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Popular Millennial Money Myths Debunked

Published April 27, 2021

8 minute read

By Jim Greene

From a personal finance perspective, millennials have inherited quite a volatile world. Higher education is more expensive than ever. House prices across North America are surging. The looming specter of climate change will likely have major economic implications too (Though even the most accomplished experts can’t predict them.) And on top of it all, COVID-19 has seriously destabilized the overall economic landscape. Nobody really knows when it will recover, or what it will look like when it does. Given the situation, millennials are rethinking conventional wisdom as it applies to money. And why not, considering the average millennial salary is only $47,034 per year. Some traditional strategies and beliefs just aren’t as relevant as they once were. Many people in the early stages of their careers are now ignoring some long-standing advice. Let’s examine some of the most popular millennial money myths, and debunk them accordingly.

Millennial Money Myth #1: They Don’t Save Money

One persistent myth is that millennials do not place a high priority on saving money. It doesn’t matter whether it’s for major purchases or retirement. These annoying stereotypes suggest they’re too caught up in their $7 lattes and $20 avocado toast to squirrel money away for the future.

However, this simply isn’t true. According to a 2018 analysis by the Transamerica Center for Retirement Studies, millennials are actually saving for the future at higher rates than older generations. According to the study, millennials contribute an average of 10% of their salaries to 401(k) retirement plans or similar equivalents. That puts them on par with Baby Boomers, who have a reputation for being financially responsible. It also outperforms Generation X, which assigns just 8% of their earnings to retirement savings.

The report also said 39% of millennials are so-called “super savers,” who bank more than 10% of their salaries. That was the highest rate among any generation demographic that participated in the survey. You can argue that the real issue facing millennials are stagnant wages and drastically higher costs of living. But they are still saving a solid percentage of their income. Those savings just don’t stretch as far as they used to.

Millennial Money Myth #2: Home Ownership Is Vital to Financial Success

With real estate prices soaring beyond the reach of many first-time buyers, millennials have been forced to rethink traditional thinking. Among those ideas are the notions that long-term renting is just a waste of money. For previous generations, home ownership was the main way for the average person to acquire wealth.

Millennials are emphatically rejecting this type of “one-size-fits-all” financial advice. In truth, renting offers a lot of financial benefits that don’t traditionally get much attention.

Home ownership still offers a lot of economic benefits. However, it’s not a “make or break” issue when it comes to financial success for millennials.

Millennial Money Myth #3: Traditional Life Goals Do Not Apply

A 2016 report by Financial Finesse found that only slightly more than a quarter of U.S. residents under age 30 are married. A Bank of America survey also found that only about half of millennial respondents identified marriage as a top priority. Similarly, only about 44% identified having children as a pressing goal.

A more nuanced view recognizes that many millennials still envision themselves getting married and having children. They just plan to do so later in life, compared to previous generations. Financial Finesse’s poll found that large numbers of millennials are avoiding major commitments like marriage and children because of student loan debt. Bank of America also found that 61% of millennials dream of traveling the world. For many, satisfying that wanderlust needs to come before getting hitched and having kids.

Millennial Money Myth #4: Poor Spending Habits Are to Blame for High Levels of Debt

According to data published by CNBC in 2021, the typical millennial has more than $27,250 in non-mortgage consumer debt. While their high debt levels are often chalked up to poor financial discipline, that’s not necessarily true. Consider that the typical millennial has a credit card balance of only $4,651. That’s almost 40% less than the average Gen Xer and 31% less than the typical Baby Boomer.

So, where is that debt coming from? Here’s a clue. In the 1970s, less than one-third of all U.S. jobs required a college degree. By 2020, that figure had climbed to about two-thirds. Over that timeframe, the inflation-adjusted cost of attending college ballooned by about 147% at public institutions. It’s was even higher (157%) at private universities. Calling the U.S. student debt problem a looming financial crisis isn’t an exaggeration.

Millennial Money Myth #5: They Are Willfully Destroying Legacy Industries

Millennials have been accused of destroying many well-established previously profitable industries. The list is long. It includes everything from oil, casual dining, diamonds, traditional retail, golf, movie theaters, and even breakfast cereals. Yes, we’re serious.

However, there’s another (and more accurate) way to think about this. Certain industries may have fallen into decline as millennials have entered the workforce in large numbers. But new industries have risen to fill in the gap. Ecommerce, fintech, and other industries that have embraced the digital economy are booming. Millennials are a big reason why. Millennials simply aren’t interested in outdated business models that don’t make financial sense to them. Instead, they are creating new ones. These legacy industries will need to adapt to what their customers want. If they don’t, they will end up killing themselves off — millennial blame not included.

