Wealth Opportunities for Millennials in the US

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16th Apr 2019 Finance Reference this

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Millennials and Wealth in America: Do millennials have less wealth opportunities in America?

Introduction

Throughout the years, society has always found wealth to be a major goal in life. Usually, acquiring an extensive set wealth happens over time from saving money and work a well-paid job.  Older generations had better opportunities to save more for later in their life due to there being more employment for the youth and reasonable living expenses. However, wealth opportunities are becoming harder to achieve for younger generations, for example, Millennial (also known as Generation Y). In the stimulus, The Wealth of a Nation, Chapter 10 discusses the natural inequality of wages, how employment through all perspectives has never been balanced, and that includes generational inequities. “The millennial generation is the generation of children born between 1982 and 2002, some 81 million children who have taken over K-12, have already entered college and the workforce.  This generation will replace the Baby-boomers as they retire” (“who are the Millennials”). This generation is already making less money than the older generations at their age. Factors that correspond to these difficulties are people being paid less for work that other generations did and the increase in debt for generations y.With these two factors combined it become hard to save money and accumulate enough money to be considered wealthy. And this could be a quite a shock to the younger generations who grew up to believe they will have the same opportunities as their parents or be able to afford the beautiful family home broadcasted on television. The standards of economic stability are changing for the Millennial and the generations to come. Now, this young generation has to face a new reality.

Student Perspective: Debt Increase

The increase in debt will be a major factor as to why Millennials will have difficulty archiving their goals. A current debt that is affecting mostly Millennials wealth is the tax that has increased. According to IRS.com, income tax rose from 10% to 39% since 1990. Income tax adds more stress to Millennials because they are not only hit with a significant amount of student debt but also taxes being pulled out of their paycheck. With the small sum of money that Millennials are earning, it’s no wonder that they are progressing slower in America than older generations did. If the average income for Millennials is about $45,000 a year and 39% of that is being reduced due to taxes, which will leave Millennials with only $20,000 a year.  That is equivalent to what a worker at a fast-food restaurant would make. This is a problem because if this trend of economic immobility continues then, this younger generation will continue to have fewer opportunities for saving money later in life. Another debt that is affecting Millennials Wealth is student debt. “The average undergraduate student loan debt in 2002 was $18,900. It more than doubled from 1992, when it was $9,200.”(Williams. “After College, A Life Without Debt”). From this quote it is evident to see, fees that add into student debt has doubled since 1990. Older generations had an advantage with little debt because they were able to focus less on paying the smaller sum of money (small by comparison) and focus more moving out of their parent’s house and living with their partner or spouse. Younger generations are at a disadvantage because this high student debt of 18,900 minima prevents Millennials from being able to focus on anything but finding a well-paying job and paying off their student debt. Not only does this cause difficulty to the younger generation but also to other businesses as a whole. For example, if Millennial are discouraged to buy own houses because they have a high amount of debt than there is the possibility the housing market will drop.If colleges reduce their Tuition fees, then student debt will become less severe. College students pay for each class they are taking; this is all added to the tuition.But for each class you pay for each unit, for example, an English class that is $300 per unit will cost $900 for three units. “a college charging $300 per unit may charge a flat rate of $4,500 per semester for anything in between 12 to 18 units.” (Clark. “Understanding College Tuition, Room, and Board”) This payment alone is the core of tuition, and Millennials will have more opportunity to save money if this debt was reduced. A solution to reducing this factor would require colleges to provide a wider option for the online course. “By converting at least 20 percent of those classes to online courses, we could save more than $90 billion annually.” (Moon. “Reducing Tuition, Not Offering More Loans, Will Make College Affordable”)This system works because a portion of the money used goes into paying instructors, 27 cents out of the dollar according to Washington post. If students take more online classed, they are paying less for tuition and instructors and ultimately shaving more money off of the average college tuition. The less money millennials will have to pay for tuition the more they can put into their saving for a better chance at accumulating tremendous wealth. However, while this solution is a great option for a college student, the instructors are getting the short end of this deal. With student taking more only classes, the money that would go into paying the instructors for their services would decrease. The would result in either the average pay of a college instructor to decline or the occupations becoming less in demand as the year go on with students taking more online classes. Also, at the thought of online classes, if enough students do online classes then colleges would have to find the money to either provide students with computer labs which would then be added to the tuition fee.

