
Millennials are working to pay off the past and save for the future simultaneously. In a 2022 Investopedia study, 64% of millennials said they invest money regularly, with the most favorable form being crypto. One in three millennials said they were invested in crypto, with the next most popular choice being stocks. The same Investopedia survey found that most millennial investors are confident about their financial sophistication – 65% said they are doing an above-average job managing their portfolio.
Strategies for Saving and Investing More
Setting and tracking financial goals can help you become more intentional, especially for millennials who are looking to take the next step for major, expensive life milestones, like a wedding or purchasing their first home. When it comes to saving and investing, there are a few strategies to employ. As a rule of thumb, aspire to follow the 50-30-20 framework. This framework states that you should allot half of your paycheck to basic necessities like housing, utilities, monthly minimum payments, and groceries; 30% to things you want, such as clothing, subscriptions, and gym memberships; and the final 20% to savings.
Future Outlook
Though life experiences and debt burdens have left many millennials stressed about the future, the 2022 Investopedia Financial Literacy Survey found them to be the most confident when it came to investing.
How Many Millennials Are There in the U.S.?
There are roughly 72.2 million millennials in the U.S., according to the most recent Census Bureau data. This makes them the largest generation currently alive in the U.S. Baby boomers numbered 71.6 million. Gen X, who are 43 to 59 years old, comprised 65.2 million people.
How Much Money Do Millennials Make?
This number is not easy to pin down. According to the U.S. Bureau of Labor Statistics, millennials with full-time salaried jobs earned a median salary of $1,136 per week as of the last quarter of 2024. That works out to $59,072 per year.
What Are the Best Investment Options for Millennials?
Investing in the stock market, using ladder certificates of deposit or a high-yield savings account are great ways for millennials or anyone to grow their money. Retirement funds such as 401ks and IRAs are great options for long-term savings.
The Bottom Line
Millennials once had a reputation for being reckless spenders, but there has been a lot of water under the bridge since then. A series of shocks, economic and otherwise, have brought challenges to this generation that have given them a cautious and even anxious perspective.
Personal Finance Tips for Millennials
Budgeting, saving, and investing are all crucial for millennials who want to achieve financial stability and security. Here are some personal finance tips that can help:
- Start saving early: The power of compound interest can work in your favor if you start saving early.
- Invest in a retirement account: Take advantage of employer-matched retirement accounts such as 401ks or IRAs.
- Avoid high-interest debt: Pay off high-interest debt, such as credit card balances, as quickly as possible.
- Build an emergency fund: Aim to save 3-6 months’ worth of living expenses in an easily accessible savings account.
Budgeting Tips for Millennials
Track your expenses: Keep track of where your money is going to understand your spending habits and identify areas for improvement.
Create a budget plan: Set financial goals and create a budget plan that allocates your income towards saving, investing, and spending.
Automate your savings: Set up automatic transfers from your checking account to your savings or investment accounts to make saving easier and less prone to being neglected.
Savings Tips for Millennials
Take advantage of high-yield savings accounts: Consider opening a high-yield savings account to earn a higher interest rate on your savings.
Use the 50-30-20 rule: Allocate 50% of your income towards necessary expenses, 30% towards discretionary spending, and 20% towards saving and debt repayment.
Consider a savings challenge: Try a savings challenge such as the “52-week savings challenge” where you save an amount equal to the number of the week.
What is the defined age range for Millennials? Millennials are typically defined as those born between 1981 and 1996.
What are some unique financial challenges faced by Millennials? Millennials face high student loan debt, rising housing costs, and growing credit card debt.
How does the average net worth of Millennials compare to that of Gen X? The average net worth of millennials was $334,000 in 2024, compared to $1.13 million for Gen X.
What role does student loan debt play in Millennials’ financial situation? The average millennial student loan borrower owed $40,438 in 2024, contributing significantly to their debt burden.
How much does the average millennial spend daily? Millennials spend an average of $85 per day, accounting for 28% of total daily consumer spending in the U.S.
How do Millennials invest their money? 64% of millennials invest regularly, with crypto and stocks being popular choices.
What are some financial goals recommended for Millennials? Setting and tracking financial goals, investing in retirement accounts, avoiding high-interest debt, and building an emergency fund are recommended.
What are some budgeting tips for Millennials? Budgeting tips include tracking expenses, creating a budget plan, and automating savings.
What are some savings tips for Millennials? Savings tips include using high-yield savings accounts, following the 50-30-20 rule, and participating in a savings challenge like the 52-week challenge.
What is the 50-30-20 rule? The 50-30-20 rule allocates 50% of income to necessities, 30% to discretionary spending, and 20% to savings and debt repayment.