Millennials in a hurry to achieve financial freedom
Millennials seek sooner financial freedom but older baby boomers – and likely indulgent parents – have lower expectations. Those are, in short, the findings of a new survey by the personal finance website Bankrate.com.
In the survey, the two demographics were asked when growing adults should begin to pay their own rents, buy their own cars and even pay their own cellphone bills. In each, the millennials set their sights on financial independence at a lower age than the baby boomers, even though in reality the younger generation is often stereotyped as being “entitled.”
“It’s refreshing to see that millennials really do have high expectations of gaining financial independence and getting off their parents’ payroll,” Sarah Berger, a columnist and analyst at Bankrate.com, said in a statement on the survey.
A nationally representative sample of 1,000 adults participated in the Bankrate.com survey.
Where a third of millennials said they would like to start paying their own rent when 22 years old, a majority of baby boomers said 23 ½ would be appropriate for millennials to start paying for their housing. For paying cellphone bills, it was 18 ½ for the millennials while baby boomers chose 20. As to cars, millennials picked 20 whereas the boomers considered 22 to be more appropriate.
The survey data was at odds with US Census Bureau numbers, which show that about 24 million young people still live in their parents’ home. Also, a high 40% of millennials who live on their own still receive financial help from their parents.
Clearly, millennials face more challenges than the baby boomers did at the same age, and consequently struggle to wean themselves away from a dependence on parents. Take income, for example. Federal Reserve data showed that millennials earn 20% less than baby boomers at the same age. Many believe millennials also have got a raw deal on student loans, paying much higher tuition fees and ending up with bigger loans.
“In 1976, tuition and fees at private colleges were $10,000 in 2016 dollars. Now they’re $33,000. For public colleges there was a four-fold increase, from $2,500 to $10,000,” F.H. Scalia, a law school teacher and author, estimated earlier this year. Scalia also blames colleges for creating “idiotic courses and administrative bloat,” in an economy notorious for jobless growth.
Millennials reportedly have student loans of an average $30,000, with many struggling to even make interest payments.
Berger’s advice to millennials: “Don’t feel down on yourself if you’re not quite there yet, but keep striving!” In her column, she cited the case of Jessica Bergman, a 25-year-old who works in Chicago for an education non-profit.
Before going to college, she reportedly spoke with her parents about what they felt was realistic, and then had another conversation after graduation. Together, they concluded that Bergman should live at home post-grad and use the savings and her income to repay her student loans as quickly as possible.
“I lived at home and worked for two full years to pay back my loans before I moved out on my own,” Bergman said. “It was the smartest move — the school I was teaching at was a 25-minute commute, so I checked my pride and did what was needed financially.”
The Bankrate.com survey was conducted by Princeton Survey Research Associates International. Princeton interviewed a nationally representative sample of 1,001 adults living in the continental United States on telephone. Interviews were conducted in English and Spanish during May 4-7, 2017. Statistical results were weighted to correct known demographic discrepancies. The survey had a margin of sampling error of plus or minus 4.0 percentage points.