As a generation, millennials are in a precarious position.
Now adults, leaders in the workplace, and parents, they’re struggling to weather economic challenges. They’re simultaneously trying to save for their children’s college while still owing student debt of their own. As their parents become elderly, they’re faced with potentially financing their care — all while trying to navigate the rising cost of housing and basic essentials.
For these reasons, it’s no surprise that millennials are experiencing a debt crisis. To learn more about millennial debt, the real estate education platform Real Estate Witch recently released a new study titled, "Millennial Debt Crisis: 90% of Millennials Are in Debt."
Here are 12 of the most important findings from the study that shed light on how millennials are dealing with crushing debt.
1. It’s not just mortgages
One might assume millennials are in debt because they borrowed money for a house, but Real Estate Witch found that a whopping 90% of millennials have non-mortgage debt. This means their debt consists of student loans, credit cards, personal loans, and more. Debt payments combined with the pressures of work, family, and other obligations contribute to overall financial instability.
2. Over half of millennials have credit card debt
Credit card debt is pervasive among millennials. Over half of them (57%) carry credit card debt, and the average balance is just under $8,500, up from about $5,300 in 2022. The findings indicate that the rising cost of living has millennials relying more on their cards to afford essentials and discretionary purchases.
3. Student loan balances are still high
Even though many millennials have been out of school for several years, 25% of them still owe money toward student loans. The average student loan balance for millennials is $56,538. This student loan burden has domino effects, making it difficult for millennials to meet other financial goals, such as saving for retirement, buying the house they want, and sending their own children to college debt-free.
4. Millennials love going out to eat
Perhaps it’s the fast pace of life and multitude of responsibilities that explain why 59% of millennials eat out at least once a week. Almost half (46%) buy alcoholic drinks at least once a week, too.
This is one category that millennials can focus on to free up cash and pay down debt. Buying a cup of coffee from a cafe every once in a while shouldn’t put consumers in debt, but a habit of impulse spending and purchases in several categories can.
5. Over one-third of millennials feel they’re at risk of bankruptcy
The Real Estate Witch data shows more than 36% of millennials feel they are at risk of bankruptcy because of their debt. This is alarming because bankruptcy can stay on a consumer’s credit report for seven or more years, making it difficult for them to achieve other financial goals, like buying a home.
Additionally, federal student loans cannot be discharged in bankruptcy except in rare circumstances, so if a consumer with multiple types of debt files for bankruptcy, they won’t be able to eliminate their student loan debt obligations.
6. Unexpected emergencies contributed to the crisis
Sometimes, major life events can derail your finances, especially if you don’t have a large emergency fund. Excessive medical costs are the biggest culprit when it comes to life events putting people in debt. Around 42% of millennials say a medical issue contributed to them going into debt, and 31% say a job loss contributed to them going into debt
7. Living paycheck to paycheck is common
Real Estate Witch's data shows 70% of millennials live paycheck to paycheck, including 74% of millennial women. This leaves little room for unexpected financial emergencies — or for budgeting for long-term financial goals. It also creates significant stress, especially in addition to family and work obligations.
8. Almost 100% of millennials have financial regrets
A staggering 96% of millennials have at least some regrets about their finances. The most common regret, cited by 51% of millennials, is wishing they had saved more of their income. Some other regrets include not investing their money sooner (32%), buying a home (13%), and having children (11%).
9. Day-to-day spending is a struggle
Everyone needs food, housing, and the ability to afford basic bills, such as water and electricity. However, the data shows over half of U.S. millennials (56%) struggle to afford bills, and almost half (47%) struggle to afford housing.
Although millennials do have financial regrets, which shows some ownership over their money dilemmas, they’re also facing an unusually harsh economy, which makes it more difficult to overcome existing financial hardships.
10. Women are disproportionately affected by the debt crisis
Millennial women are more negatively affected by the debt crisis than men. For example, almost half of millennial women (49%) can’t afford a $500 emergency out of pocket, compared to 37% of men.
The study also found millennial women have lower salaries and savings than their male counterparts, trailing men by about $15,000 in each category. Half of millennial women (50%) feel hopeless about their financial situation, compared to 43% of millennial men.
11. Millennials' income falls short of what they say they need
Millennials say they need about $120,000 to live comfortably, but the average millennial earns just under $75,000. That means millennials are only making about 63% of what they need to lead the lifestyle they want. Overspending to try to achieve that standard of living also contributes to high debt balances, particularly high credit card debt.
12. Millennials feel it’s impossible to live without debt
Many millennials feel they have to earn a college degree to achieve a desirable salary down the line. They also know that acquiring that degree often comes with tens of thousands of dollars worth of student debt. That may explain why 53% of millennials say it’s impossible to live debt-free.
Where do millennials go from here?
There’s no doubt millennials are in the midst of a debt crisis. It’s a complex challenge, derived from a mixture of stagnant wages, heavy student loan burdens, and the trappings of daily life — namely, raising children, affording rent, buying homes, and caring for parents who are getting older.
The findings above indicate extreme debt is not only a personal problem, but a societal one — an issue that requires solutions from policymakers, banks, educators, and millennials themselves.
This article originally appeared on Clever Real Estate.