Why Can’t Our Generation Save Money?


It’s no secret that Johnny and I enjoy talking about our generation of millennials and all our “issues,” such as why our generation’s still mooching off our parents. We read another discussion-worthy article recently that we wanted to share.

The article poses the question Why aren’t millenials saving any money? The author shares a startling statistic — that adults younger than 35 have an average yearly savings rate of -2 percent. Ouchh. And that it didn’t used to be so bad. In 2009, that number was at 5.2 percent. So what happened? Why are we now saving negative amounts of money?

The author blames student debt, a skepticism of banks, and a lack of financial education. She also mentions that our generation tends to be fairly open about our financial standing since we’re all faring pretty poorly (literally) in that area of our lives.

I completely agree that our generation tends to be more open about our finances. But I don’t think it’s because we all know we’re collectively doing horribly financially. Rather, no matter whether we’re doing good or bad, we talk to each other about it because we know we’re all trying our best at something we have no clue about. Every couple Johnny and I know wants financial security and independence, but none of us were taught how to get there.

And I think that’s the big reason for our collective -2 percent savings rate, too. No one taught us how to manage money. If I asked ten random peers on the street whether they got a financial education growing up — either in school or home — I really think at least nine would say “no.” I’m not sure why we weren’t educated, but I’m pretty fed up with kids growing up without any financial know-how whatsoever. If Johnny’s ever a politician, my fun little wife side platform will be getting kids a financial education in our schools. But that’s a whole other topic for another day.

Johnny thinks it’s a bit more complex than financial ignorance. He blames it mostly on college tuition being at an all-time high, resulting in much of our generation drowning in student debt. He also attributes it partially to the horrible job market we were all met with when we graduated from college.

And it’s probably a combination of all those factors, or maybe there’s a completely different issue we haven’t thought of. We’re not sure. But we want to hear what you guys have to say since many of you are sure to have some great insight. So what do you think? Why on earth is our generation averaging a -2 percent savings rate each year? At what age do we snap out of this terrible statistic, and how do we help the next generation avoid our same mistakes?

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  • Reply TT December 15, 2014 at 7:26 am

    I’m with you in the education camp, and I’d throw in there the willingness to to say to ones self “I can’t afford that.” I think the student loan debt problem is rooted in a lack of education. Kids don’t grasp what they are signing up for when they get those large loans. It blows me away that we don’t have personal finance classes in High School.

    • Reply Joanna January 4, 2015 at 1:02 am

      Totally agree. Looking back on when I got my student loans as a freshman, it’s scary just how naive I was about it all. A high school personal finance class is something kids would actually use for the rest of their lives, unlike most of the other required courses!

  • Reply Petrish @ Debt Free Martini December 15, 2014 at 7:45 am

    I think its a combination of our parents not teaching us about money and the culture that you will always have time to save. Well my mindset has changed for the better and money matters are a great subject for kids. In fact the earlier they learn the better financial fit they will probably be once they become adults.

  • Reply Madeline @ CBC Blog December 15, 2014 at 8:29 am

    I work in a high school (in Virginia) and recently they added the requirement that every student must take a finance class to graduate. At least it is something!

    I do think that our generation has no patience for delayed gratitude- we are used to things getting faster and faster- information at our fingertips and we want everything now! I also feel that not many parents say no to their children enough. If you can have everything you want every time you want it, saying no to yourself becomes hard.

    It is definitely a problem though. If we are saving a negative amount that does not bode well…

  • Reply Jayson @ Monster Piggy Bank December 15, 2014 at 8:48 am

    I am part of this generation. I believe it’s because of the temptations out there like the clothes, technology, peer pressure, and influence of media. What we just need I believe is a boost advice from parents, teachers, and others like TV, radio, internet, and so on. We need help to increase our knowledge on how to value and to save money.

  • Reply Carla December 15, 2014 at 9:23 am

    Because they don’t want to? lol! Too much “cool stuff” out there and everyone wants “instant gratification”. I wasn’t taught how to save $$ or budget when I was a kid, (I REALLY hate the “my mommy & daddy didn’t show me how to excuse) and I still have a nice chunk of change in the bank. People tend to “live for the moment”, future be damned. Until people realize that they have to take responsibility for themselves, they won’t.

    • Reply Joanna January 4, 2015 at 1:05 am

      I agree only to a certain extent. The problem is that kids are getting into thousands and thousands of dollars of student debt at the wee age of 18. Looking back on how naive I was back then, I really can’t blame them… someone should have prepared them better. They are mere kids being faced with very adult financial situations. And then when they have learned the hard way, they’re stuck paying off those loans for the next 30 years.

      • Reply Timon Vinke February 25, 2015 at 5:45 am

        Hi Joanna,

        I came across your article as I was searching for reasons why people don’t save. I see all around me here in the Netherlands the same lack of saving and planning for a financial future as you observed.

