More than other age group, millennials are more equipped to have funds available to use for unexpected expenses, indicating a generation weary and leery of debt.
According to a survey from Bankrate, 69% millennials were prepared to deal with emergency expenses by either dipping into savings or cutting back on spending, compared with an average of 61%. Among baby boomers, that number dips down to 56%, meaning that 13% of young people are better at dealing with unexpected financial responsibilities without going into debt than their parents.
Avoiding debt is a big priority for younger generations with lower incomes than their parents
The younger generations’ hesitancy to accrue additional debt may stem from both untenable levels of student loans and much lower prospects of paying them back. The millennial generation reportedly makes 20% less than their parents did at a similar stage in life, putting a significant damper on future prospects of easily handling accumulated debt.
Bernie Sanders famously campaigned on the promise of free college, capturing support from younger generations dreading having to shoulder a massive amount of debt for their education. As a result, Sanders captured the youth vote in the 2016 primary election by significant margins, garnering more under-30 primary votes than both Hillary Clinton and Donald Trump (the eventual Democrat and Republican nominees) combined.
Older generations may have no social safety net if younger workers don’t support them
While the younger generations learn to value managing their finances without debt, the government programs their elders rely on for support see a consistently insolvent future. Social Security faces a $10 trillion shortfall, which only promises to worsen without any sort of major overhaul in the system. This is further impacted by the younger generations’ lower incomes, meaning less funding coming from workers to support a growing population of retirees.