When asking millennials if they believe their circumstances are more challenging than those of the previous generation, the most common response is a resounding ‘yes’. As a member of this generation, it’s a common sentiment to feel as if the deck is stacked against you. Things that seemed easy for your parents or grandparents now seem almost unattainable, making it tough to stay positive.
Some changes in our world have been beneficial, but the fallout of certain shifts has disproportionately impacted millennials. Financial stability, for example, is a common struggle among young adults in their twenties. Trying to save, invest, budget and cut costs can seem absurd when basic necessities are a challenge to afford. Budgeting, vital for financial future, often feels like an unattainable goal for millennials.
To effectively budget, young adults need to comprehend the obstacles they face. Below are five reasons millennials often find budgeting difficult.
1. UNDEREMPLOYMENT
The job market has changed significantly in the last three decades. It used to be possible to claw your way up the corporate ladder, starting with some base-level experience. Today, the picture is vastly different. The 2008 economic downturn significantly affected the job market, where even entry-level positions require not only a degree but relevant experience. Younger job seekers now find themselves competing for these spots against experienced professionals from older generations. With lower-paying jobs becoming a common reality for millennials, securing full-time employment often feels elusive.
2. HIGH STUDENT LOAN DEBT
The escalating cost of higher education is well-known, and as a result, many millennials finish their schooling burdened with thousands in student loans. Consequently, they start their professional life at a financial disadvantage. The combination of large debts and the lack of lucrative job opportunities makes adhering to a budget seem pointless.
3a. LIMITED FINANCIAL LITERACY.
School curriculums tend to focus on core subjects like reading, writing, and math, while personal finance is typically bypassed. Thus, many young adults lack essential knowledge about managing their personal finances until they are forced to do so in real life. This lack of knowledge and experience can make budgeting seem complicated and challenging.
4. MAINTAINING APPEARANCES
Social expectations have become a significant burden, fueled by a society obsessed with luxury lifestyles. Without the necessary resources, many resort to the use of credit cards to keep up with their peers, thereby pushing them further into debt. Millennials, coming of age in this culture, feel the pressure to be in step with friends and celebrities, often overlooking their budget when they should prioritize more essential needs.
5. STRUGGLING WITH FINANCIAL INDEPENDENCE
Debt and underemployment have left numerous millennials unable to support themselves, leading to many continuing to live with their parents well into their late twenties. If their parents don’t charge them rent or bills, it’s easy to neglect financial obligations and lose the habit of budgeting. Living at home can foster a teenage mindset, creating the illusion of a higher income than actual, and causing potential misuse of money.
Creating and sticking to a budget can be a steep hill to climb, even for settled adults. Considering the difficulty many millennials face in establishing themselves financially and professionally, it’s easy to see why many struggle with budgeting. Despite these challenges, developing and following a sensible budget remains the most reliable path towards future financial success.
Do you agree that millennials struggle with budgeting? Let’s discuss.