        Reading about the Student Debt I must admit that in the Netherlands the situation is not that bad, as tuition is not so high. However, just last year students did have to repay a much larger portion of the study cost, so unfortunately also in that respect we are following in the USA’s foodsteps.

        Thinking about what you said, that you didn’t know exactly what you signed up for when taking the student loan I wonder what the alternative would be. One alternative would be not to do the study, which most likely greatly influences your future earnings. Another alternative would be to work your way through collega. I don’t know whether that is feasible or not.

        I think the root cause is not where you started of with. There are people with debts that do repay them and go on having a good financial life.

        I think the root cause has more to do with the attitude towarths saving versus spending it now.

        What do you feel is the root cause?

  • Reply Mrs SSC December 15, 2014 at 9:25 am

    I totally agree that it is financial illiteracy! At least, that is what I have seen as the root cause from my peers. Plus, I think that for some reason, lots of people are scared of math, and finances fall into that scary math category. I also think that a smaller part of the problem is just a general complacency… that many people grow up in a situation where money is tight, so that is what they are used to, and that is what they think is ‘normal’.

    Honestly, after we FIRE, one of my plans for my free time is to start teaching financial literacy to kids.

    • Reply Joanna January 4, 2015 at 1:07 am

      Haha, I was totally scared of math until Johnny came into my life. I hated that aspect of personal finances. And I agree that the situation you grew up in really affects the standard you set for yourself.

      And it sounds like you’ve got a great plan ahead of you!

  • Reply Meg December 15, 2014 at 9:30 am

    I don’t want to place blame either on educators or on parents, but I do think that it has at least as much to do with the culture of parenting as with a lack of codified financial education in schools. Parents don’t say no often enough (or, more specifically, “no” with a reason rather than “no, because I said so.”) Parents believe that it is their responsibility to do and provide everything for their children, when parenting is about teaching our children to live well without us. I think it may be even more of a quiet, unvoiced fear: If our children can do it themselves, then why do they need parents? January’s issue of Real Simple had a great article on introducing financial concepts to children, from age 4 and up. From my experience, all I can say is that my peers who had less, even when it wasn’t because their families couldn’t afford more, have had more success in life, both financially and otherwise.

    • Reply Joanna January 4, 2015 at 1:10 am

      I think your explanation is spot on. I’ll have to look into that Real Simple article… sounds super interesting! Admittedly, as much as I preach teaching financial literacy to your kids, I am kind of clueless as how to do it with our own!

  • Reply Cate M. December 15, 2014 at 9:32 am

    I do think that the high cost of tuition is a factor leading to an increase in student loan debt. I also think that for some people it’s just a matter of wanting to go out and have fun rather than put the money away. I have friends living with their parents who drive new cars and go out almost 4-5 nights a week either to eat, have coffee, go to a movie, or whatever. They are almost 30. It’s nauseating to see them do that and I constantly think to myself “Are you EVER going to move out on your own?” and “How can you afford that?!”
    My husband and I work hard to save what we can but we are a part of the statistic of people drowning in student loan debt. We have become very familiar with the phrase “We can’t afford that right now” and eating grilled cheese sammies.
    When I was in elementary school we had a program called Junior Achievement and it taught us a little bit about money but I was in 5th grade…I have retained nothing from that program besides the fact that I took it. High School aged kids desperately need to be required to take a finance and budget class to give them a wake up call while they still have a chance.

    • Reply Joanna January 4, 2015 at 1:13 am

      Agreed… there isn’t any one explanation. There’s certainly a number of issues. I think for the most part, our generation is trying their very best like you and your husband. In the end, you will both be much better off than any of your peers who are still living the easy life… it will catch up with them eventually.

      And I think it was 7th grade that I learned how to balance a checkbook in home ec! That’s the only financial education I got in school, haha!

  • Reply Kasey @ Debt Perception December 15, 2014 at 9:37 am

    Personally, I’m not saving because of student loan debt. 100% of my puny (and vastly underpaid) paycheck goes towards my student loans. I’ve been paying for about 5 years and probably still have 20 more years to go.

    I think a lack of financial education is broadly to blame. But so is college tuition. Maybe if financial education courses had been given in High School, we’d see less people with massive student loan debt?

    • Reply Joanna January 4, 2015 at 1:14 am

      College tuition rates are a huge problem, I agree. Something’s gotta give on having more affordable options for college. It has gotten downright ridiculous!

  • Reply B December 15, 2014 at 9:41 am

    I remember in highschool we had to take a finance course to graduate, but from what I remember, we learned out to balance a checkbook and to do our basic taxes, nowhere in that class that I can remember discussed the basics of personal finances(saving accounts, retirement, etc). I think our generation is more focues on going out having fun, buying the best of the best and not really caring what happens in the future. I could almost guarentee most of my social group doesn’t have an efund or even know what that is.But they sure do know the best resturants/bars to go to.

