Baby boomers who lost part of their nest eggs in the recession face a difficult retirement, but those born between 1981 and 1996, who have come to be known as the millennial generation, or Generation Y, face the most uncertain economic future of perhaps any generation in America since the Great Depression.

Three decades of stagnant wages were followed by the Great Recession, and the income and net worth gulf between the rich and the middle class is at its highest level in the past 90 years. In this article, we review how financial reality is colliding with the money habits of millennials, which could soon pose a severe economic dilemma for many.

Key Takeaways The millennial generation's attitudes toward money and investing differ from previous generations, particularly when compared to the baby boomers.

The fallout from the Great Recession continues to impact the economic future of millennials.

Millennials worry they will not be able to meet key financial goals, such as buying a house, paying off student loan debt, or saving for retirement.

Millennials are more likely to emphasize an investment philosophy that enriches both themselves and the world around them.

Millennial Statistics

Although they have frequently been labeled as materialistic, spoiled, and saddled with a sense of entitlement, the truth is many millennials feel they will not be able to achieve material goals like finding their dream job, buying a house, or retiring until much later in their lives than their parents did. Paying off student loan debt has become increasingly difficult for many who are struggling with unemployment and low-paying jobs.

The Great Recession left more than 15% of millennials in their early 20s out of work, many of whom are still struggling to get their feet on the ground. This will hurt them long after they do get work. Economic studies of those who were unemployed during the recession in the early 1980s revealed that they were still behind schedule financially 20 years later.

According to the Investopedia Affluent Millennial Survey, 46% of millennials surveyed say they aren't saving enough money and 39% say they expect to be forced to work beyond retirement age.

Millennial Investment Philosophy

The economic fallout from events such as 9/11 and the market crash of 2008 has resulted in the adoption of an increasingly global mindset, with factors such as social responsibility and the environment frequently playing a key role in where millennials place their money. Many of them are instead choosing to follow either their own instincts or go along with their peers when it comes to investment choices, and have become somewhat distrustful of the financial advice given to them by their parents or financial professionals, whom they often view as salesmen with only their own best interests at heart.

This distrust of financial advisors, however, doesn't seem to apply to affluent millennials. Investopedia’s Affluent Millennial Investing Survey revealed that nearly two-thirds (65%) of the affluent millennials surveyed said they trust financial advisors. The survey gathered responses from 1,405 millennials who reported a median income of $132,000. Additionally, affluent millennials who consider themselves knowledgeable about investing are more than twice as likely to have a financial advisor.

Still, the growing movement in the financial industry toward compensation models that are based on investment performance rather than commissions has yet to make an impression on some people. Some millennials are more interested in having a personal connection with those who manage their money than ever before, despite their comfort with the use of mobile and online technology to perform many investing functions.

0:52 Parents: This is Your Worst Money Habit

Millennial Spending Habits

A survey from the American Institute of Certified Public Accountants (AICPA) shows that over three-quarters of millennials want to have the same clothes, cars, and technological gadgets as their friends and that around half of them have to use a credit card to pay for basic daily necessities such as food and utilities. Over 25% of them had late payments or are dealing with bill collectors, and well over half are still receiving some form of financial aid from their parents.

One of the most disturbing findings of this study reveals that seven out of 10 millennials define financial stability as being able to pay all of their bills each month. The study also outlines a difference in money habits between the genders, where men feel more inclined to keep up with their friends in terms of material goods while women tend to be more frugal and place a higher emphasis on saving money.

The Impact of Social Media

Of course, much of the pressure that millennials feel to conform to the financial habits of their peers comes from social media, where financial milestones such as home and car purchases are routinely posted for all to see and envy.

Because of the influence of social media, plastic surgery is another area where some millennials are spending their money. Injectables are becoming more popular and social media influencers frequently post before and after videos online. According to a 2018 survey by the American Academy of Facial Plastic and Reconstructive Surgery, 72% of plastic surgeons reported seeing an increase in patients under the age of 30 wanting injectables or cosmetic surgery.

Workplace Philosophy

Although pay and compensation are still very important for most millennials seeking a job, it is not always the primary factor that determines the best place for them to work. Other issues have become increasingly relevant, such as autonomy, respect, and being treated fairly. They expect employers to be able to provide these conditions in their workplace.

Their access to digital information has also made them much more aware of what their peers and superiors are earning as well as what they themselves are worth, and what their rights and privileges are in the workplace. They mirror their investment philosophy in that they want work that enriches not only themselves but the world around them.

The Bottom Line

Millennials face a set of challenges that will only be truly understood in hindsight. The future for Generation Y is more uncertain in some respects than for any previous generation, and its members have quickly learned that there are few, if any absolutes that they can count on. Their ability to succeed financially will depend upon many factors, including economic and political conditions and whether they can overcome the perceived sense of entitlement that much of society has branded upon them.