Millennials Have The Lowest Net Worth of Any Generation
Generation Y having a low net worth is not surprising to most people. First, its their age, they haven’t had time to accumulate wealth. But also student loans are crippling Millennials as they are causing negative net worth amongst those under “Looking at the numbers overall gives us a depressingly low figure: -$17,612 for average millennial net worth” according to Economical Millennial.
The reason for the negative equity is mostly due to student loan debt. Which may take almost 20 years to pay off. Most Gen Xers have paid off their debt and are accumulating wealth as they get older. 18-30 year-olds get the pleasure of dealing with a substantial monthly payment, but have their degree to show for it.
The irony is that the degree is supposed to pay for a house that has in recent years deprecated which further puts you in the whole. Millennials do like to rent which is great, but then how do you build up equity. This creates a vicious cycle for which it is damn near impossible to get out of by simply working. Wage growth has been stagnant for over 10 years, leaving Millennials having to work 2 to 3 jobs just to stay afloat.
To make it worse, universities and community college are increasing their tuition since they know that it is so easy for students to get public loans from either a bank or credit lender. “This situation has essentially led to a bubble that cannot pop. Unlike the housing crisis in the late 2000s, borrowers cannot walk away from student loan debt” according to the Economical Millennial. Student loan debt follows you until its paid off which may take greater than 20 years. Those who have public student loans, the government will ltake your tax returns, garner wages or place liens on your assets when they are not paid. They will apply pressure until the loan is satisfied as they have the backing of the government.
Another bi-product of low net worth is a low credit score which is essential to renting an apartment, leasing a car or even getting a job. You can check out your credit score here:
https://www.freecreditreport.com
Here are some tips on how to increase your net worth:
- Do a personal profit and loss statement – profit is what you make and loss are expenses
- Work until you get positive cash flow – you make more than you spend
- Maximize your earnings through extra gigs, ask for a raise when justified or even invest in income based stocks and bonds if you need the money and have some savings
- Cut expenses to the bone – only pay for what you need until your out of the whole
- Lastly, when you have positive cash flow, save those funds to build up your net worth as well as pay off high debt bearing interest which will help in the long run
Building up net worth is essential now as you will be able to enjoy life down the road. Currently, Millennials are in bad shape, but there is still hope.