    • Reply Joanna January 4, 2015 at 1:20 am

      I think the culture of our generation can be very much like you described… and I think one problem is that it isn’t expected for us to grow up until around age 30. By that point, many of us have so much debt that we’re doomed. We’ve gotta get back to taking on responsiblity as soon as we enter adulthood.

  • Reply Karen B December 15, 2014 at 9:55 am

    Expectations are higher and technology is expensive. I’m in my forties, was a teenager in the 80’s and went to university in the 90’s. I did not have a laptop computer, cell phone with monthly plan, take out coffee, etc that is part of cultural norm now. When you are a single, couple or have really young kids, (you can buy young kids any cheap plastic thing for Christmas!lol and they will love it) that is the time to save hard to get ready for your future self and life. At age 12 my son was the only kid on his hockey team without a cell phone and he was out of the loop with things because he couldn’t keep up with the texts, jokes, conversations, where to meet, etc. As a parent, it is the feeling of wanting your child to not be dependent on others or ask to borrow their stuff or accidentally not being included and maybe millenials find this with there own groups of friends. It’s not the actual money but it’s keeping up with the new expensive social norms that is difficult for many. My kids sports and activities probably cost us $1000 month. (One kid in particular is in a high level competitive sports program). I am so glad I was a good saver when I was younger, I only wish I did better. I think I could have saved more and still traveled and had a fun lifestyle with little sacrifice.

  • Reply Little House December 15, 2014 at 9:58 am

    I definitely think it’s a combination of student debt, a poor job market, lower wages (wages just aren’t keeping up with the cost of living), and poor financial education. I’m part of the GenX generation, just a few years older than the millennials, I’m able to save a small portion of my income, but I really have to work at it and budget for that savings amount. I also experienced zero financial education when I was in school, I have a hefty student loan that I’ll have to pay off next year (went back to school for 2 credentials) and cost of living is out pacing our income (the school district I work for hasn’t given their teachers a raise in 8 years.) All I can do is continue to keep track of our expenses and income and find ways to cut costs and increase income. But at least I’ve learned how to do that!

  • Reply Disa December 15, 2014 at 10:49 am

    I completely agree with both of you. If I was taught about how to manage money in school, I wouldn’t be starting off saving so late. I also think because of student loans it makes it harder to save. I definitely wish I was taught a crap load of financial education in school. It would have been nice to actually be financially prepared before we graduated.

    • Reply Joanna January 4, 2015 at 1:23 am

      I know. I don’t know why it’s not more of a priority in our schools! It totally baffles me. Currently, it’s completely up to parents to teach their kids, and that’s not happening much either!

  • Reply Cindi December 15, 2014 at 11:02 am

    As a parent of two 30+ year old daughters: I ‘forced’ them to work at the age of 13. They did babysitting, dog sitting jobs, etc. By the time they were 16 both were working as ‘bus help’ in local restaurants (cleaning tables, throwing out the garbage). When they were 18 (and waitresses) I made sure they got their own checking accounts and were personally responsible for them. They were allowed to keep 50% of the money they earned to do as they pleased, the other 50% went to pay 50% of their private tuition (their father and I paid the other 50%. now divorced). They paid for their own cell phones, car insurance (I bought them used cars) clothes, makeup, whatever. There only was so much money coming in and we all had to make choices on how the money was going to go out. We had annual family budget meetings every September. Since education was paramount, our pooled money went towards education, which meant they always wore clothes from thrift shops and everything else had to be bought on sale. Yet, we still managed one family vacation every February (Florida or the Caribbean). That was ‘our family time’. Non-negotiable.
    My daughters were supposed to go to state universities, but after a year or two, they wanted private colleges. I only had enough money saved to afford state, so they took out student loans to make up the difference. And continued to work every summer as waitresses. They paid their own way. My youngest even won a scholarship but chose a more expensive college for a specific career goal ($30K a yr vs $9K a year). Needless to say when they both graduated, they easily earned six figure salaries. Never once did my daughters ever ask me to borrow money. Yet, I put down their deposits for their first apartments as graduation gifts. And I loaned my oldest her down payment for her first condo purchase (she pays me back dutifully every month, on time.)
    Never once did any of us ever come up with blame or excuses. We just did whatever we had to do to succeed. We don’t blame politicians, government, policies, job market, low wages NOTHING on our road to success. Whenever we hit a speed bump, I told my daughters to ‘find another way through the maze’. And they did. Both daughters have survived every single budget cut back, lay off, credit squeeze, yada, yada, yada. No excuses!
    The reason why I am attracted to this blog is because my youngest, after 11 years at her career, working & living in mid-town Manhattan ($4000 a month rent), and with an 18 month daughter, has thankfully, finally, moved out of New York City. Told her boss to take his job and shove it, and has ‘retired’ at the age of 33. She has saved enough money to afford her such freedom. She’s off on another career pursuit (or not at all). She has that luxury. Ditto for my other daughter, who, after 12 years, also gave the finger to Corporate America, went out on her own, did a 180% career change and is now a famous photographer.
    Stop blaming anything or anyone for your current lifestyles. It takes guts, sacrifice, determination and hard work to make it in this world. And you must have the ability to say ‘no’. No to your peers, no to trends and doing what the ‘in’ crowd is doing. And you also have to have goals. You have to envision what your end result is. And then you move towards that goal and do whatever you have to do to achieve it. Period. There is no magic pill.
    I wish all of you much luck. My condolences to this blog author who just recently moved into NYC. You have no idea what you are in for. NYC has changed MUCH over this past year. My daughters couldn’t get out of the city fast enough. And watch your child like a hawk! Don’t take your eyes off her for a micro second.
    OK, this mother has spoken.
    I only wish you guys the best.
    Good luck.
    God bless.

