4 Reasons Why Millennials Should Be Optimistic About Their Finances

By Brittany Lyte on 30 January 2015 3 comments

For millennials — young adults ages 18 to 33 — acquiring a job, a home, and other markers of passage into adulthood during the deepest recession since the years following World War II has been a struggle. But make no mistake: this isn't a lost generation. Despite the limited job prospects and skittish mortgage lenders they've suffered in recent years, millennials actually have quite a few things going for them financially these days. (See also: The 5 Most Important Financial Lessons People Learn in Their 20s)

Read on for our roundup of four reasons millennials might just be the "comeback kid" generation.

1. They Put Off Homeownership — And Now They Can Afford It

For years, high lending rates and the hurting job market led many millennials to delay homeownership. Instead, nearly a third of young adults ages 18 to 34 have been living at home with their parents. But those who moved back into their childhood bedrooms were able to stow away money that might otherwise have been spent on mortgage payments or rent.

Meanwhile, the labor market has been rebounding, and experts say it's nearing what the Federal Reserve calls "full employment," meaning almost anyone who wants a job has one. Experts say these jobs gains mean there could likely be significant increases in mortgage lending on the horizon. These conditions are creating the perfect storm for millennials to take the big plunge into homeownership. And, in this improving economic climate, they're in a better position than ever to comfortably afford to buy their own place.

2. They're Delaying Parenthood

Millennial women are putting off motherhood at higher rates than any previous generation, and experts say it's largely because they're focusing on getting their financial footing before even thinking about building a family. For each year motherhood is put off, a woman's career earnings increase by 9%, according to an economics expert from the University of Virginia in Charlottesville. That's great for millennials' bank accounts and it's great for women, because it's helping snuff out the gender pay gap. "Later first births allow women more time to invest in schooling, work experience, and on-the-job training that will, on average, increase their lifetime wages," Amalia Miller, an associate professor of economics at the University of Virginia in Charlottesville, said to Bloomberg News.

3. They're Less Inclined to Buy Cars

The wide open road from which young people once derived a sense of freedom has been replaced by the Internet — an equally vast and exhilarating international connector that allows millennials the freedom to go wherever they like. So perhaps it should be no surprise that young Americans' interest in vehicle ownership has dropped significantly. Adults between the ages of 21 and 34 bought just 27% of all new vehicles sold in America in 2010, down from a peak of 38% in 1985, The Atlantic reports. Instead, Bloomberg View contributor Leonid Bershidsky writes that millennials are more interested in things like smartphone apps that can connect them to carsharing services, public transportation offerings, and maps that direct them to the nearest and best sushi spot.

4. The Median Age of Employees at Facebook Is 28

At Google, it's 30. At Apple, it's 31. Millennials are dominating the tech sector and they're earning on average much more than the typical American worker. Check out these numbers: The median salary for high-tech workers with one to four years experience is $73,500, according to Payscale. By comparison, the median wage for U.S. workers, $27,500, is less than 40% of that. And now that the jobless rate has plunged to numbers last seen before the financial crisis, Chief Economist of Mesirow Financial Inc. Diane Swonk says wages will start to accelerate. "Companies are finding themselves having to compete for workers, and then compete to retain them," she explained to a Bloomberg reporter. That bodes well for millennial workers, who started the decade off with historically low wages.

In what ways has the improving economy benefited Millennials?

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Guest's picture
Guest

While it's good to be optimistic, I think people who write articles like this have an obligation be truthful. Things aren't quite as on the up and up financially or in the job market as this article would have you believe. I'm actually disappointed to see such a fantacy filled article on Wisebread.

Guest's picture
Rich

Interesting article, and I can relate to a lot of the content here as a millennial. Please can you check your math however? How on earth do you conclude this statement:

"The median salary for a high-tech worker with one to four years experience is $73,500, according to Payscale. That's nearly 40% higher than the median wage for all U.S. workers, which is $27,500."

$73,500 is not 'nearly 40% higher than $27,500' it's ~267% of this value!

Lars Peterson's picture

Hi Rich-

Thanks for the comment -- and the correction!

What Brittany probably meant to say is that "the median wage of all U.S workers -- $27,500 -- is only about 40% of that" or similar (it's actually 37.4%). We should have caught the error prior to publication.

We have corrected the text.

Thanks again!

-Lars