When you ask millennials if they think their lives are tougher than those of the previous generation, the most common answer is a definite ‘yes’. Being part of this generation, it often feels like the odds are against you. Things that seemed easy for your parents or grandparents now seem nearly impossible, making it hard to stay optimistic.
While some changes in our world have been good, others have hit millennials particularly hard. Financial stability, for example, is a common issue for those in their twenties. Saving, investing, budgeting, and cutting costs seem unrealistic when even basic necessities are hard to afford. Budgeting, which is crucial for a stable financial future, often feels out of reach for millennials.
To budget effectively, young adults need to understand the challenges they face. Here are five reasons why millennials often find budgeting difficult:
1. **Underemployment:** The job market has drastically changed over the past thirty years. It used to be that you could work your way up from an entry-level position. Today, that’s not the case. The 2008 economic downturn greatly affected the job market, where even entry-level jobs now require a degree plus relevant experience. Younger job seekers find themselves competing with older, more experienced professionals for these positions. With lower-paying jobs being the norm, securing full-time employment often feels unattainable.
2. **High Student Loan Debt:** The rising cost of higher education is widely known, leaving many millennials with substantial student loan debt. They start their professional lives at a financial disadvantage. The combination of large debts and a lack of high-paying job opportunities makes sticking to a budget seem impossible.
3. **Limited Financial Literacy:** School curriculums usually focus on reading, writing, and math, while personal finance is often ignored. As a result, many young adults lack essential knowledge about managing their finances until they have to do it on their own. This lack of knowledge makes budgeting seem complicated and overwhelming.
4. **Maintaining Appearances:** Social expectations have become a heavy burden, driven by a society obsessed with luxury lifestyles. Without the necessary resources, many turn to credit cards to keep up with their peers, driving themselves deeper into debt. Millennials, growing up in this culture, feel pressured to match their friends and celebrities, often neglecting their budget in favor of keeping up appearances.
5. **Struggling with Financial Independence:** Debt and underemployment have left many millennials unable to support themselves, causing them to live with their parents well into their late twenties. If their parents don’t charge them rent or bills, it’s easy to ignore financial responsibilities and lose the habit of budgeting. Living at home can create a false sense of financial security, leading to potential money mismanagement.
Creating and sticking to a budget can be tough, even for established adults. Given the financial and professional challenges millennials face, it’s easy to see why many struggle with budgeting. Despite these difficulties, developing and following a sensible budget remains the most reliable way to achieve future financial success.
Do you think millennials have a hard time with budgeting? Let’s talk about it.