    • Reply Joanna January 4, 2015 at 1:28 am

      It sounds like you were a great teacher and example to your girls. I’m sure having a mom like you is partially to owe for how successful they’ve been!

      We are being very careful in the city and have chosen a safe neighborhood for our little one. Thanks for your words.

  • Reply Jim McMahan December 15, 2014 at 11:13 am

    Great topic for discussion for millennial in addition to my generation which was born in the 60’s. I am at the tail end of the baby boomers that benefited from the “greatest” generation which was post depression era.
    First a history lesson, as I believe we are all products of our environment and I want to share the depression era environment which my parents were born into.
    My grandparents were products of the depression era so I saw firsthand how that shaped their lives and perceptions of savings.
    They saved every penny they could, they were not just savers, they were penny pinching misers who were frugal to a fault. I could not understand why they were so cheap!
    Behind their modest shotgun house they had a vegetable garden, fruit trees, grapevines and a strawberry patch to help sustain them during lean times when they had no money for food. My grandmother’s basement was filled with mason jars filled with preserved fruits, vegetables, jams and jellies. Once again I didn’t understand and only until I became a father how expensive feeding an entire family really was.
    My parents’ generation used those personal and financial traits to mold them into savers and providers without establishing debt. They saw first-hand what living in debt could do to a family and a nation. Again, I didn’t understand why debt was so bad because everyone in my generation was creating debt, hell; we received multiple unsolicited credit cards upon entering college, right?
    Now I am almost 50 years old, my children, who are 12 & 14, they each have I-phones to stay connected to us (and their peers) and lap tops to support their education, my 14 year old is asking for a car as she is aging into the driving years and the a reality is their immediate requests for the latest clothes, technology and whatever else is being purchased by their generation is driving the narrative. My point is it affects our financial bottom line and saving for their post high school education is getting increasingly harder and shorter.
    We try to teach them to be savers and the youngest is a saver compared to her older sister who may have $5 left in her wallet. But they have no idea what it really costs to be independent and self sufficient. I am creating the 2015 McMahan financial analysis for all of us to participate. I have documented our spending habits for the last three years and have found glaring examples of waste and a lack of savings. It’s tough to save especially when you don’t understand where it all goes and what we are saving for.
    I challenge everyone / anyone who wants to change their spending habits and become savers to analyze where every penny is spent for 2015. This will guide you in understanding where you are and will allow you to better understand what it will take to move the needle towards savings.
    As to why we don’t teach “savings” or “understanding our financials” in school, I’m not sure but I do know it is needed. Let me ask this question, does anyone know how to calculate your credit score?
    Please use my narrative as starting point for alternative solutions and I’ll check back later for additional commentary. Thanks for your time and I apologize for the lengthy post.

    • Reply Joanna January 4, 2015 at 1:32 am

      It sounds like you’ve got a great plan for 2015! Johnny and I just did the same for our 2015 year, and it’s a huge relief to have everything budgeted out. We’ll do a post on credit scores soon, but in the meantime, you should look into creditkarma.com… we use them, and they’re totally free. Thanks for your thoughts!

  • Reply Nalani December 15, 2014 at 1:05 pm

    I think it’s student loans (working on paying off my 169k law school loans). We will be done in a year. My savings rate is terrible because of my huge payments. Once they are gone our household savings rate will be 50%, but there were still a couple of years of nothing.

    I think it’s also keeping up with the Joneses, especially with social media out there. People see others in our age range and think, they can buy X, why can’t I? I deserve it! Out come credit cards, car loans, etc. Some people are just content with monthly installment payments of >7% interest…

    • Reply Brittany @ Fun on a Budget Blog December 15, 2014 at 11:36 pm

      Totally agree with the constant pressure to keep up with the Jones’s. I think a lot of people accept debt as a way of life for the rest of their life in order to have material things—the bigger question is why.

