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In this episode, Chelsea discusses the differences in how millennials and boomers handle money, much of which has to do with the world and economy they've been faced with.

Entitled millennial stereotype:

Ageist stereotypes:

Lower average pay for millennials:

Federal minimum wage:

Share of workers holding multiple jobs:,baby%20boomers%20(%245%2C892)%20reported.&text=Millennials%20were%20defined%20as%20those,boomers%20ages%2055%20to%2073

Homeownership by generation:

Homes are more expensive:

Rising rental costs:

Differences in generational spending:

Millennials say no to McMansions:

Banking stats:

Rising bank fees:


Millennial wealth gap:

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Hey, guys.

It's Chelsea from The Financial Diet. And this week's video is sponsored by

And today, I want to talk about Boomers versus Millennials, especially when it comes to how we both respectively view and do money. Now the stereotype of the lazy entitled millennial has been debunked over and over again including on this channel. We did a whole video about it a while back, and I'll link you to it in the description.

And generational stereotypes can have a negative impact on anyone, not just millennials or Gen Zers of whom I'm deeply afraid. For instance, one Harvard Business Review study found that when undergraduates were asked to train another person on a computer task using Google's chat function, when "trainers believed that they were teaching an older person how to do the computer task, they had lower expectations and provided worse training than when they believe they were teaching a young person. These results demonstrate that poorer training is a direct result of age stereotypes." It is still important to understand, though, that generational stereotypes do exist because in many ways, the world does change.

And when it comes to money, millennials do money differently than boomers did, and still do, because they have to. And so I want to explore how and why these two generations have such different relationships to money. And one of the first reasons is that millennials have just on average lower income.

According to a 2019 report from the nonpartisan think tank New America, millennials earn 20% less on average than boomers did at the same stage in their lives. And this is despite the fact that millennials are better educated as a whole. The Pew Research Center found that "nearly 40% of millennials 25 to 37 have at least a bachelor's degree, compared to just a quarter of baby boomers, and 30% of Gen X when they were the same age." Now much of this is largely due to wage stagnation.

We have seen over and over again that as productivity has vastly increased over the years, largely in part due to the combination of people who are more and more skilled with more and more effective technology that allows us to be more productive. Our wages have not just not caught up with the level of productivity, they've not even kept pace with costs of living or inflation, which is why the millennials are lazy debate can be so particularly frustrating. In addition to the fact that on aggregate millennials work incredibly hard, they're also working for a world which increasingly compensates them less.

And frankly how can we expect people to be overly motivated to work when they do so to barely make a living wage? For those keeping track at home, the federal minimum wage is currently $7.25 an hour, which most of us are now aware of because it literally hasn't changed in 10 years. And according to the Economic Policy Institute, "In 1968, a minimum wage worker earned $10.59 per hour in inflation-adjusted terms, 46% more than today's 7.25 minimum wage.

The minimum wage today would be over $22 per hour had it tracked productivity increases over the last five decades." So with a lower average income to start, basically every subsequent choice that millennials are facing are going to be different than what boomers were dealing with. Another way in which things are just different for us is that millennials increasingly work multiple jobs. A Census report from earlier this year found a rise in the number of people working multiple jobs. "An estimated 7.8% of US workers had more than one job as of the first quarter of 2018, up from 6.8 in 1996.

The earnings from the workers' second jobs make up an average of 28% of their total earnings, showing that workers are likely relying on that pay, researchers said. They also noted that multiple job holdings occurred at all levels of income but was more common for low wage workers. Those juggling more than one occupation earned less, on average, than people who only had one job." So we start to see how all of that sort of hustle culture, girl bossification that millennials became notorious for especially in the past decade comes from a real need to adapt to the reality of needing to work multiple jobs in order to get ahead.

And when you combine that with the fact that millennials on average are dealing with about $37,000 in student debt, a reality which most boomers never had to deal with, you start to understand the extent to which having to work multiple jobs in order to sustain yourself and to pay off your debts becomes your new normal. And it's not surprising that you'd find different ways to adapt to and even in some level glorify that. I think we're starting to see the tide turn a little bit on that hustle culture glorification, but I do think it's worth examining exactly why it came to be so popular in the first place.

It's also worth noting that that particular cultural phenomenon continues to fly in the face of that perception that millennials are lazy. Not only are they working, in many cases they're working multiple jobs. And this data lines up with a SunTrust Bank survey from 2019 that found that millennials are working more side hustles than previous generations. "Specifically, 64% of millennials said they have a side hustle or have had one in the past, compared to 58% of Gen Xers and 44% of Baby Boomers.

Millennials surveyed said they made an average of $10,972 per year from their side hustles according to the survey, which is 20% more than Gen Xers and 46% more than baby boomers." For some, there's always been a need to work multiple jobs. But for millennials it basically became a de facto part of life. Which brings us to another reality that a lot of millennials are faced with, and boomers frankly continue to misunderstand which is opting out of home ownership.

We are constantly being inundated, especially as we come out of the pandemic, with report after report about how millennials are not buying homes and not having kids. But in addition to the realities like lower income overall and the student debt I mentioned earlier, there's also a real change in just how much it costs to become a homeowner that is dissuading so many young people from doing it. According to data from the Federal Reserve, "Millennials only own 4% of American real estate by value.

A lot less than the 32% of real estate value baby boomers owned at that age." Homes are more expensive now than they were for boomers buying their first home decades ago. "In November 2017, real estate website Zillow showed that the median home value was a whopping $205,100. Compared to what baby boomers might have paid in 1980, that is a 39% increase. And compared to the homes in which the silent generation grew up, you're looking at a nearly 300% higher price in today's dollars." And rental costs are also higher than they were in previous decades.

