Millennials Aren’t as Financially Challenged as We Think. Really.

4 min readAug 10, 2021

Despite the “doom and gloom generation” cliché, things might not be as bad as they seem.

Millennials often get a bad rap when it comes to their financial situation. Arguably, no other generation has been taken to task as much for their financial irresponsibility as millennials. Some of the more common criticisms revolve around millennials’ penchant for credit card debt, excessive spending, and their lack of ability to generate long-term wealth.

But is the criticism justified?

On the surface, the answer may be yes. When you consider that only 16% of millennials are “financially literate,” it further proves that millennials may not be all that competent when managing their finances. [Link]

While millennials may be judged for their lack of financial knowledge and inability to accumulate wealth, several factors prevent this from happening, with much of it outside of their control. Let’s look at the biggest ones.

Rapidly Rising College Tuition Fees

One of the biggest knocks on millennials is the amount of debt they put themselves into, especially as a student.[Link] Millennials have faced the burden of putting themselves through college while also experiencing the sharpest increase in tuition and related fees.

In 2000, the average annual cost to attend college in the United States was just over $15,000 per year. Fast forward to 2018, and that tuition had more than doubled to just under $33,000 per year.[Link]

When you put this tuition cost increase into perspective in terms of wages, from 1989 to 2016, the cost of going to college in the United States was increasing at a rate that was eight times faster than wages were increasing.[Link]

Thus, while millennials were faced with the brunt of rising college tuition, this rise was rapidly outpacing the wage increase they would receive upon employment. With less money to pace the increase in college tuition, it’s easy to see how millennials have been saddled in student loan debt for years and, for some, even decades.

The Great Recession

Since the Great Depression, there has been no greater financial impact on the economy than the Great Recession. Unfortunately, the Great Recession came in 2008, and it severely impacted millennials’ ability to gain employment and build wealth as well.

Before the Great Recession struck the global economy in 2008, approximately half of college graduates had some form of employment lined up. In 2009, that number precipitously fell to fewer than 20% of college grads.[Link]

This sharp fall in job opportunities meant college grads had to find temporary working opportunities, usually outside their field of study. In contrast, some even had to take multiple jobs to make ends meet.

Not having a potential career opportunity ready for them after graduating college, while coupled with massive student debt, is a fact that cannot be ignored when it comes to why millennials have had limited financial success.

Change in Real Wages

We’ve already examined how the increase in college tuition rapidly outpaced the growth in wages, but what was the direct effect on wages?

The answer here shouldn’t really surprise you; the effect on wages has been enormous and has drastically reduced millennials’ spending power.

Since 2006, wages in the United States have increased 19%, which is great, but the real wage has decreased by 8.8% when you consider inflation.

So, what does this mean?

According to The PayScale Index, while you may technically have a higher wage and income today than in 2006, you can buy less today than in 2006.[Link]

This has had significant consequences for millennials, given that 2006 was right around the time they entered the workforce. So if they stayed in the same job until today, their dollar would get them less than what they had in 2006.

Why There’s Hope for Millennials

Despite a once in a generation economic slump, rapidly rising college tuition costs and crazy loan debt, and depressed real wages, there’s actually financial hope for millennials.

When faced with these massive financial barriers, millennials have shown they are a resilient bunch. Many have scratched and clawed their way to live more comfortably and yet more still within their means.

Among older millennials, those aged 33–40, roughly 52% of them say they have been able to get out of the vicious check to check living cycle. Digging deeper, nearly 30% of these older millennials have some disposable income leftover when accounting for their recurring expenses.[Link]

When it comes to setting themselves up for future financial success, roughly 60% of older millennials (born between 1981–1988) are now homeowners. This goes against the generally held misconception that most millennials are forever renters.[Link]

Millennials are also the most educated generation yet. So they should take solace in the fact that once their student debt has been fully paid off, they should expect to earn more in lifetime earnings over someone who isn’t as educated.

When you combine increasing homeownership rates with an educated generation, the hope is that younger millennials will follow this path and prove the generational doubters wrong — that things really aren’t as bad they seem.




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