      • Reply Nalani December 16, 2014 at 8:55 am

        I think it’s about the expectations we have growing up. No one complements people on their introspection, kindness to others, learning to be happy without lots of stuff and just generally not buying into “stuff!”. The people that get complements and are popular/envied are people with stuff.

        Generally they already have money one way or another, but we don’t see that. We just see the outcome and the only way most people can get to that income without a trust fund or serious parental support is with credit. And since they are doing it that way, they assume that’s the way other people must be doing it, so it must be normal!

        I mean a question would also be, why do people think that carrying a balance is good for your credit? Or that you need to take out a loan to build credit? It’s a mix between wanting stuff, not knowing how to pay for stuff by just not buying and saving and terrible financial knowledge.

    • Reply JGB December 31, 2014 at 5:42 pm

      Do you mind sharing your strategy for paying off your law school loans? I’m in the same boat.

      • Reply Nalani December 31, 2014 at 10:59 pm

        Sure, it’s nothing spectacular, increase income, spend less. 80% of my take home pay goes toward student loans. I pay for my youngest’s daycare, kids activities and about $150/mo for me to spend on whatever I want. We have not gone complete bare bones and part of that is because we live overseas, which was one of the reasons we’ve been able to be so aggressive in our debt pay off.

        We do pack our lunches everyday, have a dinner out maybe once a month, buy clothes on sale maybe once/year, I don’t buy makeup/cosmetics, get my hair done maybe once every 2 months for $50. Still our rent is 20% of my husband’s income. That’s just a fact of living here, where livable, safe places require that expenditure, especially with kids.

        Increased salaries, almost tax free income, has made it worthwhile for us to live away from family. The tradeoff is that we do end up spending money on travel more than we would in the US because we need to do it to actually see family. While most people are jetsetting all over the world on pretty spectacular vacations 3x/yr, we have gone to see family and stay with them to keep costs low.

        • Reply JGB January 2, 2015 at 9:54 am


    • Reply Joanna January 4, 2015 at 1:34 am

      First, congrats on being only one year out from having your loans paid down! Well done. You’re totally right about social media… I didn’t even consider that. Now success is all about how we present ourselves, rather than reality.

  • Reply Newlyweds on a Budget December 15, 2014 at 1:32 pm

    I do think it is a combination of things. Student debt being a big one, plus life is just expensive. Most people need a car to get to work, and cars are expensive, on top of student loan payments, cell phone payments, insurance, and your crappy entry level job. doesn’t pay very well. I’m glad we sacrificed a lot early on so we can enjoy our financials now

  • Reply Melanie December 15, 2014 at 1:35 pm

    I love reading everyone’s comments on here. They prompted all my thoughts.
    * I definitely had no clue on loans or really how to fathom education costs as an 18 year old. I talked about this with my parents the other day and they were defensive like “Well, why should you know? We didn’t want to stress you out. Or you had no idea how to interpret that.” My ex was a college professor and taught a “Student Life 101” class and showed his freshman students if they’re taking out X in student loans, you’ll owe Y. He said they were SHOCKED and had no idea what this all would mean in the future.

    *Regarding education in schools, I heard Dave ramsey say his financial tools are in 25% of schools now. So thats good to hear!

    *I also think many of our parents had pensions as commonplace when they were young, so they were never taught to save starting in their 20s, for 35 or 45 years for retirement. So, they probably didn’t know to how to instruct us on retirement savings when they weren’t really taught it either.I believe (but I may be wrong) saving for retirement has never been more advertised than ever before…perhaps as pensions die off more everyday.

    *Also, remember layaway? Seems like the idea of saving for a purchase is a thing of the past, with credit cards and such. (I love my credit cards, but pay them off each month like you OFBers).
    *ts also a sense of entitlement, myself included. “I grew up going on vacations, so I NEED a vacation.” Certainly a personal weakness of mine.

    *Interestingly, as a 29 yr old, my Grandma is of the Depression era, and my parents are now in their late 60s (born post-Depression). Where my Grandma truly embodied scrimping and saving, my parents lived more carefree with vacations each year, restaurants, nicer purchases, etc. Now Im somewhere in the middle, more of a saver than my parents, but not quite so much as my Grandma. I bet our parents/grandparents generational differences matter a lot too.

    *I didnt “get into” personal finance until about age 27, starting with Dave Ramsey. Imagine if I had sooner… but on the flip side, thank God I did at that age!!!!

    There’s my many thoughts!! 🙂

    • Reply Joanna January 4, 2015 at 1:40 am

      Great thoughts! Thanks for sharing!

  • Reply Ashley December 15, 2014 at 1:40 pm

    I just started reading your blog last week, I love it! It’s fun to see people that are around my age talking about money related topics. I am a family finance major, but some of the things you two have talked about I’ve honestly never even thought of before, like paying for insurance while being pregnant and having a baby (I’m not a parent yet).

