There is no debate that many young Americans are struggling with unaffordable housing and rental markets. This has made the wealth-building process a much more challenging and daunting task for young people than for previous generations. This article will be dedicated to highlighting some of the challenges that young people face and proposing actionable solutions that most young people are implementing to make the process easier.
Young people are living at home for longer
Most people are cutting back on expenses, but young people, who can, have chosen to cut back on their biggest expense, housing. Staying with parents for longer has become the norm. A Pew Research study from 2020 found that 52% of Americans aged 18-27 are living with their parents out of necessity. Most major cities have had an expansion of “luxury” apartment complexes that command premium prices, and little to no expansion in affordable housing. Young people are opting out of living in "IKEA-renovated" apartment complexes and would rather give their rent money to mom and dad instead of corporate landlords.
Young people seek information to expand their financial literacy
The internet has become a great equalizer of information. Financial knowledge that was gatekept in the past has become more widely known. Young workers are using the time at home with parents to save and invest more than their boomer counterparts.
Young people are more conscious of spending
Many young people have figured out more doesn’t mean better and have opted out of expensive hobbies and turned to cheaper alternatives. Running clubs, hiking, biking, hangouts with friends and other recreational activities have taken the place of shopping and going to bars for many.
Young people are working multiple jobs
Gig work has become a side hustle for a lot of young people. People are taking up doordashing, ubering, freelancing, and other ventures on weekends and after their full time job. This combined with the ability to live at home has allowed them to make more than they would have just working a full time job.
Young people are living with multiple roommates
For some young people, moving in with parents isn’t an option. In HCOL (high cost of living) areas like New York and San Francisco, it’s especially normal to live with multiple roommates in order to reduce living expenses. As nationwide housing costs get more expensive, young people are living with more roommates for longer periods of time.
Young people are thinking twice about going into debt
It’s no secret that college has gotten insanely expensive. More young people are deciding whether or not taking on student loans is right for them. With a bachelor's degree becoming commoditized and more and more companies looking for specialized employees in our technology reliance culture, young people are seeking certifications or learning a trade.
What this means
The housing affordability crisis coupled with an insurmountable mountain of student debt has led young people to relentlessly cut costs and work harder and longer hours. Data backs up that most young workers are making less on an inflation-adjusted basis than their parents were at the same age as them. With housing prices at a multiple of 8x the median household income, young people are delaying their move-out date and postponing having kids. The younger generation is showing resilience and are making sacrifices in order to stay financially afloat.
