Feb 9, 2025
If you’re a millennial — that is, someone born between 1981 and 1996 — there’s a good chance you’re wealthier now than your parents were at your age. But this wasn’t always the case. You got off to a slow start, and eventually caught up. Yet, it doesn’t feel like you’re doing that well. Why is that?
Millennials have often been criticized by older generations as lazy and entitled, taking longer to reach key life milestones. But the numbers weren’t always on their side.
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In a 2018 essay, the Federal Reserve Bank of St. Louis stated that “the 1980s cohort is at greatest risk of becoming a ‘lost generation’ for wealth accumulation” because the 2016 median family wealth for households headed by someone born in the 1980s was 34% (since revised to 38%) below what would be expected based on where prior generations were at the same age.
By 2019, millennials were catching up, but were still 11% below expectations. By 2022, however, their wealth was 37% higher than expected — and they haven’t looked back since.
In the five years since Q3 2019, the collective wealth of American millennials quadrupled from $3.94 trillion to $15.95 trillion, according to Federal Reserve data, and their share of the collective net worth of all generations increased from 3.7% to 10% over the same period.
Millennials don’t feel wealthy
Despite these gains, only 12% of millennials feel wealthy now, according to a Schwab survey. So few may feel this way because they haven’t arrived at their target net worth yet.
On average, millennials believe they need a net worth of $2.5 million to be wealthy but, as of 2022, the median net worth for those aged 35 to 44 in the U.S was $135,300. Another reason could be that many have “phantom wealth,” meaning they feel less wealthy than they are on paper because their net worth is tied up in illiquid assets.
The Federal Reserve Bank of St. Louis says a large portion of the wealth gains made by millennials has come from real estate. And housing prices, as measured by the S&P CoreLogic Case-Shiller U.S. National Home Price Index, rose about 53% over five years to Q4 2024.
They also have wealth tied up in stocks, bonds and retirement accounts such as 401(k)s. According to Fidelity, the average 401(k) balance for millennials was $62,000 in Q2 2024.
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Although they may have a decent net worth, many millennials — like many Americans — still feel economically insecure. They’re worried about inflation, the political climate, global conflicts, a possible recession and the potential for a reduction in Social Security benefits.
They’re also finding it harder to make ends meet after the inflation of recent years. Plus, illiquid assets don’t exactly help with paying the bills — so they do little to remove those anxiety-inducing feelings of economic insecurity.
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Dealing with ‘phantom wealth’
So, if you’re stressed about paying your bills — despite your (phantom) wealth — what can you do about it? Perhaps the best advice is simple: Spend less than you make.
Of course, this is easier said than done. But a good way to start is by tracking your expenses. There are several apps on the market that can help with this (your bank may even offer one).
By tracking your spending, you’ll get a better sense of how much you’re actually spending on things like takeout or streaming services.
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All of those small expenditures can quickly add up — and you may be surprised by how much you’re spending on them. Then, you can use that information to create a realistic budget.
But it will only be effective if you stick to it, so it’s important to find a budgeting strategy that matches your personality. Continuing to track your expenses can help determine if and when you need to tweak that budget.
If you’re still feeling financially insecure, you may want to consider looking for a side hustle or a higher-paying job to bring in additional income — though be careful not to fall for lifestyle creep, where your spending increases alongside your income.
Rather, put that extra income to good use, such as paying down high-interest debt (like loans and credit card debt) or saving for retirement.
Another way to build financial security is to build up your emergency fund (if you don’t already have one). Your emergency fund should be a liquid account, such as a high-interest savings account, with enough money to cover three to six months of expenses.
That way, if you lose your job or need to replace your roof, you’ll have easy access to cash to weather any unexpected expenses. You can also protect all of your assets with insurance, which can help you manage risk and guard against potentially devastating financial shocks.
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Vawn Himmelsbach is a veteran journalist who has been covering tech, business, finance and travel for the past three decades. Her work has been featured in publications such as The Globe and Mail, Toronto Star, National Post, Metro News, Canadian Geographic, Zoomer, CAA Magazine, Travelweek, Explore Magazine, Flare and Consumer Reports, to name a few.
