No Two Millennials Are AlikeIn general, most millennials in the United States are behind financially when compared with other generations. Thanks to the rising cost of living and stagnant salaries, sky-high student loan debts and lingering fallout from the Great Recession in 2008, many millennials are struggling to make ends meet. The 2008, the Great Recession effectively split millennials into two separate groups. Older millennials experienced more of the financial crisis and usually faced low wages and a sparse job market as a result. This made it harder to save and stay on top of bills early on. Younger millennials entered the job market while the economy recovered, which made things a little bit easier.
Limited SavingsThe average millennial has a net worth below $8,000, which technically makes them financially worse off than any previous generation. The net worth of all Americans between 18-35 decreased a whopping 34% since 1996, which leaves many millennials behind the curve and racking up debt. 58% of millennials have a savings account balance lower than $5,000, according to a Morning Consult survey. Because many millennials are carrying so much student loan and credit card debt, it is difficult for them to accumulate a significant balance in a savings account.
Millennials and Student Loan DebtStudent loan debt is currently sitting at record levels thanks to the skyrocketing cost of college. At the start of 2019, student loan debt reached $1.5 trillion nationally. Millennials who were in the 2018 graduating class had an average student loan burden of $29,800. Because those loans have specific and often aggressive repayment periods, the weight of that student loan debt negatively impacts the average millennial’s ability to save up.
Millennials and Debt PayoffEven though many millennials are behind in terms of saving up, many are surprisingly financially savvy and looking for ways to save money and pay off debt more quickly. Because many aged during and immediately after the recession, they acutely understand the risks presented by a bad economy and they are more likely to be practical when saving up for an emergency when the money is there. Many millennials also create and utilize budgets and stick to them. One optimistic study on millennials and debt found that they are actually more likely to be “highly disciplined” or “disciplined” financial planners and have an intention for every dollar. At the end of the day, what is the most common thing that millennials see as defining financial success? Being debt free.
Attracting the Right Millennial ClientsAs a business, you never want to intentionally partner with a client that has a high risk of being sent to collections. Knowing that many millennials, both business owners and otherwise, carry high levels of debt, you should be cautious when extending a significant line of credit or large amount of unpaid services their way. How can you protect yourself?
- For younger, less-established businesses, consider requiring a deposit or certain percentage of the cost of your services or goods up-front.
- Do research on who you are selling to, particularly if the amount of goods being purchased is high. If the company is brand new or the owner is a recent college graduate, the odds of there being significant debt outside of the business are high.