illennials are the generation that was born between 1981 and 1996. Many things characterize this generation: They care about their family, they are tech-savvy, they are achievement-oriented, and they will question the authority much more than their parents. This article is about a very specific characteristic of this generation: their financial struggles. 

Financial Challenges Millenials Are All Too Familiar With

Student loan debt

According to According to The College Board, the cost of college tuition has risen by more than 210%. More tuition means bigger loans and more significant debt. Millennials are the most in debt generation, and the loan payment process is one of their biggest financial struggles. However, there is an evident difference between the income of Millennials with and without a degree. Many people decide to skip college, borrow less money with a modest income. There are different paths for different kinds of people. 


A few hundred years ago, there was free housing on the West Coast since most of the population lived on the East Coast, the 13 colonies' location. That's not the case anymore. We are dealing with overpopulation, natural disasters, and climate change. These are all factors that cause a huge demand for safe housing. The demand increases, as well as the housing prices. It is a major challenge for many Millennials to own a house, so they pay an "affordable" rent while they wish for a better place to live.

The medical assistance for parents is a significant expense for many millenials.  Image Courtesy of Jo Jo.

Aging Parents

Scientists have achieved unbelievable things during the last couple of decades; medicines and treatments for illnesses that used to weaken people to death during the 20th century. According to a survey conducted by Genworth, the average person is living longer.

Although this is a great achievement from scientists and incredibly positive for many families across the world, it is also a financial challenge. 7 out of 10 people will require long term care during their lifetime. 

Many families don't have access to health care, so paying for medicines, medical assistance, and treatments is a luxury instead of a benefit, and it adds up to the list of expenses for many Millennials.

Swimming Against the Tide

One of the characteristics of Millennials is that they entered the workforce during the Great Recession. They may have graduated from college in the middle of the recession, but their first job after graduation was waiting tables because there weren't enough jobs during that time. They faced a reality where an expensive education doesn't necessarily mean decent wages. This was a rough beginning to their professional career. It was harder for them to start building wealth than it was for their parents as the times didn't allow them to show their full potential. 

Financially Fragile

It's interesting how they teach in school how to multiply and divide fractions (something unusual in times of calculators and percentages), but they never taught us how to manage money.

There are more people managing money than people dividing fractions out there, and these people are struggling with how to cover their basic needs with a modest income.

A survey by the Economic Innovation Group, shows that 63% of millennials will struggle to cover an unexpected $500 expense. This can be a broken bone, a subtle car accident, a phone loss, or a broken appliance-- stuff that happens to any person any day.

Millenials have faced more financial challenges than previous generations. Image courtesy of James Bloedel.

The Solutions

Understand your income and your expenses

You must live your life according to your resources, not to the resources you would like to have. It is imperative that you know how much income you earn every month from every source (tips, freelance, unemployment benefits, pensions, etc.). This number should be relatively constant every month (if it's not, you should be even more organized.) Once you know your income, start writing down all of your expenses: rent, gas, food, loan payments, etc. 

Be particularly careful with subscription services and auto paid memberships. It is very easy to forget how many services you are subscribed to, so start listing them: streaming services, internet, Spotify, Amazon Prime, software, or licenses. That must be at least a hundred dollars per month! Compare your income versus your expenses. Does your income cover your expenses fully? If not, where are you getting the rest of the money? Which expenses are unexchangeable, and which ones are a simple pleasure or an unnecessary little dose of leisure? It is important to make these decisions wisely. Many payments are due every month, so if you don't make your full credit card payment, the debt increases-- but if you leave more money unused in your bank account, you will have a little more flexibility for unexpected expenses.

The student loan debt has increased dramatically over the last couple of decades. Image Courtesy of Honey Minaya Cruz.

Pay down student debt

It sounds pretty obvious, but it is vital to make your loan payments on time. It's not a good idea to have bad credit. If your credit rating takes a hit, it will only make things worse.

Look at your finances and see if you can aggressively pay down your student debt, make bigger payments if you can, adjust your expenses, and get it over with. Once you are done paying, you will be so relieved that you will have wished to pay everything earlier.
If you are having trouble keeping up with the payment, talk to the federal servicer in charge of your loan repayment plan to see your options. The government is as anxious to get your money as you are to be done with the payments, so express your needs and concerns, and they might have a repayment plan for you.

Ask for help

It might be hurting your ego, or you may feel that you are disappointed with yourself, but it is totally normal to ask for help. Every story of success of any person comes after a collaborative work of a bunch of people behind the scenes, so don't ever feel that you have to manage everything by yourself.

There is a perception (mostly from Generation X and Baby Boomers) that all banks steal your money and that you should never trust them. The truth is, there are many tools that banks are offering to help you to manage your money wisely. Most banks have apps where you can check your balance, track your spendings, set spending limits, and do automatic transfers to your savings account. There are many resources that will help you have a less stressful financial journey. Of course, always read everything you sign and ask if there are fees when it is unclear, but don't ignore these helpful tools if you are scared of them. 

It is equally important to research any resources that are available to you through the government or through non-profit organizations in your community. You or your parents may qualify for food stamps, clinical services, or any other type of benefit. At the end everything adds up, so if you need to fill an application, do it! The worst thing they can say is no.

It can be a struggle for many people to add constantly to their funds for savings, but it is a smart practice that can help you during difficult times. Image Courtesy by Sandy Millar.

Start saving today

We have heard grandmothers say: save money in case something happens. Many kids don't listen to their grandmothers, but that "something" happened in the Great Recession, the Coronavirus Pandemic, or protests that lead to curfews that caused many local businesses and transportation services to stop working for several days in different cities across the US. This stuff happens, we have seen it happen, and it is very important to be as financially prepared as we can to deal with these unprecedented situations. It's not the same to face a recession with $10,000 in savings versus $2,000 of debt. Ideally, you should save around 10% of your monthly income, but if it's not possible for you right now, start with any amount that feels comfortable. The goal should be to have savings enough to cover the basic needs for six months. It may sound like a lot, but it may save you from an emergency. 

Don't give up!

Although the circumstances may not have been ideal for you, there are always things that you can do to improve your living situation: sell your old stuff on eBay or Amazon, cook more and order less food, carpool, walk or use the public transportation if it is safe and reliable. Little by little, these decisions will be reflected in your balance, and you are going to feel very happy about it. 

Don't be hard on yourself and enjoy your professional and personal journey as much as you can. As the famous author C.S. Lewis said: "You can't go back to the beginning, but you can start where you are and change the ending."

Dec 7, 2020