Huge Student Loan Debt
According to a survey conducted by the National Financial Capability Study (NFCS) in 2015, 45% of the millennial age group (18-34) currently have student loan debt. Among the baby boomers age group of those over 55, only 9% of them have student loan debt. It’s easy to try to dismiss that statistic by thinking that the baby boomers have had time to pay off their student loans, and many have. But, you have to look at also how college tuition inflation has hugely outpaced wage growth.
In 1970, according to Rita J. Kirshstein, Ph.D. a managing director at American Institutes for Research, the national average for yearly tuition was $348. Adjusting for inflation, that’s $2,153 in today’s money. And for 2016, the national average yearly tuition for a public universities was $9,650—some private universities can run north of $60,000 a year.
Add to that the increase in cost of living and you can quickly see how much more encumbered the millennial generation is by student loan debt than previous generations. This leads to a much different way of thinking about investing, renting versus buying, when to retire, etc.
Non-Linear Career/Life Path
The age of the internet has enabled us to digitally experience so many wonderful places on the planet. High Definition video has given us a window into the wider world. For some, this means they never have to leave the comfort of their home, but for many more it ignites a wanderlust. But like all things, the price has gone up and millennials are starting down traditional career paths right out of school with the express intent to cut and run after a few years.
Millennials leave college, mired in debt, with no delusions about what the workforce entails. Many are strapping on their 9-5 business suits while still bartending weekends and nights. They’re after cash to fund their next great adventure. They know they won’t be retiring at 60 or even 65. In all likelihood, they’ll be working till damn near 80.
This makes for a sense of urgency to see the world or put all that earned income into retrofitting a van and hitting the road. They know they can rejoin the workforce after exploring the world while they’re young enough to really enjoy it. And with their renting over buying mentality, they’re much more at ease with packing it all up and moving to wherever the next job lands them.
No Faith in the Stock Market
Every millennial has seen The Big Short. And they lived through “the Great Recession,” witnessing the wreckage the housing bubble caused to the baby boomers and their retirement investments. So for those on the upper end of the millennial age range, the Great Recession annihilated their financially formative years. For the younger portion, it blew their faith in investing money into a system they’ve seen collapse.
For those that haven’t lost faith, having enough money to properly invest is also an issue. Bankrate.com took a survey of over a thousand millennials and found that 48% said money is the main barrier to investing; 25% said they don’t understand the stock market; 11% think stocks are just too risky. These numbers show us that millennials aren’t going to invest their money in the same manner as generations prior. This mistrust of the system and lack of funds has a major influence on how financial companies will market to millennials and will ultimately lead to dire need for innovation in that industry.
So What Does it Mean?
Well, millennials are changing the way we communicate, the way we conduct transactions, and how finance and business will shift to accommodate them. The educational world is feeling the changes as four-year degrees are yesteryear’s high school diplomas. Certificates are needed to differentiate and beat out the competition.
Accountants can’t get by anymore with just a degree, they need to become CPAs, CMAs, EAs, and CFAs. A whole industry of test prep and review courses for such programs has sprouted and flourished to meet this new need. And that’s the biggest way Millennials are influencing business and finance, through entrepreneurial ventures that rise up to meet their specific needs.
Christine Sato founded the site cpareviewcourses.org - an online resource dedicated to helping professionals pass all four sections the CPA Exam on the first try. Seeing the growing need for students to get advanced certifications, Christine compared the Best CPA Review Courses of 2017 to help students fast-track their success.
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