5 Reasons Millennials Struggle with Budgeting
When you ask millennials whether they think they’re facing tougher challenges than the previous generation, most of them would agree. Being part of this generation, it often feels like the odds are stacked against you. Tasks that seemed simple for your parents or grandparents now appear almost impossible, making it hard to stay optimistic.
While some changes in our world have been positive, many have disproportionately affected millennials. One of the most common issues young adults in their twenties face is financial stability. Saving, investing, budgeting, and cutting costs can feel absurd when even affording basic needs is tough. For millennials, budgeting—essential for a secure financial future—often seems out of reach.
Understanding the obstacles is crucial for successful budgeting. Here are five reasons why millennials often struggle with budgeting:
1. **Underemployment:** The job market has drastically changed over the past thirty years. It used to be possible to work your way up the corporate ladder starting from a basic level. Now, things are different. The 2008 economic downturn heavily impacted the job market, making even entry-level positions require both a degree and relevant experience. Younger job seekers now find themselves competing with experienced pros from older generations. With lower-paying jobs becoming common, securing full-time positions can seem unattainable.
2. **High Student Loan Debt:** The rising cost of higher education is no secret, and it leaves many millennials graduating with colossal student loans. Starting their careers already at a financial disadvantage makes sticking to a budget seem futile, especially when there are few high-paying job prospects.
3. **Limited Financial Literacy:** Schools often focus on core subjects like reading, writing, and math, while personal finance is usually overlooked. As a result, many young adults lack fundamental knowledge about managing their finances until they face real-life situations. This inexperience can make budgeting feel complicated and daunting.
4. **Maintaining Appearances:** Social pressures, fueled by society’s obsession with luxury lifestyles, have become a heavy burden. Lacking the means, many millennials turn to credit cards to keep up with their peers, increasing their debt. Growing up in this culture, they feel compelled to keep pace with friends and celebrities, often ignoring their budgeting needs.
5. **Struggling with Financial Independence:** Many millennials face debt and underemployment, preventing them from supporting themselves. As a result, they live with their parents well into their late twenties. If parents don’t demand rent or bill contributions, it’s easy to neglect financial responsibilities and lose the habit of budgeting. This setup can perpetuate a teenage mindset, creating a false sense of income and leading to irresponsible spending.
Creating and sticking to a budget is challenging, even for well-established adults. Given the hurdles many millennials face in establishing their financial and professional footing, it’s understandable why they struggle with budgeting. Despite these challenges, crafting and adhering to a practical budget remains the best strategy for achieving future financial stability.
Do you think millennials find budgeting hard? Let’s chat about it.