Millennials are living at home longer, putting off home purchases and marriage, are struggling to find gainful employment, and are saddled with more than $1 trillion in student loan debt, so it’s no surprise that their financial confidence is at an all-time low.
A new report from CEB, a member-based advisory firm, identified Millennials (those 18 to 29) as the most pessimistic generation when it comes to personal financial situations. The report shows Millennials’ confidence has fallen 9 percentage points over the past year, while sentiments from Generation X and Baby Boomers have gone up.
The analysis draws on a proprietary global survey from CEB among 17,500 consumers across 24 countries.
The report finds that 33% of Millennials became more indebted or relied on their savings account to pay bills, including rent and utilities, over the past year. They are also less likely to work with financial advisors, keep formal budget plans or plan for long-term goals than they were a few years ago.
Peter Aykens, managing director with CEB, says there’s been a noticeable decay in optimism among this generation in the past 12 to 18 months.
“They went from being more optimistic than other generations to being less optimistic, and are demonstrating much more anxiety about their personal finances.”
He notes that in the past quarter, the level of student loan debt has surpassed both auto and credit card debts, which is likely a major factor to the fading financial optimism.
Their stress is leading to unhappiness with their financial providers and products, Aykens notes. “They attribute their basic financial health back onto providers that they use and look for change.”
This shift raises concerns over long-term consequences for economic recovery. Aykens says right now, this is purely speculative, but that it is a reasonable conclusion to draw.
“We certainly speculate that younger consumers that are more indebted with weaker job prospects are likely to defer major financial decisions that their parents or other generations may have made,” he says, “like deferring home purchases, investment activities or more.”