    Anyway, I think the reason people in our generation are so bad at saving money is that they may not know what vehicles to put their money in. Sure they may have a savings account at their local bank with a really low interest rate or they have heard of stocks and bonds, but nobody shows them HOW to research and actually open an account. Which, is probably just a result of no financial education or poor financial education. I took a financial literacy class in high school but it wasn’t the greatest…

    • Reply Joanna January 4, 2015 at 1:42 am

      I think you’re spot on, Ashley. There’s so much to learn, and yet no one is telling us we need to learn this stuff!

  • Reply Valerie December 15, 2014 at 2:05 pm

    I also think health insurance costs are partly to blame, as well. Between student loan payments and health insurance premiums to keep yourself from declaring bankruptcy at the first sign of medical issues, you’re eating up a huge chunk of your salary before addressing any other spending.

    I found this article from the Washington Post to be really interesting: http://www.washingtonpost.com/news/get-there/wp/2014/09/18/why-do-gen-xers-make-more-but-have-less-than-their-parents/.

    • Reply Joanna January 4, 2015 at 1:44 am

      Very interesting article. Thanks for sharing! And I think you’re right… several necessary expenses, especially student loans and health insurance, have gotten out of control. Something’s gotta give with both of those!

  • Reply EcoCatLady December 15, 2014 at 2:15 pm

    Big question you pose there… Speaking as a Gen X-er I am blown away by the way your generation has been coddled throughout your entire lives, and I think it has led to an unreasonable level of expectations regarding how you should be able to live.

    In a certain sense, my generation grew up with absentee parents – we were latchkey kids who had to take responsibility for our own lives on a daily basis. We had to get ourselves to and from school, we didn’t have parental chauffeurs hauling us around to a pile of activities, we had to make our own snacks, create our own entertainment, yadda, yadda, yadda. We enjoyed a level of independence that would be unheard of these days, and while I sometimes resented my parents lack of involvement in my life, it also fostered a sense self sufficiency that I don’t see in younger generations. And I think that colors everything.

    I mean, I had my first job in the 5th grade – a paper route. And from that point onward (until I reached financial independence) I always worked. While my parents did support me with some meaningful gifts throughout my life, I just never had the expectation that any person or institution would “take care of me” financially. I mean, as a kid my parents would buy me clothes, but not fashion. If I wanted anything but the basics, I had to buy that myself. If I wanted to go to the movies I had to pay for it, if I wanted a bike or a skateboard I had to save up for it, if I wanted to buy lunch at school rather than make myself a sack lunch I had to pay for it… and on and on and on.

    But the expectations go far beyond that… I mean younger generations seem to expect that they should all be entitled to go to college, and get a pile of advanced degrees – hence the ridiculous student loans. I mean, I had about $15K in student loans from my undergraduate degree (which I think was about the max you could get at that point), but I had them paid off before age 30 (this having never made more than $15K/year at that point).

    And don’t EVEN get me started on lifestyle issues. When I graduated from college I didn’t know ANYBODY who could afford their own apartment. We had roommates, or rented a basement somewhere. An answering machine was a luxury, as was a television, as was eating out. There was just an expectation that you had to work your way up in life.

    It even applies to jobs – the sorts of jobs kids expect to be able to get right out of college just boggle my mind! Most of my generation started out with REALLY basic entry level positions right out of college, with really basic entry level salaries. When I hear about kids these days making $75K with their first job and still having trouble making ends meet, I’m totally floored! I’ve never made that much money in my entire life!

    So I dunno – I suppose you could call that sort of upbringing a “financial education” but I think it extends way beyond finances.

    • Reply Joanna January 4, 2015 at 1:56 am

      Agreed that your generation was probably taught to be much more self-sufficient than ours has been. But while many of us may have been coddled, just as many of us haven’t been (as can be seen in some of the other comments).

      And as far as student loans go, even if you’re just getting your undergraduate, it’s easy to go into a TON of debt now… tuition prices have skyrocketed.

      You make some great points, but I do think you’re being a little harsh on our generation! 😉

      • Reply EcoCatLady January 6, 2015 at 2:46 pm

        Probably true, I am being harsh – did I mention that I walked to school in blizzards and that it was uphill both ways? 🙂

        I actually didn’t mean to point my criticism at your generation as much as at your parents and at society in general.

        I think the out of control “fear-based media” has a LOT to do with why your generation was allowed so much less independence than previous ones. And don’t EVEN get me started on how your generation was taken advantage of by the giant marketing machine from the moment you were born – the way they pray on children is just out of control these days, and I’m sure that being steeped in that from day one has an impact on expectations etc -both for you as kids and for your parents. Plus, y’all grew up in the era of deregulation and out of control capitalism – leading to less college savings by your parents, higher tuition & ridiculous student loans.

