Millenials and money

[CityLife]

http://finance.yahoo.com/news/student-debt-other-millennials-think-011828088.html

Really good article about successful millennials and their outlook on money. One potentially misleading/confusing statistic is that 12 million millenials live in households that make more than $100k a year. However, more than 1/3 of the 80 million millenials live with their parents, so its hard to tell how many millenials actually make more than $100k a year and how many live with parents who make that.

I think the article showcases how a lot of millenials aren't as into conspicuous consumption as previous generations. I'm an older millenial (31) and I'd say that most of my social network from college are now in the $100k and up group. In fact, a lot are probably closer to $200k than $100k (mostly married couples). However, none of my friends have made home purchases equal to their level of success and only a few drive flashy cars. As in the article, we spend our money on experiences like food, drink, travel, and events. Our generation is more geographically scattered and mobile, which I think leads to more millenials traveling to see their friends and attend events like music festivals, parties, and sporting events.

With many of the successful of this generation not being as into home ownership, frequently changing jobs or working for themselves, and being less likely to invest into stocks or mutual funds; it will be interesting to see what the long term affects on the nation will be. Especially with the baby boomers transitioning into retirement.

What are other millenials experiences like? What affect will this generation have on the country?

[JFman00]

Priorities of my friends (college educated, 24-30):

1. Grad/law/med school
2. Job satisfaction
3. Pay off debt
4. Save money/retirement
5. Travel, food, events, culture. Above all searching for unique, superlative experiences.

I definitely agree conspicuous consumption is just not a priority. My friends are significantly more conservative than I in their finances,  dumping money into paying off debt and retirement/savings accounts. I can think of only one friend (PhD candidate in the Midwest) who has bought a residence (urban townhouse) that intends to occupy it long-term. With the travails of the housing market, my peers seem downright scared of real estate.

We're much more likely to aspire to visit Peru or Croatia or Vietnam than a luxury car purchase. Above all though we are intensely career focused. Not a single of my close friends is married or intends to marry anytime soon. We have no compulsion, even given the job market, to stay in jobs we don't like. Indeed, we are all tied much more closely to our careers than any location. All my friends have had at least 3 moves since graduating from college and anticipate more.

I will say talking with colleagues who are technically in the same cohort, they absolutely do not share those priorities. In general they are Southern (my close friends are from Northern metros), married with kids and despite (or perhaps because of) being in the military value stability and family over all else. I can't speak on whether the attitude is a regional issue or military specific but figured it was worth tossing in the observation.

[mtraininjax]

In 2015, Generation X and Y will be 80% of the home buyers in the market place. Millennials .... pick up the pace.

[ProjectMaximus]

I agree completely with everything you guys have said. I'm 29 and most of my friends are exactly as you guys describe, with the one exception being home purchases. I know lots of people who have purchased their own home, many who have purchased multiple properties. Most have lived in each home at the beginning, while view it as a longterm investment that they would probably hold onto even if they moved.

[peestandingup]

In 2015, Generation X and Y will be 80% of the home buyers in the market place. Millennials .... pick up the pace.

And do what exactly?? Millennials have simply ran out of runway due to a shrinking economy, wages that haven't kept up with inflation/cost of living, downsizing all around & starting off with untold amounts of student loan debt the likes that no previous generation has ever seen.

As far as X & Y, they're BARELY limping along. With X being better off than Y, as they got in earlier & was able to build some kind of wealth & stability. Y is somewhere between the two. Not dire straights, but not good either. There's a reason why many Millennials have moved back in with their parents, and its not because they want to or because they're lazy. Its just not much out there for them, which is causing a stall in housing, car ownership, having kids & raising a family, etc. Basically all the things that make our wheels turn.

So I wouldnt count on stable home prices or any type of "recovery" lasting at all. The economy is in a freefall, masked by wall street, banks, lenders & investors. Older people of course will have a different opinion since they're not feeling the effects as much & have accumulated assets. But ask anyone under 30 who's been out of college & been in the game a while.

[CityLife]

I agree completely with everything you guys have said. I'm 29 and most of my friends are exactly as you guys describe, with the one exception being home purchases. I know lots of people who have purchased their own home, many who have purchased multiple properties. Most have lived in each home at the beginning, while view it as a longterm investment that they would probably hold onto even if they moved.

