Why Millennials Can’t Seem To Get Ahead (2024)

Millennials, or people born between 1981 and 1996, are known for living at home with their parents longer, renting instead of buying a home, and staying in college to earn advanced degrees while simultaneously drowning in student loan debt.

But one thing hardly discussed is the factors that have impacted millennials, their lifestyles and their finances, for better and for worse.

While people are quick to poke fun at them, nobody wants to talk about why millennials aren't meeting the same financial milestones as previous generations.

What Is A Millennial's Average Net Worth?

First off, millennials did make some financial progress since the start of the Covid-19 pandemic, and this progress led to the generation's average net worth and total net worth doubling since March of 2020.

It also makes sense generationally as well — the oldest millennials are 40 years old and have likely started to experience mid-career salary growth.

A recent report from Magnify Money explained this phenomenon while crunching the numbers, ultimately proving that the total wealth of millennials doubled from $4.55 trillion to $9.38 trillion in just over two years. Over the same period, stats show that the average net worth of millennials increased to $127,793, which is up from the $62,758 average in the first quarter of 2020.

Interestingly, the report shows that most millennial net worth is tied to real estate they own. This makes sense when you consider the incredible increases we have seen in housing prices over the last few years.

For example, the National Association of Realtors reported that the national median existing-home price for all housing types was $266,300 in January 2020, whereas the median price for existing homes came in at $359,000 three years later in January 2023. So, while millennials are known for living in their parent's basem*nts, many who took steps to purchase a home several years ago are doing quite well.

That said, older generations still own a much larger portion of America's wealth. For example, Magnify Money research shows that millennials owned just 6.6% of the nation's wealth last year, compared to Baby Boomers (50.4%), Generation X (29.9%), and consumers ages 77-plus (13.1%).

Factors Holding Millennials Back

So, what is truly making it more difficult for millennials to build wealth? According to Sam Garrison, who is the co-founder of financial wellness company Stackin, many millennials started out on their journey to adulthood at the worst possible time. For example, some came of age in the working world at a time of dramatic changes, beginning with the '08 recession through to the Covid-19 pandemic and now the new wave of tech layoffs.

Garrison also adds that millennials are more likely than previous generations to switch jobs every few years. This assertion is backed up by a recent report from Gallup that showed 60% of millennials were open to new job opportunities, compared to just 45% of workers in other age groups who said the same.

The Gallup report even pegs millennials as "the job-hopping generation," and it asserts that millennials lack of engagement in the workplace is one reason they are always looking for a better gig. Unfortunately, job hopping does have some downsides.

"While this might mean accelerated salary growth, it also means interruptions and changes to our ability to grow net worth," says Garrison.

Garrison also says that availability of credit, dramatic swings in the stock market, and shifts in what it means to work and have a career mean that millennials are more likely to spend money on experiences and temporary needs instead of focusing on acquiring assets.

For example, Garrison says that young people may look at the high cost of housing prices and decide it's a better idea to cash flow an awesome vacation versus saving for years to build up a huge down payment for a house or investing in a brokerage account.

"The combination of external market factors, and a shift in cultural values, has deprioritized saving and emphasized pursuit of experiences," he says.

There are also just so many more ways to spend money than there were just a few decades ago, which makes it more difficult to save and get ahead.

Financial advisor Jordan Taylor of Core Planning points out that young people spend a lot more on their phone bills and various subscriptions than previous generations, partly because these items didn't even exist 20 or 30 years ago.

For example, young people in 1993 didn't have the option to have HelloFresh deliver dinner ingredients to their doorstep a few days per week, or to sign up for Disney+, ESPN+, HBO Max, Hulu, Netflix NFLX , and Spotify all at once.

Then there are just lifestyle purchases in general, including some that could result from social media pressure that also did not exist a few decades ago.

"Nicer clothes, nicer cars, higher rents, more expensive mortgage payments, and lower rates of marriage are all areas where money gets spent and is not funneled towards saving goals at large," says Taylor.

Millennial Student Loan Debt And Housing Issues

Of course, millennials also face a significant amount of debt, and particularly student loan debt. According to 2023 student loan debt data compiled by Forbes, 7.6 million borrowers ages 24 and younger had a total of $110 billion in student debt, compared to 14.9 million borrowers ages 25 to 34 with $500 billion in student loan debt. Another tier up, which includes some millennials on the lower end, includes 14.4 million borrowers ages 35 to 49 who owe $622 billion toward their student loans.

Our student debt crisis has made it increasingly difficult for all age groups to get ahead, but especially for millennials who have well over the average of $28,950 per borrower in loans to pay back.

Finally, it's important to mention how rising housing prices have pushed many millennials out of the running for homeownership, even as the average millennial net worth has increased due to growing real estate values.

While younger homebuyers who bought into the market several years ago may be sitting pretty, the fact remains that the national median existing-home price for all houses increased $92,700 from January 2020 to January 2023. Where a potential homeowner needed to save up $9,320 to put down the 3.5% required to get a FHA loan for the national median existing-home priced at $266,300 in January 2020, the same home with the same loan would now require a down payment of $12,565.

Much higher interest rates for mortgages have also compounded the problem. Where the average for a 30-year, fixed-rate mortgage worked out to 3.64% in January of 2020, today's average comes in at 7.13%.

At the lower end of the scale, a 30-year, fixed-rate mortgage for a $300,000 home with a 3.64% rate would require a monthly housing payment (principal and interest only) of $1,371. With today's rate of 7.13%, the same home would require a monthly mortgage payment (principal and interest only) of $2,022.

That's a difference of $651 in added interest alone every month, and that doesn't even take into account the impact of higher housing prices overall.

The Bottom Line

Millennials may have made some significant financial progress during the pandemic, but they still have a way to go. Unfortunately, many factors are still holding them back and making it more difficult for them to get ahead, from today's sky-high housing prices and interest rates to the huge stock market swings we have seen since the pandemic began.

On the upside, millennials are known for being crafty and flexible, and for working hard (even with multiple side hustles) to get what they want. With enough time and perseverance, it's possible things could change in their favor.