Debt Is Taking A Toll On Millennials’ Net Worth, Report Shows


Set of color credit cards on wooden table

The net worth of the millennial generation is taking a hard blow. Student loan debt has long been a problem for millennials what with college tuition skyrocketing after 1980 and college degrees becoming a necessity in today’s job market.

However, according to a report by advocacy group Young Invincibles, millennials with student loans now have to worry about their dropping net worth.

In a previous report in 2013, Young Invincibles analyzed the wealth of 25-to-34-year-olds in 1989 compared to those in 2013 to create a direct comparison between millennials and baby boomers. The researchers found that, at the same age, millennials were less likely to own a home, had a lower net wealth, and had lower incomes.

In an updated report using data from 2016, Young Invincibles found that, despite the nation’s recovery from the recession, young adults have yet to reap any benefits.

Nationwide, the median household income exceeded pre-recession levels and the unemployment rate decreased. However, young adults saw small increases in income, assets, and retirement savings with homeownership declining by three points.

“Our updated analysis shows young adults still earn significantly lower incomes, own homes at lower rates, and have accumulated fewer assets and net wealth than young adults twenty-five years ago,” said the Young Invincibles in their report.

After subtracting student loan and credit card debt from millennials’ assets, the average young adult is expected to have a net wealth of $1,900 compared to the millennial of 2013 with a net worth of $9,000. Student loan debt can make it difficult for millennials to become financially stable, which is partly why the state of New York created the Excelsior Scholarship.

Unfortunately, today’s social media is only increasing the amount of debt millennials have. According to Credit Karma, approximately 40% of millennials are overspending to keep up with their friends, family, and social media appearances. This is disconcerting considering the average amount of debt owed by millennials who use Credit Karma is $46,713.

But why are millennials putting themselves even more into debt? As it turns out, it’s a fear of missing out. With social media at the forefront of their lives, many millennials feel an increased pressure to spend money on experiences such as weddings, festivals, social activities, and sports events because their friends do.

For instance, more than 500,000 young adults from around the world have traveled to Israel on Birthright trips. While these trips are free for Jewish people all across the world, their photos posted from these trips on Facebook, Twitter, and Instagram may tempt friends to also go on vacation despite having a potential disinterest in traveling — Americans left up to 662 million vacation days on the table in 2016.

Millennials are also more tempted to eat out. Compared to the average American who eats burgers 4.3 times a month, millennials eat out five times a week.

How then can millennials start to save more money and begin paying off their debts? It turns out, saving money may be as easy as turning off social media.

“The best way to just live simply and be content is just to turn [social media] off and hardly pay attention to it at all,” said Derek Sall, a millennial who managed to pay off up to $116,000 in debt, to CNBC. “Because that’s what gets people in trouble. They see ‘Oh, my friend went on this great vacation, and I wish we could do that!'”