Nearly half of US millennials live pay cheque to pay cheque

By Suzanne Woolley and Katherine Doherty 

Nearly half of millennials in the US say they’re living pay cheque to pay cheque, up 6 percentage points from a year earlier, a new survey has found. 

And with so little cash to spare, more millennial workers – those between the ages of 25 and 40 – feel they can’t handle an unexpected financial expense. Only 28% said they were prepared for the unexpected, down 4 percentage points from the prior year. 

The nationally representative survey of 1,174 people was conducted in October by the AgingWell Hub at Georgetown University’s Business for Impact, in partnership with Bank of America. 

The worsening outlook may be because young adults, who moved back in with their parents early in the pandemic, were moving out again when the survey was conducted and facing everyday expenses like rent, said Jeanne de Cervens, director of the AgingWell Hub. 

She also pointed out that there was an uptick in covid cases when the survey was conducted, which may have affected respondents’ optimism. 

Millennials are feeling crunched financially at just the age when previous generations would be hitting big milestones like getting married, having children, or buying a home. 

More student debt

Many carry far more student debt than their parents did, and the entrance of the oldest millennials into the job market coincided with the painful 2008 financial crisis.  

There are some emerging bright spots in the financial health of younger Americans. Thanks in part to programmes such as the US moratorium on federal student-loan repayment, unemployment compensation and rental assistance, millennials surveyed said they were making headway on paying off debt (44%), making and sticking with a budget (33%) and raising their credit score (43%). 

However, just 30% are taking steps to save for retirement. 

And only 32% of millennials said the statements “I can enjoy life because of the way I am managing my money” and “I am securing my financial future” described their situation in 2021 either completely, or very well. 

Despite federal relief and other efforts to lessen financial stress during the pandemic, “everyday living expenses have continued to increase,” de Cervens said. 

Millennials also sometimes rely on their parents as a “family bank,” but financial stress affected the amount of support their families could provide, according to Surya Kolluri, managing director in Bank of America's retirement research and insights group.  

“Very few young adults said they talked to their parents about money and had very little understanding of what their parents’ financial situation was,” de Cervens said. 

Attitudes about the financial future were more positive among racial and ethnic minorities and male millennials. 

While 48% of all millennials said they lived pay cheque to pay cheque, just 29% of Asian millennials said that described their situation well. 

And while 39% of all millennials surveyed think they’ll enjoy a better life than their parents, that percentage jumps to 43% among men, 52% for Black/African American millennials and 47% for Hispanic/Latino millennials.  

Millennial women see more financial obstacles ahead. Just 29% said they had money left at the end of the month, and only 21% agreed that they could deal with an unexpected major expense. For men, those percentages were 42% and 35%, respectively. 

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