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Millennials have a reputation for having bad money habits — living at home with parents, buried in debt, the works. Despite the stigma, how much of it is true? Millennials have the highest education of any generation and still seemingly struggle with budgeting and saving. What’s the reason behind it?
Starting salaries have become an issue for millennials as well. A new college graduate makes the same amount of money a year as an employee in 1989 did without a college education. Income has remained nearly the same for the past three decades, yet the cost of living has risen exponentially. This leads to a larger portion of paychecks set aside toward basic needs such as food, transportation, and housing. After the basic needs are met, there’s little left for saving and investing.
Even with less of a paycheck left than their elders had, millennials are still saving money better than their parents. More than a third of millennials save more than a fifth of their total income. That’s more than the past two previous generations had in their day. However, even with improved savings habits, a dollar still doesn’t go as far as it used to. The increased cost of living makes it difficult — and disposable income doesn’t go far with today’s wages. Even with a smaller percentage put away for savings, baby boomers had managed to save twice the amount of money at the same age.
Investment Zen has put together an infographic that shows the finances of millennials compared to previous generations. The infographic below shows some of the more important statistics as well as more reasons why this bad reputation exists.