The Millennial Perspective: The Cost of Learning

I’m sure we have all heard of student loans the mountains of debt that come with them. Every generation has or has had student loan debt. Millennials, surprisingly, don’t have the highest average amount of student loan debt though. However, I think that we may have the hardest time balancing the debt with other aspects of being an adult. When people in Gen X, the generation with the highest average amount of student loan debt, were accumulating that debt, many Millennials were still learning to read and the cost of goods across the nation were a lot cheaper than they are now. Housing was cheaper making it easier for the generation before us to invest in a home following graduation. Food and gas were a lot cheaper too. Tuition, on the other hand, was starting to rise.1

According to Business Insider, the cost of tuition has increased 260% between 1980 and 2014. In dollars, this equates to $9,438 for four years including room and board to $23,872. Along side this, inflation has seen an increase of around 120%. Now let’s look at the cost of minimum wage. In 1980 minimum wage was $3.10 and increased every couple of years until it stopped increasing in 2009 when it reached $7.25. While this is a significant increase in terms of percentage, it has not kept up with the cost of consumer goods and it certainly hasn’t kept up with the cost of tuition. This has caused the Millennial generation to fall behind on getting a real start on life.

Like any type of loan, student loans come with an interest rate and different types of loans have different types of rates. Federal student loans issued by the Department of Education range from 3% to 6% interest while private student loans issued through banks, such as Discover or Wells Fargo, start at 8% and go up from there. The process of getting federal student loans can be difficult for some and this struggle can be caused by a number of things. For some, their parents or guardians may make too much money to allow them to qualify for any financial aid until they are 24 years old, married, or have a child. Others may have done poorly in their courses causing them to lose their eligibility. In these cases, the options to pay for school are left up to scholarships, cash, private loans. The repayment options for these different types of loans differ greatly as well. With federal loans, you can often be placed on an income-based repayment system allowing for your monthly payments of the total sum of your loans to match your income. On the other hand, private student loans do not have this option unless they are consolidated. A new private loan is issued per semester and typically has a $50 monthly payment that starts after graduation, meaning that you could be looking at a $400 a month payment after graduation. Regardless of the type of loan or the amount of the monthly payment, it can be difficult to get these loans paid off in a reasonable time frame and get a start on building a life because of the lack of increase in income for new graduates.

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The Millennial Perspective: My House, My Rules

Picture it: a nice starter home with a yard for children and pets to run and play. A place for you to gather with family and friends. A place to call your own. Many millennials dream of buying and owning a home, but how many actually do? According to Urban Wire, the most recent study on this was conducted in 2015 when the youngest millennials were 18 years old and the oldest were 34. At that time, only 37% of millennials were home owners. Now, five years later in the year 2020 I am sure this number has grown considering most millennials are past college age and heading towards their 30s and 40s. However, I decided to conduct a study of my own and ask my fellow millennials about their home buying experience, if any. 

I asked my friends a series of questions:

  1. Do they own a home or have they ever owned a home?
  2. If so, what was their buying process like?
  3. If not, what is holding them back?

Several people that responded do, indeed, currently own a home and a few of the older millennials are even in their second home. Some of them qualified for special loans which allowed them to make the purchase without a down payment. Others saved just about all they could manage to make their dream come true even if it took several years and some had help from their families. Those that do not and have never owned a home gave a good list of reasons that seem to be a general consensus for a lot of millennials. From that list, several stated that they haven’t purchased a home yet because houses are too expensive. They would rather save until they find a home that they love at a price point that works for them than buy a house at what they could afford, but want to upgrade it or even buy a newer home within a few years. Some also stated that they don’t know where they want to end up, they aren’t married and don’t have kids yet and want to make sure that when and where they buy is just right.

Being a millennial comes with a lot of uncertainties. A lot of us are in the turning point of our lives where we transition from college age to being a “real adult.” We want to make plans and live a life that we deserve, but at the end of the day, life gets more and more expensive and the job market and average income can’t compete. Now we have lived through and will certainly feel the repercussions of two financial crises for many years to come. However, all this being said, the current trends for the housing market predict that another housing market crash may be imminent, but it could open up the opportunity for many people in my generation to finally be able to say those famous words that our parents shared with us many times, “my house, my rules,” so long as the job market and income allows. 

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The Millennial Perspective: Handling the Weight of Stress

Stress. What does this word mean to a millennial? A lot of the time it could be the large sum of student loan debt hanging over our head, saving for our future, finishing a degree, the list goes on. What it really feels like to most of us is a weight on our shoulders that can be hard to shake off. So, how do we handle this weight when it becomes too heavy to bear? As it turns out, there are many ways the millennial generation copes with stress and anxiety.

