Young, Broke… but Smart

Millennials may not have the means yet, but they aspire to financial responsibility.

Each week, Consolidated Credit searches for financial research that can help you deal with your debt and budget. This week…

The interesting study

Millennials get knocked as the selfie generation and as a result they’re often discounted in serious discussions, but when it comes to money they may be wiser than their years… and their parents.

Several studies just released seem to back up this perspective – everything from a 2015 Summer Consumer Spending Survey to a® study of housing sentiment seem to point to Millennials stepping up more than previous generations when it comes to financially responsibility.

So why then, does a new Heartland Monitor Poll find Millennials are still broke and struggling?

The big result

Millennials lack money

The Heartland Monitor Poll’s headline statistic is that 63% of Millennials report “a fair or poor rating of their current personal finances.”

However, while that might be attributed to a lack of fiscal responsibility, the Summer Consumer Spending Survey finds that while Millennials are the only generation spending more on leisure this summer compared to last (32%), they’re being smarter about it so they can avoid debt problems. In the meantime,® reports that Millennials now make up almost one quarter of their business (23%) in homebuyer searches on their website.

The fascinating details

Here are some of the indicators that Millennials may have learned some important financial lessons in growing up and watching their parent and older generation siblings lose big during the Great Recession:

From the 2015 Summer Consumer Spending Survey:

  • 26% of young Millennials (18-24) will take one trip this summer, while older Millennials (25-34) plan on taking 3 or more
  • 36% of Millennials surveyed are allocating their leisure spending to smaller purchases like food and drinks, rather than big purchases like air travel and hotel accommodations.
  • 30% of Millennials plan to use credit cards to earn credit, while Gen X (27%) and Boomers (21%) will use credit to earn rewards.
  • While 7% of Millennials may be reporting they plan to spend between $3,000-$5,000, 28% plan to spend less than $100.


  • Millennial homebuyers represent about 23% of the homebuyers in the market today – up from 21% in January.
  • The percentage of Millennials in the rental market decreased from 26% in January to 20% in June.
  • 65% of older Millennials (25-34) looking for homes intend to buy in the next six months.

Still, how does this mesh with the Heartland Monitor Poll that Millennials feel like their financial situations are only fair, at best? It may have something to do with the fact the 68% of Millennials feel like they had a much harder start financially than their parents did and earlier generations did.

What you can do

There is some truth to Millennials feeling like they had a harder start in their financially lives. Most Millennials graduated into the workforce around the Great Recession. At its height, unemployment hit 12.7% in 2009, howeve,r youth unemployment rates at the same time topped out at 17.6%. Millennials also have exponentially more student loan debt than previous generation.

At the same time, Millennials often also didn’t necessarily have the financial safety net of their parents to fall back on when facing these challenges. As parents lost retirement assets from the stock market crash and faced negative home equity following the real estate market collapse, they didn’t have the means to make sure their children got the good start they’d always wanted to provide.

This may be why Millennials tend to be more fiscally responsible – they faced hardship themselves while watching the older generations struggle to recover from what was often a lifetime of bad financial habits.

The moral of the story: Learn your financial lessons early and stick to them so you can weather any financial storm that can be caused by a bad economy.

Here are some steps you can take as a Millennial that will build the foundation you need for a financial outlook that’s strong enough to weather economic changes and market fluctuations:

  1. Don’t leave your monthly finances to guesswork – build a budget.
  2. Know your debt-to-income ratio and check it often to make sure you aren’t taking on too much debt overhang to manage comfortably.
  3. If your employer offers a 401(k) match program, sign up now instead of waiting to start a retirement plan in your 30’s. If your employer doesn’t have a retirement benefit option, then invest in a private account.
  4. If you’re still struggling with high student loan payments, look into options for student loan consolidation.
  5. Build a financial safety net for yourself, where you have 3-6 months of budgeted expenses saved up in case of unemployment.
  6. If and when the economy goes south again, increase your financial safety net to cover 6-12 months of expenses, since unemployment periods last longer during an economic downturn.
  7. Build credit strategically and use it wisely. If you’re not experienced with credit, don’t go for high-interest rewards credit cards; instead, opt for easier cards to manage, like secured credit cards.
  8. Check your credit report yearly.
  9. Know your credit score and put some effort into maximizing it before any major purchase made with a loan or before you apply for new credit cards.
  10. If you get into trouble, don’t put off finding a solution – talk to a certified credit counselor as quickly as possible to maximize the options you have available for relief.

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