If you were born between 1946 to 1964, you’re what’s known as a ‘Baby boomer’, a term derived from the spike in birth rates during the 40s and 50s. The following generation, Gen X, consists of those born between the swinging 60s and the early 80s.
If you’re a child or grandchild of the former two – i.e. were born between 1997 and 2012 – you’re part of Gen Z, and you’ll now be between 6 (and as such probably not reading this article) and 24 years old.
So what about that middle ground? That lost generation that’s old enough to remember dial-up connections but young enough to have missed out on pensions, and cheap education? We’re talking of course about Millennials. If you were born between 1981 and 1996, congratulations! You’re part of the poorest generation of 25-40 year olds since before the World Wars.
A recent report from Grattan Institute ‘Generation gap: ensuring a fair go for younger Australians’, confirmed that younger generations are not making the same economic gains as their predecessors. The wealth of households headed by someone under 35 has barely moved since 2004.
If you’re in the market for another depressing stat, Millennials own 4.8% of America’s wealth. When Gen X hit their prime working years, they owned 9%. The Boomer generation owned 21%.
Although living through economic recessions is unavoidable, the age they hit you at can determine their impact. Take for instance those 35-year-olds, born in 1985. They would have been leaving college or university and entering the job market just as the 2008 Global Financial Crisis took hold.
Why are Millennials poorer than their predecessors?
Many Millennials were forced into minimum wage employment, or no employment at all. For those who did secure jobs in their fields, salaries suffered, and the cost of living jumped. For those who didn’t, by the time the job market had improved, there were fresh new graduates to compete with. Even those who managed to salvage a career and find financial stability missed out on key earning years – the type of years that would’ve set a Boomer up to buy a house before the age of 25.
And there begins the cycle: trapped in rental property, Millennials never got their big break. Never mind the crippling student debt, which of course still has to be paid regardless of whether the degree delivered on its promise of a job.
And that’s without taking into account the modern consumerist attitudes that see Millennials and Gen Z bombarded with targeted advertising, peer-pressed into buying branded goods, and driven further into debt via BNPL ‘solutions’ and all-too available credit cards.
The housing divide
It’s been acknowledged that the young and lower-earning people of Australia have been locked out of the lucrative proposition of home ownership. Many Boomers – enjoying a strong buying position during the housing boom of the 80s and 90s – secured both homes for life, and property for rental.
House and land prices have since more than doubled in high-density areas like Sydney and Melbourne. The alternative – renting – makes it harder to save for a deposit with ever-escalating rates. But not all is lost.
Millennial ways to make a living
Millennials and Gen Z’ers are groups that value their time. The new remote working protocols demanded by the pandemic have thrown something of a spanner in the works for managers. Young workers across the world are quitting in their droves rather than resuming 9-5 desk positions. They’ve had a taste of freedom, and they just might get it.
The rise of the ‘gig economy’, social media careers, entrepreneurship, and increased awareness of investing are all providing avenues for alternative money-making.
Seeking new ways to build wealth
The positive perspective to take from this article is the wealth of information young people have at their fingertips.
One of the ways young people can break the cycle of debt and renting is to research, plan, and execute an investing strategy that will protect and maximize the assets they have.
That’s where UFinancial comes in. We help you navigate the complex and constantly changing financial landscape with a diversified, full-service model that supports you from your first investment to buying your first home to building wealth that lasts.
Talk to one of our experts today.