Millennial Money Myth #6: They Are Free-Wheeling, Credit Card-Happy Spenders

Given all the clickbait-driven hype, you wouldn’t be faulted for believing that millennials are irresponsible consumers. You know, the kind that jump at every chance to swipe their credit cards. In 2020, U.S. News did a comprehensive analysis of what millennials spend their money on. The answers included debt, social impact, and eating out. That last one was largely a consequence of working long hours and constantly being on the go.

Conversely, they spend less on cars, clothes, real estate, and retirement than previous generations. Vehicle ownership is less of a priority in the rideshare age. Millennials are surprisingly responsible when it comes to shopping around for the best prices on clothes too. They’re spending less on real estate because fewer have the money to buy a home. Although retirement is still a priority, it often gets deferred until student loans have been paid off.

Millennial Money Myth #7: Personal Credit Scores Aren’t Important

When it comes to personal credit scores, millennials rank near the bottom. According to Experian, millennials had an average credit score of 680 in 2020. That ranks on the low end of “good.” The typical Gen Xer, meanwhile, had a credit score of 699. Predictably, Baby Boomers averaged 736 and the “silent generation” (aged 75+) averaged 758. The only generation millennials outperformed was the 674 average score posted by Generation Z (age 18-23).

These numbers would seem to indicate that millennials don’t really care that much about their credit scores. However, there’s an underlying factor that almost never gets mentioned. Many millennials do not have credit cards at all. One Bankrate survey of young adults found that 63% of them have zero active credit card accounts. But credit cards are so convenient! So what gives? Millennials have a stronger mistrust when it comes to traditional financial institutions. Remember, they came of age during the Great Recession. They tend not to trust banks or credit card companies. After all, they continue to pull in record profits while the economy crashed every ten years or so.

Myth #8: They Don’t Work as Hard as Previous Generations

We’ve all heard this one. Millennials are spoiled, lazy, entitled brats. They want everything handed to them on a silver platter. They expect to go from internships to the C-suite in a matter of months — all while arriving at work no earlier than 10:00 a.m. and being able to slip out early to grab a patio beer.

The reality is much different, though. Millennials work longer hours and are more likely to hold full-time jobs than members of older generations. All that work tires them out, which may explain why they also sleep more than their older counterparts. These insights came from a 2019 Axios report that drew on data published by the U.S. Bureau of Labor Statistics (BLS). Millennials are surely different from previous generations —  but they definitely aren’t lazy.

Millennial Money Myth #9: They Are Enthusiastic About “Robo-Advisors”

Financial technology (“fintech”) has created a brave new world of digital personal finance tools. Robo-advisors, which are automated, AI-powered digital tools that provide money management suggestions, are one example. They are one of the purpose-built platforms that fintech bigwigs figured would strike a chord with the smartphone generation.

They were wrong, though. Robo-advisors have yet to post the kind of adoption rates that were expected. This suggests that millennials actually prefer talking to actual human advisors instead of interacting with their smartphones. Who knew?

Millennial Money Myth #10: They Aren’t Conservative About Their Finances

Millennials are often portrayed as free-wheeling spenders. They are reckless gamblers, eager to blindly throw their stimulus checks at the latest meme “stonks.” However, new research shows that a large majority of them feel negative emotions when faced with taking financial risks.

Research from C Space indicates the most common feelings millennials associate with financial risk-taking are “nervous,” “anxious,” and “scared.” Compared to Generation X and Baby Boomers, they also agreed with the following statements at the highest rates.

Looking at it that way — you could say the millennials are actually the most conservative generation when it comes to their finances. So much for those millennial money myths we keep hearing about!

The Bottom Line

Millennials have found themselves in a very unique set of financial circumstances. Their parents are the outdated Baby Boomers, who are often out of touch with the realities of today’s workforce and expenses. They have lived through multiple financial crises, while seeing the cost of housing and education skyrocket. Meanwhile, job security and wages have both failed to keep up. They may be jaded, sure, but they certainly haven’t thrown in the financial towel.

Millennials are still careful with their money. Multiple studies and surveys prove it. However, they prioritize their spending differently than previous generations. They would rather travel the globe than spend $25,000 on a wedding. They are okay with renting a condo downtown instead of buying a house in the suburbs. And they definitely don’t want to spend their hard-earned money on re-heated frozen food from Applebee’s. However, they don’t mind paying a few dollars more to get fresh meals from a local restaurant.

The next time you hear someone complain about this generation, keep these millennial money myths in mind.

Millennial money myths


Jim Greene


Jim Greene is a freelance writer based in the Toronto, Canada area. He has been writing professionally since 2001 and has an extensive professional background in consumer research, personal finance and economics.

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