Are your friends buying homes comparable to their income/wealth? In my experiences, my friends are buying homes substantially lower than theirs or are choosing to rent in lieu of buying...though most live out of state in places they didn't grow up. I think this is due to the mobility thing and fear that the housing market still hasn't bottomed out. In the past you could buy a home and at at worst sell it at breakeven after a year or two. Nowadays if you have to move for a job, you may have to rent yours, take a loss, or just give it up.

[CityLife]

In 2015, Generation X and Y will be 80% of the home buyers in the market place. Millennials .... pick up the pace.

And do what exactly?? Millennials have simply ran out of runway due to a shrinking economy, wages that haven't kept up with inflation/cost of living, downsizing all around & starting off with untold amounts of student loan debt the likes that no previous generation has ever seen.

As far as X & Y, they're BARELY limping along. With X being better off than Y, as they got in earlier & was able to build some kind of wealth & stability. Y is somewhere between the two. Not dire straights, but not good either. There's a reason why many Millennials have moved back in with their parents, and its not because they want to or because they're lazy. Its just not much out there for them, which is causing a stall in housing, car ownership, having kids & raising a family, etc. Basically all the things that make our wheels turn.

So I wouldnt count on stable home prices or any type of "recovery" lasting at all. The economy is in a freefall, masked by wall street, banks, lenders & investors. Older people of course will have a different opinion since they're not feeling the effects as much & have accumulated assets. But ask anyone under 30 who's been out of college & been in the game a while.

Good post. The originally linked article definitely painted a romanticized, idealized version of the upwardly mobile millennial. Reality is most of the generation is underemployed and for some grossly underemployed. Especially those that graduated post crash.

Even though our generation has had a much tougher time than our parents generation did at the same age, I still think there will be great opportunities once the Baby Boomers hand over the keys. Especially for those that are setting themselves up for success now. A lot of Gen Y'ers may not be making the type of money they want, aren't doing their dream jobs, and are struggling with loans; but they are hungry and will pounce when they get the right opportunity. Ultimately living through the recession will probably make millenials stronger in the long run. We've had to become resourceful, adaptable, creative, and possibly developed a stronger work ethic than Gen X. I know its made me stronger in the long run.  I've had two Gen X'ers take new jobs in the past year because I had already surpassed them for future promotions...and both had 5+ year head starts on me. Will definitely be interesting to see the Gen X vs. Gen Y dynamic over the next 10 or so years.

[thelakelander]

I'm a Gen Xer.  I easily spend probably double or triple as much on traveling annually than I do on housing.  I've never had the idea of purchasing a dream house or living in a particular residence for decades (like my parents).  I've always viewed housing as a real estate investment.

[CityLife]

You're a young Gen X'er though. I'd imagine young Gen X'er's and old Gen Y'ers have more in common than they do with those on the other end of their own generational spectrum.

[JayBird]

Great article and I agree. Born in 1980 I seem to find more in common with the GenXers than with my fellow GenYers/millenials. Most of my friends and coworkers are in the same boat, out of the main group of us that went to college together and all stuck together afterwards (7 of us), only two of us own homes (and the only reason I do was because of a great deal that I could see paying off in ten years, and in year 4 it is looking like it was a good move), 3 of us are married (1 for the 2nd time), and I still drive the same Dodge Ram pickup truck that I bought with my signing bonus after college graduation (2003 and still running like new) and the newest car in the group is a Volvo S something. However, we will once every two or three months pool our money and fly to Vegas for a weekend or go to SoBe on a whim. Personally, I spend more on Jaguars tickets, travel to games, and fan "stuff" than I do my mortgage payments each year and look forward to going to London this October. I do indulge in toys to a point, I have a motorcycle that gets a lot of use on the weekends but none of us have the stuff our parents did. Growing up in Jersey they had family boats, ATV's, horses, and shiny performance cars in the driveway and none of us have those things. Heck even the expense of getting a dog is something deeply thought about, unlike my parents who got our family pets on a whim.

