Most Millennials Live Paycheck to Paycheck. Financial Literacy is Key to Their Freedom

Millennials are on a tight budget, even those making six-digit figures. 

According to a new survey by PYMNTS and LendingClub, 70% of millennials are living paycheck to paycheck. Most baby boomers, on the other hand, are living the life, with only 40% claiming they are in the same conditions. 

In its analysis of the survey’s findings, Business Insider suggested that a lifelong of economic difficulties and job market hardships caused by the Great Recession have both heavily contributed to the bad luck of Americans between 25 and 40 years old. In addition, the publication suggested, the pandemic may have worsened an already difficult situation. 

But what might be the most incredible discovery from this survey is that 60% of millennials earning over $100,000 are struggling. Their difficulties lie in the fact that, as their income increases, so do their expenses. This is what researchers called lifestyle creep or the “phenomenon where discretionary consumption increases on non-essential items as the standard of living improves,” as Investopedia explains. But as millennials spend more money as they struggle to live up to their six-figure paychecks, they become less likely to save. 

If anything, that means millennials aren’t being good about thinking ahead. And as they are faced with economic difficulties caused by forces that are beyond their control, they find themselves in trouble time and time again. 

Why Should Anyone Save Money Anyway?

Research carried out by Sunny Israni, founder of the personal finance app Clasp, focused on what millennials who were both bad and good with their money did differently. When it comes to millennials who never seem to get anywhere in their financial life, Israni told Business Insider in early 2020, it is clear that they lack a vision of what having money means. 

Additionally, he found that millennials who aren’t good with their money overspend, whereas those who are more responsible about their finances tend to have budgets and limit their spending. 

In the long run, an overspender is less likely to save. Without savings, there’s little to no security outside of what your paycheck can offer.

When it gets to that point, Israni found, millennials who overspend have a tendency to just give up.

“After they were past a certain level of circumstances, they got into this whole ‘screw it’ mentality, where they just felt like they couldn’t get a leg up,” Israni said. “Oftentimes, it was mental. They felt so behind their peers that they just said ‘screw it.'”

“It’s exacerbated by the current macro trends, especially around climate change and our political system,” Israni said. “People are like, ‘well, climate change is going to end the world anyway, so might as well live it up right now.'”

It is this very mentality that could be driving the number of millennials earning more but saving less. And it is this type of attitude that will eventually make them feel hopeless. 

Back to the Basics

Why do we make money anyway? Because we have goals. Young people with no goals have no reason to save. But what is worse than having no goals? Having only one. And that is, making more money. Let me explain.

In his lengthy interviews with young Americans about their finances, Israni also discovered that millennials with no serious life goals were spending all their money whereas those with goals were saving for the future. 

Sounds like a no-brainer but if that is the case, then why aren’t young people taking it seriously? According to another survey covered by, the top concern for over 90% of millennials is debt, and living debt-free seems to be their only ambition. With such a concern eating at their core, making life goals beyond making more money seems impossible, especially if they are waiting to be completely debt-free to focus on other priorities. 

For millennials to release themselves of their debt worries and start living their lives, they must first be financially literate. That’s key in understanding how they can both fulfill other life goals and address their debt in a realistic manner. 

While these are skills parents should always teach their children at home, especially since most high schools no longer provide personal financial education, adults can also achieve financial freedom by learning these skills on their own. 

If the observations of different researchers mentioned previously mean anything, it is that now is the time millennials begin their search for economic freedom, lest they’d prefer to spend their entire lives worrying about not having enough money.

Chloe Anagnos is the former Director of Marketing, Outreach, and Sales at the Independent Institute.
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