Millennial slump Gen Z rises

#Millennials #gigeconomy #GreatRecession #Gen Z

A recent study from the St. Louis Federal Reserve reveled that the average net worth of a family headed by someone born in the 1980s is 34% below what is expected, largely resulting from the Great Recession.

The study also discovered that after the initial shock of the Great Recession, Millennials continued to spiral deeper into dept and many don’t own appreciating assets.

A combination of; credit card dept, student loans, low savings, lack of appreciating assets are contributing to a net worth that trails previous generations.

Listen, I love Millennials. Many of our staff are part of this demographic category. They are smart and competent professionals and I am confident they will persevere.

However, this group of people have been afflicted by some generational realities that have created some unique challenges.

Back in the 40s and 50s, America was strong. We railed in defiance of tyranny and struggled through adversity together. Everyone served and made sacrifices to uphold freedom and preserve democracy. World War II fashioned incredible resolve. Considering the people that endured the challenges of World War II also experienced the Great Depression, it’s easy to understand their tenacity.

At the same time, baby boomers raised a generation of kids insulated from adversity by parents that over compensated for their challenging childhood with a sense of privilege and entitlement. This isn’t an indictment; it’s love that drifted off course.

Rising wealth and affluence coupled with a cynical view of government and a life of sacrifice and hardship produced a generation determined to make life better for their kids.

The unintended consequence is a generation of children that had limited exposure to set backs, until the Great Recession.

The economic burn of the Great Recession coupled with a bursting real estate bubble, provided some massive financial impediments that many younger people weren’t prepared to navigate.

Millennials also fell in the love with the idea of having total flexibility at work and the freedom to work from whatever location they pleased. They also developed a cynical attitude about owning real estate or any possessions that compromised personal freedom.

There’s plenty of people on social media preying on this prevailing mentality by advocating you own what you rent and rent where you live. 

I am not convinced this is the best advice for every person in every situation. In fact, I argue your financial independence is predicated on a personal assessment of what constitutes stability and financial independence.

Owning a home for many baby boomers and their parents served as the primary source of retirement income. I am not suggesting that’s a smart idea.

I am a big believer in diversification and balance.

Owning a home in my opinion is a beautiful necessity, that can also serve as a smart investment. A place to live and raise your family. Establish some roots in a wonderful community and let your kids frolic with other children. However, assuming double digit property increases will be the impetus behind your retirement savings is foolish.

According to the St. Louis Federal Reserve study, the big problem for Millennials is high dept and low home ownership. After the economic setbacks of the Great Recession, Millennials have some formidable challenges.

Being hit by massive financial setbacks isn’t ideal during your initial earning years. Recovering from this setback can be intimidating, but it's not impossible. 

With the Social Security parachute scheduled to disintegrate in the next several decades, Millennials have some obstacles to overcome to achieve a comfortable quality of life in retirement.

I encourage Millennials to disregard all the negative sentiment hurled in your direction. Labeling people doesn't help them receive the support they need to resolve their problems.

I believe this generation will succeed. They have beautiful values that are often inconsistent with antiquated leadership. Good leaders accentuate these wonderful qualities instead of lamenting about their inability to "identify" with a generation they don't understand.  Understanding is your responsibility as a leader.

Timing is everything, especially when it pertains to real estate.

Unless you’re a dedicated real estate professional, dabbling in real estate isn’t a good idea as a tool to get rich.

Most Millennials agree that owning a home is in their family’s best interest. However, they believe making a good decision is equally as important. Many Millennials just don’t have the savings to justify a down payment.

Almost 6 out of 10 Millennials believe renting is better than owning based on their personal circumstances. This mentality has been incubated by personal experience and social media commentators that advocate owning a home is a bad idea.

Wrestling with the bursting real estate bubble of 2006 and the Great Recession can make your sphincter pucker up. I get it.

However, suggesting you shouldn’t own what you live in isn’t universal advice that's beneficial for everyone. Watch out for people that advocate formulas. They are full of crap. Individual circumstances should dictate each person’s financial choices.

Oh, recent studies indicate Gen Z will constitute 40% of all US consumers in 2020 and 32% of the global population. Ineffective leaders will finally have something new to complain about.

Steve Wohlenhaus - CEO Weatherology Author - Anatomy of Success Podcast Host - Anatomy of Success