I, personally, have my own methods of coping with high amounts of stress and anxiety which usually involve eating a lot of snacks, but I wanted to hear the input of my fellow millennials. Since this could be a more sensitive subject, for those who struggle with depression and anxiety, I asked some of my close friends for their input. Many of them claimed playing video games and binge-watching shows, or movies, were a good way to wind down from stress. However, in those higher stress moments where the world feels like it is closing in on them, many turn to proven strategies to help center their mind. In light of recent events caused by COVID-19, finding peace in a disrupted world has been something a lot of us have had to work on. This could be focusing on that single task to distract the mind, such as cleaning, shopping or reading. Many said they make lists of the things they can control to help them get a better handle on what is going on around them. Others seek help from a therapist to talk through their stress. Some said they just cry it out rather than letting their stress build up inside to a point beyond control. Meditation was another tool many used to help ease their mind of stress and anxiety or read something that is similar to a mantra. The last two strategies are interesting and something that I think may be worth trying. Centering your mind to gain perspective is a highly successful strategy for some individuals.

Because of findings, I pursued a lengthy discussion on meditation with a friend. She mentioned that she uses an app called, “Calm”. This app provides guided meditations as well as tips and tricks about how to incorporate meditation into your daily routine. There are similar apps out there as well. Taking time to meditate, in some capacity, on a daily basis can help start and end the day on a positive note. Meditation can also make you more aware that although anxiety and stress are present, our reactions to it may be controllable. People experience a variety of reactions to stress. To put it simply, some people react to situations better than others by approaching stressful situations and anxiety with a different mentality.

There is a concept called “spheres of influence” that is present in some stress-management methods. To briefly describe this concept, there are things you have absolute control over which is called, “The Self”. Things you have limited control over called “Influence”. Lastly, the things you have no control over are grouped as “Everything Else”. 

To place this concept in perspective during the COVID-19 pandemic, consider the following:

  • Self: We as individuals have control over what we do during the pandemic. We can decide to go to the store, or do delivery or pick-up, decide to go to restaurants, decide to exercise, etc. Factors that we can control, we should. We can decrease our stress levels by ensuring we are utilizing good behaviors to keep us as safe as possible. 
  • Influence: The next sphere contains life areas over which we have some or limited control. This may include family members’ decisions during the pandemic. Yes, you can give advice but you cannot decide for them what they can do. Therefore, it is not helpful to devote time to these activities that cause you stress.
  • Everything Else: The final area. This includes the governmental decisions affecting health, safety and the economy. We have very little direct control over these areas on a global basis. It is best not to fixate on these areas of life because it lowers our feeling of comfort and increases our stress level. Focus on what you can affect, not what you can’t.

No matter the method of controlling your stress levels, whether millennial or older, it is important to keep the majority of your focus on yourself and those things you can control. Expend very little, if any, energy on the things you cannot. 

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The Millennial Perspective: Starting Late, Retiring Fearless

According to Pew Research Center, Millennials are individuals born between 1981 and 1996. We grew up in a time before the internet was a part of everyday life and playing outside or playing video games were the best options to keep us occupied. We grew up in the rapidly changing age of technology and social media. We also, unfortunately, grew up and are still facing the ramifications of the Great Recession of 2008. This has brought on a number of financial concerns among Millennials and has caused delay for many milestone events, such as buying a home and starting a family. The average Millennial makes $35,592 a year and has a net worth of less than $8,000 according to Business Insider. The average Millennial also has a student loan balance of roughly $30,000 for four years of college. The lower income and high cost of student loan debt on top of the cost of living makes it hard to start a life and save for the future.

As any Millennial would do, I took to social media to gather the opinions of my fellow Millennials about what concerns they faced regarding their financial future. Much to my surprise, several people joined in the conversation. Some said that their biggest concern was paying off student loans, others said buying a home, saving for their children’s futures, or starting a family in general. We will touch more on those subjects later, but one of the most popular answers I received was saving for retirement. Many of us are told to start saving for retirement as early as possible and many of us fear about the future of Social Security. However, when it comes time to set up our 401(k), 403(b), or whatever kind of retirement plans are available, if any, from our employers we find that the suggested amount to invest in the plan is far more than we can afford and still have a comfortable lifestyle. I remember when it came time to sign up for the retirement plan at one of my jobs which I thought paid fairly well for someone my age. The suggested investment each month was a third of my total gross pay, or in other words, the pay before any taxes or deductions. This would have left me with just enough money to pay my rent, my car note, and utilities each month. I, unfortunately, opted out of saving for retirement at that time. 

So, how do we start to save for our futures when we can hardly afford the present? Balance. It is important to find a good balance between what you need to live, what you can save for the future, and still have some funds left over to pay yourself, even if that means setting aside more savings. How do you find this balance? Planning. Sit down and look at how much you are making and how much you are spending, and create a budget that works for you and stick to that plan. Even if you are not investing in a retirement plan with your employer, you can start to save for your future. It doesn’t have to be much to start, but we have to start somewhere. Talk to a Certified Financial Planner™, get a second opinion if you have to, do whatever you need to do to feel comfortable when making these kinds of decisions and ensure that you are making the right choices to plan for your future. Retirement doesn’t have to be a lost cause or a fantasy for Millennials. As Jonas Salk said, “Hope lies in dreams, in imagination, and in the courage of those who dare to make dreams into reality.”

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