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Editor's note: This article originally ran on the personal finance blog Get Rich Slowly. It has been reprinted here with permission.
Last summer, I hung out with my brother on his college campus. He and his roommate live very much like typical college students — a fridge full of free food from my brother’s catering job, a hodgepodge of hand-me-down furniture, etc. Nothing terribly out of the ordinary with their lifestyle. They’re broke, but happy, twenty-somethings.
What I did find interesting was their view of money. They had a surprisingly frugal mindset and complained about the price hikes of everything from tuition to gas. They weren’t spending money on drinks every night; they were staying home and having fun for free or working so they could pay their meager rent but outlandish tuition. In short, my brother and his roommate definitely didn’t seem like the spendthrift, entitled and spoiled Millennials that I’ve been reading about recently.
(Side note: My brother says the word Millennial is annoying. But for the sake of succinctness, I’m going to keep using it in this piece. Sorry, bro.)
2013 was a popular year for the topic of Millennials and money. But up until very recently, all the stuff I was reading was negative. I’m guilty too. In a Get Rich Slowly post, I linked to an article about employment, and it ripped Millennials a new one. While I may have agreed with the sentiment of the article, I do think Gen. Y has unfairly been given a bad rap this year — they inherited a whole mess of money problems, and then they’re criticized for not having it together financially.
Here’s why I think Millennials might be better with money than others may be ready to admit.
A majority of them saved for college
Earlier this year, I was surprised to come across a Fidelity study that researched the money behavior of recent graduates and found that 85 percent of them contributed at least some of their own personal savings to their college tuition. And what’s even more surprising is that, of that percentage, 27 percent contributed more than $10,000. That beats what I saved for college: $0.
Millennials are paying their debts
A study from the Pew Research Center compared the debt of young adults with that of adults over the age of 35. In three years, (2007 to 2010), the median debt among the 35+ crowd dropped by 8 percent. The debt drop among Millennials? Twenty-nine percent. Six years ago, young people had nearly as much debt as older generations. More recently, they have about half as much.
But, sure, maybe trends and regulations in the past few years have made it harder on adults over 35 who own homes, for example. Maybe it’s gotten harder for older adults to pay off debt. Maybe it’s not fair to compare. But here’s an interesting stat that’s specific to Generation Y. According to PewSocialTrends.org: “ the share of younger households holding debt of any kind fell to 78%, the lowest level since the government began collecting such data in 1983.”
Experts say the drop has to do with Millennials continuing to postpone debt-inducing milestones, namely home and car ownership. But Pew found that there’s also been a significant decline in credit card debt among this generation.
“Younger households have pared their credit card balances. In 2010 only 39% of them carried a balance, down from 48% in 2007 and 50% in 2001. The median outstanding amount owed among younger households with balances has fallen over the decade from $2,500 in 2001 to $2,100 in 2007 and diminishing further to $1,700 in 2010.”
They’re sucking it up