Why Millennials Are Financially Screwed And How To Fix It

It has become easier to succeed compared to the “old days”, but the obstacles in our life have become much more significant and harder to cross. Everything is so expensive now and debt has crawled its way into our lives like a cancer that can never be removed.

We have more opportunities than most, but it seems like the system is working against us at times, preventing us from succeeding. The resources are there for us, but reaching it is another story. 

Student Loans

One thing we are taught growing up are the stages in life we need to follow. Go to college, get a job, married, house, kids then retire at 65. We have this roadmap laid out for us and there’s no going against it. 

I love structure. I thrive on it, however not everything in life goes according to plan. Following this roadmap was great, but I walked into this with no knowledge of the damage I would do through student loans.

College is the natural step to take after high school. Many are now opting out to pursue self-employment and building their own businesses. That is admirable, but not for everyone. For me, I chose the wrong major, but living away from home in a dorm was a life changing experience. I also met my wife there, which is a cherry on top.

You finish college and realize finding a job is much harder than the school made it to be. You need experience to find an entry-level job, but can’t get experience without a job first. It’s a never-ending cycle of rejection and neglect. 6 months go by and now the bill is due for those 4 years of school. 

There is no education on what you are signing to pay for your college and most Americans are still paying it off decades later. 

The High Price Tag of Houses

Another stepping-stone in life is to buy a home. That has become increasingly difficult in these times. Because of the pandemic, interest rates have dropped to record lows, but with it the prices of homes have increased. Inventory of available houses is very low, so it’s basically a seller’s market. They have the power and can decide how high they want to sell the house for. 

Affording a new home has now become much more difficult and out of reach for most. The average age of first time homebuyers has actually increased from 31 to 33 years old. We’re seeing a shift in people not moving into a new home until much later in life. We have now entered a new age of renting.

Average Debt Increasing

Assets are now rising in price and we are forced to go along with this lifestyle at the cost of our bank account. It’s now a habit to just blindly swipe your credit card and continue about your life. You don’t realize the implications of continuing that lifestyle under your drowning up a debt that can’t be paid. Clothes are expensive, food prices are increasing and the million different TV streaming subscriptions provide endless entertainment. 

These liabilities quickly add up. The average personal debt of Americans is $90,460. That’s a lot of money. 

We are living our life with debt and it’s now even become the norm to live above your means and collect more credit cards like they’re Pokémon cards. Gotta catch them all. 

How to Fix The Problem

We have quite a few hurdles in life, but that doesn’t mean all hope is lost. There are steps we can take to prevent us from falling into massive debt and create a life we want. 

The first step is recognizing the problems. We can’t live above our means, no matter how tempting it is. There are plenty of ways to stick to budget and still enjoy your life. 

Creating A Budget

That leads into the first step, after realizing the problem. Creating a budget is a necessity in life, no matter the income bracket you belong to. Millennials have enough hurdles in their life; don’t feed into it. Sticking to a budget will allow you to go through life with more confidence that your finances are stable and growing every single day. 

With a proper budget you can begin to tackle that debt you’ve accumulated, both consumer debt and student loans. Analyze all your expenses, cut out the useless stuff. You don’t need more than 2 TV streaming apps. Netflix and Hulu will be good enough. (Peacock is free too)

Lowering Student Loan Debt

It may be too late to work through college to lower your student loans, but that doesn’t mean you can’t tackle those loans now on your own terms.  Call up the lender and try to work out a payment plan that works. You would be surprised how accommodating they can be once you take the initiative. 

During this pandemic, all student loans were put on forbearance and no interest is accumulating. This is the perfect time to make a huge dent in that debt. 

If you decide to have children, it’s so important to educate them on what they are signing when going to college. Taking out loans to afford a school could provide so many wonderful opportunities. But there are ways to alleviate that college bill, like getting a job through school or becoming a Resident Assistant and get free food and dorm. That’s what I did and saved over $10,000 a year as a result.

Save and Invest Early

As early as possible begin saving for your retirement. It may be decades into the future, but the sooner you start, the more money you will end up with. Compound interest will take effect and work its magic. 

Figure out how much you could realistically retire on and plan accordingly. Multiply that number by 25 and now start working towards that amount. 

If you start saving as early as possible, home ownership may still be an option for you. Remember to purchase a home you can afford and not go broke trying to affording the mortgage payments. 

Final Thoughts

There are many obstacles in place to prevent us from succeeding, but with a little budgeting and smart investing, you can live the life you have always dreamed of.