Yves here. I am cross posting this article because it is the sort of thing that will infuriate many readers for valid reasons. It contains some good information but then connects the dots in ways that reveal assumptions about how things work which are increasingly not operative.
The premise of the article is that Millennials “ought” to be saving more for retirement and are spending way too much. First, paying down loans is a form of saving, and the article gives no credit whatsoever for that. Second, some of the factoids are missing key context. For instance, quel horreur, half say they spend more on nights out that on their mortgage or rent! How profligate!
Now consider: 1/3 of Millennials live with their parents and presumably pay no or only token rent. So that means that only 1/6 are spending more on their nightlife than on what most people would think of when they think of housing costs. Now how many of those might be in high income cohorts, have rich parents (so they know they are getting an inheritance and don’t need to put away as much) or are making dating a priority because they want to get married and plan to cut back once they’ve found a spouse?
Or consider the supposedly damning factoid that “Half of Millennials have made unplanned purchases because of something they’ve seen on social media.” Help me. This means nothing if you don’t know the amounts involved. So someone heard about a new bakery and bought a muffin as a result? And we are supposed to get bent out of shape about that? Moreover, there’s no baseline. How much to older people buy in response to good old fashioned ads? Are social media somehow more magically powerful than Madison Avenue? Another factor that could lead to mistaken inferences is that young people may more candid about their (gasp) “unplanned spending” than older folks.
And the article pointedly ignores the elephant in the room…high unemployment rates and poor earnings among the young, particularly among the college educated who had the misfortune to graduate during or shortly after the financial crisis. Why are so many living at home? Why have so few bought houses? Aside from the high-fliers who land in fast track jobs in Silicon Valley, finance, or increasingly, the Beltway, Millennials face short job tenures and not much reason to expect their incomes to get a lot better down the road.