Worker Perspective: Income Decrease

Another factor that poses a problem for Millennials is the drop in income for their generation. The decline in income can cause many problems ranging from not being able to pay off debt to being discouraged to make major purchases. “The median net worth of a millennial is $10,090, 56 percent less than it was for boomers” (Reutter. Millennials consistently earn less than elders) this quote shows that boomers, as a whole, made more than half of what millennial are earning as a whole. Boomers had more economic mobility in their time. This problem goes hand in hand with the increase in debt, putting millennial in an even tighter spot. If this generation is accumulation such a small amount of money, then paying off debt would be the last expense they would be able to tend too. After the overall cost of living like, apartment rent, bill, grocery and paying taxes.“Fully half of Millennials (51%) say they do not believe there will be any money for them in the Social Security system by the time they are ready to retire” (Millennials in Adulthood). This quote shows that Millennial are not confident that they will be able to support themselves after retirement. With this lack of confidence, millennials are subjected to this will manifest into this generations skipping out on the traditional stages of adulthood. Including marriage, home ownership, starting a family, and retiring comfortably. However, if millennial take charge of their financial being, they will have a better chance at preserving the wealth they have. For example, when it comes to one’s paycheck they’ll need to take their finances into their own hands. Or at least have someone help them. Millennials may have fewer options and more obstacle at acquiring wealth, but they have more options to keep the money they have. One of those options being a financial adviser. “Millennials need and advisor to assist in putting a plan in place so they can start taking control of their financial well-being.”(Allen. “Why Millennials need a financial advisor”) This article written by Ryan Allen, a business development representative, addresses the importance of millennials have a financial adviser. When getting sound financial advice early in life, it can affect the well-being of that person for a long time. Also, young adults will have the opportunity to develop healthy habits when dealing with their money. The help will improve the confidence that millennials for retirement and being able to provide for a future family. However, enlisting for a financial advisor is only as beneficial as the person makes it. If someone gets a financial advisor but does not apply the skills that advisor provides into benefiting their economic well-being, then that is money and information wasted. Errors in the advisor-client relationship can lead to failure from both parts. What’s important to take away from this is that millennials may have fewer wealth opportunities, but they do have more options when it comes to saving their money. Also, there are a wider variety of “quick” jobs, jobs that assisting in one making money quickly, available to this generation. However, without the right attitude and the willingness to care about one’s financial well-being, any solution would be hard to accomplish.       

Conclusion

In conclusion, Millennials face lowers economic mobility due to two major factors. One factor being an increase in debt that the younger generation is expected to pay and the decrease the average income that often becomes discouraging to Millennial. Of course, anyone could say that millennials should get paid more for their jobs and have their student debt reduced. Maybe lowering the prices of the overall cost-of-living. Health insurance, schooling, housing, and other expenses are what everyone would propose to free or at reasonable prices. However, when dealing with money, it is never that easy. Many obstacles or limitations that prevent problems like this to be solved is that not just affecting one group people. It’s affecting companies, workers, and those how to benefit from that money. It takes years to make changes like to the economic stability of a generation, but the best thing anyone can do is learn to adapted to this new reality. Being able to develop time-saving skills, being able to prioritize money, and maintaining a mindset of working hard are lifestyle tools not only Millennial but all generation can benefit from learning these tools will help Millennial achieve a better chance at sustaining and maintaining wealth.[Word count: 1,919]

Bibliography

  • “Who Are the Millennials?” Who Are the Millennials? – CPCC. N.p., n.d. Web. 11 Apr. 2017.
  • Williams, Jeffrey. “After College, A Life without Debt?” Alternet. Dissent Magazine, 16 Aug. 2006. Web. 05 Apr. 2017.
  • Reutter, Justin. “Millennials Consistently Earn Less than Elders.” The News Record. N.p., 2016. Web. 05 Apr. 2017.
  • “Millennials in Adulthood.” Pew Research Center’s Social & Demographic Trends Project. N.p., 06 Mar. 2014. Web. 05 Apr. 2017.
  • Clark, Ken. “Understanding the Basics of College Tuition, Room, and Board.” The Balance. N.p., 22 Mar. 2017. Web. 05 Apr. 2017.
  • Moon, Munir. “Reducing Tuition, Not Offering More Loans, Will Make College Affordable.” The Huffington Post. TheHuffingtonPost.com, 22 Apr. 2014. Web. 05 Apr. 2017
  • Allen, Ryan. “Why Millennials Need a Financial Advisor.” Advicent. N.p., 27 Sept. 2016. Web. 05 Apr. 2017.
  • Yakoboshi, Paul J. College-Educated Millennials: An Overview of Their Personal Finances(2014): n. pag. TIAA-CREF Institute, Feb. 2014. Web.
  • Hoxby, Caroline M. “How the Changing Market Structure of U.S Higher Education Explains College Tuition.” (1997): n. pag. Nber.com. National Bureau of Economic Research, Dec. 1997. Web.
  • Douglas-Gabriel, Danielle. “Is Resetting Tuition the Solution to the Broken College Pricing Model? This School Thinks So.” The Washington Post. WP Company, 16 Sept. 2015. Web. 05 Apr. 2017.

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