A Sneak Peek At The Months Ahead For My Generation

The fluctuating economy has had a large effect on the millennial mindset. Here are some of the overarching problems that permeate the generation.

Millennials are the most racially diverse generation in American History. They make up 23% of the total U.S. population yet 27% of the total minority population.With this racially diverse generation comes an equally diverse range of perspectives. But there are still many topics that resonate with millennials, especially when it comes to financial concerns.

Balancing debt load with employment expectations is one of them.

Credit unions can benefit greatly from knowing the perspective of the millennial generation. Here’s a guided tour into their mindset.

More people have access to higher education and are attending colleges in droves. According to the National Center for Education Statistics, Total undergraduate enrollmentin degree-granting postsecondary institutions increased 31% from 13.2 million in 2000 to 17.3 million in 2014. But the current national student loan debt amount sits at $1.2 trillion and many millennials are finding themselves drowning in student loan debt.

Compounding the stress of debt, the highly competitive job market has made it difficult for many millennials fresh out of college to find secure employment. According to a Business Insider article, Fewer than 39% of 18- and 19-year-olds are employed, down from 56% in 2000. As a result, debt that wouldn’t be a concern to someone with a secure job has become a major issue.

Homeownership, or the lack thereof, is another financial concern. According to a Washington Post article, Homeownership rates among Americans under age 35 are barely more than half the national number [62.9%], at just 34.1%. When finding a stable job to repay looming student loan debt seems outof reach, purchasing a home is out of the question. According to data from Goldman Sachs, 29.9% of millennials are still living at home with their parents. Millennialswho simply cannot afford to support themselves are moving back home with mom and dad after graduation.

Those who have the financial capability to afford a home and a mortgage face the challenge of securing a mortgage rate within their financial means. A short employment history, high debt-to-income ratio, and lack of credit or poor credit i.e.,credit score all can add precious basis points to a borrower’s loan rate. And even a small increase in rate can equate to thousands of dollars over the life of the loan.

Finally, what about the elusive credit score? According to TransUnion, 43% of borrowers between the ages of 18 to 36have a subpar VantageScore credit rating. According to a May 2016 NerdWallet article about the TransUnion findings, The biggest factorsin a good credit score tend to be low credit utilization, on-time payments, a long credit history and a mix of both revolving and installment accounts.

Millennials aren’t checking these boxes. According to TransUnion, they are using 79% of their available credit, whereas 50% or less is recommended. And instead of using a credit card, millennials are using cash or a debit card, which hampers the ability to establish credit.

These are just a few topics I plan to visit in the My Generation.

Mark Manicone writes the My Generation blog for CreditUnions.com. He is a student at the University of South Carolina in Columbia, SC. Contact Mark by email at mmanicone@creditunions.com.

February 2, 2017

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