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Millennials are poor, in debt, and happy with their finances

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Melanie Stetson Freeman/Staff/File

(Read caption) Roommates Spencer Wolfe, Sean Wen and Forrest Miller hang out in the living room of their four-bedroom apartment in the Fells Point neighborhood in Baltimore. Despite a rough start to their working years, Millennials are more optimistic about their finances than any other group, according to a study released Monday, April 20, 2015.

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Statistically, America’s Millennial generation (of which I am a member), has had the roughest start to its working years in living memory. Many of us graduated in the throes of the Great Recession, hit with a double whammy of historically bad job prospects and a cresting student debt crisis. Keeping up with skyrocketing housing costs on stagnant wages is just distracting us from reading article after article about how our ability to earn a decent living has been permanently kneecapped by the random misfortune of being born a couple of decades before the worst economic crisis in 80 years.

No one would blame Millennials for feeling gloomy about our financial situations. According to a recent survey, however, we’re actually more optimistic than any other age group.  Bankrate.com, a personal finance site, teamed with Princeton Survey Research Associates International (PSRAI) to survey 1,001 employed Americans by phone. Of those, 33 percent of respondents aged 18-29 said their finances were better off overall than they were a year ago, compared with 20 percent of those surveyed overall.

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Millennial respondents reported higher levels of job security (32 percent better, compared with 23 percent of the general population) and more confidence about their savings (30 percent to 20 percent). "Millennials got the memo when it comes to savings," says Bankrate chief financial analyst Greg McBride, in a phone interview. "They're more likely than older counterparts to have money squirreled away." Eighteen to 29-year-olds also are more hesitant to take on debt, he says, possibly because of the financial crises that colored their early adulthoods. 

Workers age 50 and older were the most pessimistic about their finances. Just 13 percent of that age group reported being better off financially than they were a year ago. 

The only area where young adults lagged was actual net worth, which makes sense since relatively fewer would be in a position yet to invest heavily in assets like houses and equities. Eighteen percent of surveyed Millennials reported higher net worth than a year ago. “While Millennials are doing pretty well financially, their net worth is being held back because they aren’t as invested as older adults in the stock and housing markets,” Mr McBride says. 

For several reasons, a more upbeat financial outlook among the group isn’t surprising.  Older Millennials are settling into a more stable version of adulthood – getting married, locking down jobs with salaries and retirement plans, and (occasionally) buying their first homes.  "I feel better about my financial situation now than I did last year," Atlanta-area call center supervisor Andy Heatherington told the Monitor. "I worked my way up to get a better paying job, which has allowed me to have more financial stability and finally pay off credit cards I've had since college. I also don't feel crippled by student loan debt anymore."

Plus, the overall economy continues to improve, with the job market leading the charge. Before a small stumble in March, the US added at least 200,00 jobs each month for 12 months straight. This means many young workers who scraped by early in their working years have better opportunities available. "In December 2014, I started a new permanent job," writes Zachary Morgan, a state government worker, via e-mail.  "The stability was a huge relief, and since it's a state job, I am forced to pay  six percent of my wages into a retirement plan (something I had gladly done before but had neglected for the past year). Combine that with with a sort of recalibration of spending habits, and I'm feeling significantly better and more optimistic about the future."

 But a healthier economy doesn’t quite explain the results, Mr. McBride says. “I don’t chalk it up necessarily to the economy. If it were, than every age group would be feeling better and we’d see identical readings."

On the job security front, he says, Millennial workers have a leg up because of their computer skills, which make them more employable in the current job market than older workers. And there's hope ahead on the student debt front: last month, President Obama unveiled a set of recommendations to reform the federal student loan program, including better protections for borrowers, more effective communication between borrowers and the government agencies handling their loans, and making bankruptcy protections more available to student borrowers who default on their loan payments. 

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Young adults still face many economic obstacles, of course. The student debt burden in the US sits at $1.1 trillion, nearly quadruple what it was a decade ago. Those high debt levels have made it difficult for them to break into housing market: according to a recent survey from LendingTree, less than half of college-educated adults ages 24 to 35 own their home. Part of the reason is a slow financial start and debt; part is a continued wariness of the financial industry in the Recession's wake. Despite their confidence in their savings, Millennials are the age group least likely to invest in the stock market. 

Still, there's a good chance we Millennials aren't going to be the lost generation many feared. "So much of what we hear is that Millennials are buried in student loan debt, can't get jobs, and living at home with  Mom and Dad," McBride says. "That can’t be true."