        Anyhow, just wanted to clarify that I don’t think y’all are slackers, I just think that society has gotten out of control, and people have become much more “sheep-like”. So these days one really has to “buck the system” in order to do what was just “the norm” for previous generations.

        • Reply Joanna January 12, 2015 at 10:20 am

          Totally agree. The way society has changed in general has really affected our generation. And it’s true… hard work isn’t the norm our generation as much as it was for others. Great thoughts!

  • Reply Miranda December 15, 2014 at 2:24 pm

    I agree with everything you wrote. I sort of think of it as the Trifecta of Crapdom. Rising education costs collided with a lack of financial literacy and a limping economy. Take away anyone of those factors and I don’t think we would be sporting that glorious -2% savings rate. Perhaps it wouldn’t be much better, but I’d at least like to think it would be on the positive side of zero. At the end of the day, I do think we are in a better position than older generations. Many of our parents and grandparents had to drain the savings they did have (if there was anything left after 2008), come back into the workforce, or delay retirement even further than expected (some permanently). Not to say that we don’t need to get on top of our mess and save some money, but when put into perspective, time is on our side. We just need to pretend that it isn’t. Also, sounds like YOU should be the one to go into politics. Need a campaign manager?

    • Reply Joanna January 4, 2015 at 2:00 am

      Yes, you are so right. While we were hit hard in the beginning, our generation has lots of time to make up for all of that. And I sure hope we do! A -2% savings rate is kind of embarrassing!

      And yes. Joanna and Miranda 2040. Has a nice ring to it!

  • Reply Kristin December 15, 2014 at 2:34 pm

    I think student loan debt is a big part of it for many people and health insurance is surely expensive, but there are also spending choices the late Gen-X’ers and Millennials make, that they don’t even realize are optional. Like internet & cable bundles, satellite radio or other digital music subscriptions, and huge cell phone plans. These didn’t even exist for our parents’ generation and still aren’t necessities now, but many people think they are! Say those total $200/month… that would have been 8% of my entire monthly take-home pay when I was single & working. Can we squeeze out a few percentage points? Yes, easily.

    • Reply Joanna January 4, 2015 at 2:01 am

      Yes… there’s so much that’s seen as a “necessity” by our generation that is really just a spending decision. Our generation can be doing much, much better than we are!

  • Reply Nicole December 15, 2014 at 3:26 pm

    Great topic! I have a lot of thoughts but don’t want to write a novel, so here we go:

    1. Sense of entitlement/”Keeping up with the Jones” mentality. I think the Internet/social media plays a huge part in this- Facebook, Instagram, blogs, Pinterest, etc all give an unprecedented glimpse into other’s lives. 20 years ago the “Jones” were your neighbors. Now they are the entire world, literally. It’s hard not to be swept up in all of it, and that combined with a definite sense of entitlement is a recipe for disaster.

    2. Cost of higher education/lack of education surrounding student loans/belief that you must go to college directly after high school- Obviously tuition costs are crazy. It is incredibly difficult to start out as an adult 25k, 50k, 75k (or more) in debt. 90% of 18 year olds who take out their first student loan have no grasp on the reality of what all that debt will mean in 10 years. I also think there is a lot of pressure/an expectation for most middle-class kids to go directly to college after high school, even if they can’t afford it or have no idea what they want to major in.

    3. Very little knowledge of personal finance- My parents were/are pretty frugal, but were very hush hush about family finances growing up. I never took a personal finance class in high school or college. I’m willing to bet that the majority of 20 something’s don’t have an e-fund, aren’t saving for retirement, etc.,

    FYI, I’m 30ish, married, with a 2yr old and a 6m old.

    • Reply Joanna January 4, 2015 at 2:03 am

      The social aspect is such a great point that neither Johnny nor I thought of… thanks for mentioning it. SO TRUE. Johnny and I want to do a post on this soon because it’s such an interesting part of our culture. Thanks for your thoughts!

  • Reply Rob December 15, 2014 at 4:24 pm

    Hi guys! How goes the battle for you in your new home? Good, I hope.

    Interesting blog topic, Joanna, and I see that you’re receiving lots of reader feedback so here’s my take on things:

    First, you mention that the “average” yearly savings rate for your millennial generation is -2%. That may be true but I’d be curious to know what you calculate your family’s “personal” yearly savings rate to be. Based on regularly reading your blog I would bet that you folks are doing wayyy much better! Right? Unless Sal has picked up some expensive spending habits since arriving in NYC! 🙂

    As to root causes in general well I look at it this way. Many moons back, when I was your age, I never had any “formal” financial education given to me – it was all self taught and learned through the “school of hard knocks” over the years – just like I figure that you guys are doing. I can’t blame my schools or my parents (or anyone else) back then for that situation. It was just the way it was. Like the saying goes: God helps those who help themselves in life.

