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Millennials having trouble keeping up financially

A report finds it's a common problem for young people around the world

Photo (c) Diy13 - Getty Images
A report by British researchers has found millennials in the UK have fallen behind other generations economically, a trend that appears to be replicated across all developed nations.

The Resolution Foundation found people born between 1981 and 2000 generally have a lower standard of living than the generations that came before. The report focused on household income and employment trends to reach its conclusions.

"Overall, the pace of generation-on-generation growth in household income – a common benchmark of day-to-day living standards – has slowed across high-income countries," the authors write. "It is common for millennials who’ve already reached their early 30s to have experienced little or no income improvement on generation X."

Bad timing

Part of this economic disparity may stem from timing. The leading edge of the millennial generation entered adulthood and the workforce at about the time the economy nearly collapsed. The financial crisis of 2008 reduced job opportunities and began a period of wage stagnation. Those lucky enough to find jobs weren't paid as much as they might have been before the crash.

The housing market has also had an effect. Home prices have risen in the last decade as millennials have entered their household formation years. Those who are able to purchase a home have to use a larger portion of their income to pay for it.

The report focuses on millennials in the UK but notes the trend is evident throughout the developed world.

"Public concern about the living standards of young adults compared to those of their parents’ generation is evident across high-income countries, and our findings indeed point to many areas in which the generational challenge appears shared," the authors write.

The report shows that millennials in the UK and Greece have lost the most ground economically, but in other developed countries millennials, and even members of generation X, have real incomes that are little or no higher than their predecessors’ income at the same age.

Role of housing

In the U.S., millennials' economic struggles are most evident in the housing market. A 2017 report by Unison Home Ownership Investors documented the barriers faced by first-time homebuyers, largely made up of millennials.

While 77 percent of consumers agree that buying a home is a good financial decision, 41 percent identified scraping together the money for a down payment as the biggest hurdle.

Broken down by age groups, the survey found Millennials are most likely to worry about the cost of housing. Fifty-six percent worried about what a home would cost to purchase and maintain, as opposed to 47 percent of Baby Boomers expressing similar concerns.

Nearly 60 percent of Millennials reported rent and mortgage payments as a strain on their budget each month, slightly higher than their Gen X and Boomer predecessors.

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