Being that I work between two offices, one in Jax and the other in NYC I can also see a big cultural difference between the two geographical areas. Those raised in Florida/Jax/Southeast seem to be more happy getting a job and settling in for the ride until moving to another company. Very few actually try to promote within. Whereas in the northeast the motto of " you should always be moving up or moving out" definitely applies. Also I have noticed more people in the Jax office get married in their 20's and are more family oriented. One thing that surprises me, more of my coworkers in NYC are church going religious participants than in Jax, which I am not sure stems from tradition or maybe just the need to belong to some group. But surprising none the less to me because I've always associated the south with being "bible thumpers". Just proves to me that stereotypes can be very wrong.

However, one thing I've noticed is that the new people joining our company, most graduated this past spring and have very little, if any student loan debt because they worked their way through or had another means to pay for it. In addition, very few have any desire to continue on with grad school studies. So I wonder if the educational necessity of a degree is changing. But I have noticed that those whom have graduated with a degree after 2006/2007 seem to have a determined "why not" attitude, which is wonderful because they will be the ones in five or six years that will dramatically change the business world with their natural views questioning traditions.

One concern about me, my small group, and some others of our age: I/we do not plan too well for future retirement (I have an IRA acct that I contribute to, and feel that by the time I am of age I will be prepared though don't have a solid plan to get there) and even less prepared for any major medical event causing us to not be able to work. Surprisingly, three of our group have no medical coverage because their employers do not offer it. So I do question if our generation, though having a more successful 20's and 30's than our parents, if when we are in our graying 50's we will also see a greater fall.

[CityLife]

Yea I think there seem to be a lot of dissenting opinion on where X stops and Y starts. I've seen 1978, 1980, and 1982 for the start of Y. I've even seen some say that the millennial generation stretches all the way to births in the early 2000's, which is just foolish. I have nothing in common generationally with someone that grew up having cell phones, Ipads, and laptops at age 8, and has no idea who the Beatles are.

One thing the article didn't touch on, is that imo the millennial's tend to spend more money on clothes and appearance than other generations did. Personally my wardrobe is probably worth more than my car...granted my car is an 07 and not worth much, but still. I also have a friend who is in massive debt from law school, but you'd think he was a movie star from the way he dresses. My wife and I laugh at how nicely young people dress their kids nowadays compared to the junk we grew up wearing.

[simms3]

Many of my friends in Jax and Atlanta are buying homes.  None of my friends in the NE or in CA are buying homes.  I'd say for primary college grads the numbers below seem very average, don't yell at me if they don't to you.  City limits only.

Jax - make $60K at 25, COL = well below nat'l avg, condo for $100K or house for $200--300K - why not?
Atlanta - make $75K at 25, COL at nat'l avg, condo for $150-$300K - why not?

NYC - make $120K at 25, COL highest in country, apt for $1.2M+++ - just doesn't work (I guess you can find a decent place in Brooklyn still for ~$600K - still an out of whack ratio)
SF - make $100K at 25, COL 2nd highest in country, apt for $800K+++ - just doesn't work

I'm down in LA now - I know folks in SF who buy crash pads here in West Hollywood or DTLA (where I spent the last weekend), two of the "hot spots" right now (or Santa Monica, where I'm at right now), and it's super cheap compared to SF (where they are stuck like the rest of us in their rent-controlled apt, not owning a damn thing).  Yet LA, especially Santa Monica, is very expensive compared to the SE.  It's all perspective; I think people still want to own real estate, but not everyone can.  In the gateway markets (Toronto now included) most buyers are foreign.

[thelakelander]

Simms, are you visiting LA or have you moved there from San Francisco already?  Kind of off topic, but what's your impression of DT LA?  Overrated, underrated?

[CityLife]

Darn good point Simms. I suppose that is why in my experiences friends who live in NYC, Chicago, San Diego, Denver, Austin, and other places aren't buying.

[fsquid]

Simms, are you visiting LA or have you moved there from San Francisco already?  Kind of off topic, but what's your impression of DT LA?  Overrated, underrated?

I basically live in DT LA in Feb and March every year.  It is certainly improving, but still becomes a bit of a ghost town in the evenings except for the part around LA Live.  Good number of apartments and condos have opened or filled up down there in the past 5 years.  Lots of conversions to condos in the jewlery district in the last 2-3 years.  Simms probably has actual data, but that's what I've seen walking around.