A lot of big decisions happen between the ages of 25 to 34. Most people graduate from college, start a new job, purchase a home, and perhaps, get married. The current generation within this age bracket, called millennials, has been influenced financially as they transition through these life-changing milestones. At the same time, many find themselves dealing with a ton of consumer debt.
Let’s look at the numbers
A study done by the U.S. Department of Labor states that the average American between the ages of 25-34 spends $1,903 annually on clothing. Additionally, they spend approximately $3,131 each year for dining out. Since the average income of this same age group is $41,000, it’s easy to see that spending proportions are off. Millennials are experiencing an increase in consumer debt and report major unsatisfaction because of it.
Why the increase in consumer debt?
It’s believed that the increase in debt amongst millennials is caused by several things. Here are a few of the key factors:
Increased social media marketing – There are numerous amounts of ads appearing on social media. These ads emotionally appeal and target the millennial demographic.
Accessibility – Online shopping and home delivery make it easy for a person to purchase consumer goods. One can binge buy a complete line of products in a matter of minutes.
Lack of strategy – A major concern of the millennial generation is how to eliminate student debt. Millennials work hard toward paying off their college tuition fees, yet disregard making a plan for the rest of their expenses.
When you combine the financial challenges of the examples above, it’s a recipe that does not suit well for the wallet.
A truly vicious cycle
CNBC published that many millennials are already struggling to hold onto their money. Likewise, nearly 40 percent have spent money they didn’t have. Consumer debt is a vicious cycle for the millennial generation. This is in stark contrast to their baby boom predecessors.
In order to get out of this debt mindset, one must create a predetermined budget and spending limit. If you cannot immediately pay off your debts in full, at least refinance to a lower interest rate.
The future of finance for millennials
Financially, the future can hold many promises for millennials. Furthermore, it’s never too late for them to take a different approach to their consumer debt problems. Now that the research is out, it’s definitely a trend worth watching.