According to the US Census Bureau, in today's dollars, the median gross rent in 2000 was $866, compared to 758 in 1980. And with that lower average income, not only are the houses millennials are looking at potentially buying-- Hello, Mona's a Zoomer. Actually I don't even know.

Mona was born in 2014 so that's a Zoomer. Well, she loves TikTok, and she loves wide leg jeans. And she loves center parts, and she doesn't care about any of this.

And when you combine these increasing housing costs with lower overall income, you're also talking about a home purchase that makes up a greater percentage of millennials overall income or wealth. In 2018, SmartAsset found that 21.6% of millennials' annual spending went to housing costs, compared to 19% of Gen Xers' and 17.6% of boomers'. But it's also worth noting that millennials are just generally not that interested in buying all of that absolutely hideous, cheaply made, way bigger than necessary McMansion housing stock that boomers and Gen Xers were famous for propagating in the 90s and the early odds.

And this may end up being a real financial problem for boomers. According to a 2019 article in The Wall Street Journal, "The problem is especially acute in areas with large clusters of retirees. In North Carolina's Buncombe County, which draws retirees with its mild climate and Blue Ridge Mountains scenery, there are 34 homes priced over $2 million on the market, but only 16 sold in that price range in the past year, said Marilyn Wright, an agent at Premier Sotheby's International Realty in Asheville." As we spoke about in a previous TFD video, which we'll link you to in the description, house size got out of control.

And it was basically everyone's objective during that specific period in real estate history to basically own a small castle made out of particleboard. And it's no surprise that with those inflated ticket prices, and when you combine it with the fact that millennials in general are much more concerned with things like not having more than they need and living a more eco conscious lifestyle, buying up giant homes in the middle of nowhere is not exactly top of their priority list. And because of all these problems, millennials are increasingly looking beyond traditional banking.

So with technology giving rise to just so many options when it comes to financial management outside of traditional brick and mortar setups, it is no surprise that the way millennials bank period looks very different from previous generations. "When millennials are dissatisfied with their bank, they are not afraid to move to greener pastures. They are 2.5 times more likely than baby boomers and 1.5 times more likely than Gen Xers to switch banks. Additionally, millennials want banking products and services that offer a little extra bang for their.

Buck In a Kasasa survey, 83% of millennials said they'd be willing to switch banks for better rewards, such as higher interest rates on deposit accounts, cash-back on purchases, and foreign an ATM fee refunds. And 94% of millennials also said that no-fee banking was a priority." And perhaps this is due to millennials growing up in a world in which brick and mortar banks were increasingly nickel and diming people. In 2019, the average cost of using an out-of-network ATM was 4.72, when 20 years previously it was 2.28.

And in 2019, overdraft fees were $33.36, compared to 22.60 in 1999. So in some ways although millennials do have overall fewer financial options, they are also much more savvy about making the most of what they have and demanding that their financial services companies work for them. Which brings me to my final point.

One of the areas in which we see the most extreme discrepancies between boomers and millennials and the financial world in which they're living in is when it comes to retirement, which in many cases is not often working for millennials. According to a joint survey from INSIDER in Morning Consult, a global data intelligence firm, more boomers have retirement accounts than millennials. However, "nearly 46% of boomers aren't currently putting money aside each month for retirement, whereas only 35% of millennials aren't.

Millennials who are putting money aside regularly also save more money a month for retirement than boomers do." However, while millennials may be generally more informed about what they need to do with their finances, that doesn't mean that they are ahead of boomers financially. More millennials than boomers expect to never retire at all-- around 9%, compared to 4% of boomers. And 18% of millennials don't know when they'll retire, compared to 13% of boomers." It's become almost a meme amongst millennials and I'm sure Gen Xers to basically be like, my retirement plan is getting hit by a bus.

But it's important to note that this reality in a world where we're seeing fewer and fewer pensions and fewer employers who offer any kind of retirement plans at all and also a state sponsored retirement system that is not even remotely enough for most people to live on, that if you are not able to get past that low income, even while working multiple jobs as many millennials do, the thought of planning for retirement can seem both overwhelming and totally futile. We of course recommend that everyone take planning for their retirement very seriously. But we also must be realistic about the fact that saving robustly for retirement is just not an option for many millennials.

And it's important to also note that, to be fair, not all millennials are struggling. And especially post pandemic, we are starting to see an increasing wealth gap within the millennial generation itself along all of the indices that we talked about today. "Less than a year in, the pandemic has ultimately inflamed a millennial divide, widening the gap between the generation's rich and poor. Millennials are experiencing their own K-shaped recession, which is uniquely compounded by two recessions.

This will naturally lead to an unequal recovery between these two groups, Jason Dorsey, president of the Center for Generational Kinetics said, with those who lost a job taking longer to recover than those who began the pandemic with a better financial backstop. We're going to see a growing divide between the millennials who've weathered the storm financially well, and those who are really struggling financially, Dorsey said. And I think that's only going to grow as they come out of this at different speeds." Now my larger point is to never judge any individual of any generation based on stereotypes about that generation.

But I also think it's always important to interrogate that when we compare generations against each other, we're not just talking about individual human beings in a vacuum who are all starting from 0 and playing the exact same game and analyzing the choices they make within that game on an equal playing field. We're talking about generations who exist and move around and have choices within vastly, vastly different worlds and contexts. My hope here is that we can start to understand a little better what leads to the extreme gap in perception between boomers and millennials and hopefully understand that these gaps exist between all generations.

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So click the link in our description to get started with today. As always, guys, thank you for watching. And do not forget to hit the Subscribe button and to come back every Monday, Tuesday and Thursday for new and awesome videos.