Financial Fact-Checking: Why Gen Y Is Doing Better Than You Think

Financial Fact-Checking: Why Gen Y Is Doing Better Than You Think

Yes, many of them are drowning in debt. Yes, some are woefully underemployed or out of work all together. And yes, they’re generally earning less than their predecessors.

But no, today’s young adults—known as Millennials or Generation Y—aren’t faring as poorly financially as you might think.

In fact, a new report finds that, by a number of measures, they’re actually financially healthier than previous generations.


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The study, conducted by the Federal Reserve Bank of St. Louis, focused on Americans ages 18 to 31 who were living independently. Specifically, researchers looked at factors like net worth, debt levels and retirement savings, and how they changed between 1989—when Generation X was just beginning adulthood—and 2013.

Perhaps unsurprisingly, the study found that the average net worth of a young adult in 1989 was about 30% higher than one in 2013, when it dipped to just $6,100.

But at the same time, Millennials were more likely to own stocks and retirement accounts in 2013 than the young adults in 1989. Millennials also held less credit card, automobile and home debt than their 1989 predecessors.

Yet for all the talk about how Millennials’ financial difficulties are keeping them from homeownership, it turns out they're still more likely to own homes than Generation X-ers in 1989. The catch is that these homes may be worth less than those back in the 80s—leaving Millennials with less valuable assets.

The only type of debt that did increase was related to education. In 2013, 40% of Millennials owed a median of $11,100 in student loans, which is more than twice the rate and value recorded in 1989. The study authors suggest that this kind of debt may have supplanted other types as a significant financial burden for these young adults.

While this study suggests that Millennials weathered the recession better than many believed, the researchers admit that they’ve focused specifically on people living independently. That means the results don’t necessarily reflect the reality of many 20-somethings still living with Mom and Dad because they can’t find a job.

Curious about which other generational stereotypes hold up—and which are plain myths? Learn more about the real financial situations of Generations X, Y and Z here.


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