    As to high student debt (that Johnny mentions), well that certainly has become a factor over the years but again, consider this:
    Like as has been commented here already, student debt can be managed – all in good time, through working hard in studying (to apply for available scholarships – both gov’t and corporate), through working hard earning money in summer / weekend / after-school jobs, etc etc. And here’s another thing: getting (expensive) higher education is one thing but you better have a well thought out idea as to what you plan to with that pricey education after graduation. It better be in some career that you will enjoy, succeed in, is in demand, and that pays properly. Paying a gazillion $$$ in tuition fees to get a PhD as a blacksmith does not cut it, if you catch my drift.

    We live in the age of technology, of computers, where the pace is frenetic and feedback / actions / expectations lead to a life of instant gratification. Many people expect to quickly get to the point of enjoying a lifestyle like their parents (or grandparents) are currently experiencing. Well it doesn’t quite work that way. Everyone has to pay their own dues in this life.

    I once had my fair share of debts. I worked my way out of them over time. You guys are doing the same. If one is in debt then that person has to do likewise – budget better, spend more wisely, work harder, get an extra job or look for a better job, continue to self-educate (it is a life-long activity) – whatever it takes!.

    And last, but not least, never give up. Anything is possible. My wife and I did it. You and Johnny are doing it in great fashion. Anyone can do. Whether it be in Toronto, or in New York City, or anywhere!

    • Reply Joanna January 4, 2015 at 2:09 am

      As always, good points, Rob. I agree that you can’t really make any excuses for people, but I also like to cut people a little slack. I could have had a full scholarship my whole time in college and avoided debt, but I made some bad decisions (not studying, staying out too late), and I ended up with $15k in debt of my own. And luckily I did learn from it (mostly thanks to marrying someone responsible like Johnny). I hope that’s what happens to our generation… we’re able to learn from the bad saving situation we’ve found ourselves in (for whatever reason). Thanks for your thoughts!

  • Reply Maddie December 15, 2014 at 5:24 pm

    I definitely agree with lack of education and with so many people having so many huge student loans. We’re still working to pay off mine from my 1 year at Columbia 5 years ago (almost done!). We had a very nice nest egg from wedding money and what we brought to our marriage from before, but we haven’t been able to add much to that and since moving to the suburbs where we suddenly need a car and etc, we’ve used up a big chunk. We’ve always wanted to do more with the money we have and have a more solid long term goal, but I don’t know what else to do other than putting it in savings. Your blog and others has helped with that, but it still feels scary to move forward with doing something other than straight savings. I think that fear comes from my own family history–my parents are very open with me about their finances and how they manage them, but they haven’t done much more than use their savings accounts. So the people I normally look to for financial guidance can’t really offer me more than what I already know and try to do, but I’m sure our money could work for us a lot more than it currently does.

    • Reply Joanna January 4, 2015 at 2:22 am

      First, congrats on almost being done with your student loans. Well done.

      As far as knowing where to put your money, Johnny and I were in that exact same boat when we paid off our student loans. We were saving, but we’d never done more than that. This post helped us figure it out some http://www.ourfreakingbudget.com/where-should-you-put-savings/

      It all depends on what your financial goals are and how accessible your savings needs to be. But it is totally worth it to start investing some NOW if you can. The compound interest you’ll earn by starting today vs 5 or 10 years from now is staggering. Since we’re in a similar situation ourselves, we’ll do more posts on this topic soon. Thanks for your thoughts!

  • Reply Tarynkay December 15, 2014 at 8:29 pm

    I think there are lots of reasons:

    1) college is more expensive than ever, and universities are offering more and more fluffy majors and somehow convincing young people to spend tens of thousands of dollars pursuing degrees in things that frankly are not very marketable.

    2) debt is cheap. People see no reason not to finance the things that they want right now. It is easy to think of buying things in terms of the monthly payment instead of the total cost since this is how bigger ticket items are now marketed.

    3) health insurance is ridiculously expensive for many people. We can pay over $400 through my husband’s work for a policy in which nothing is covered, no co-pays, nothing, until we reach the $7000 deductible.

    4) we are constantly bombarded with advertising. And advertising is smarter, sneakier, and more ubiquitous than ever. Falling for it doesn’t mean people are stupid. Advertisers spend literally billions of dollars a year making sure people fall for it.

    5) interest rates are pretty low right now. The Fed sets these low on purpose so that consumers will consume more, not save more.

    So yeah, there are lots of reasons. I don’t think that being lazy/entitled/uneducated even comes into it, honestly. People always have these same negative things to say about the up and coming generation. As a member of Generation X, it was kind of a relief for Millenials to get old enough for everyone to start complaining about them instead.

    • Reply Joanna January 4, 2015 at 11:49 pm

      Everything you said is so true. And I appreciate what you said about the up and coming generation! We’re all failures until the next generation swoops in and takes our place.

  • Reply Mrs. Frugalwoods December 16, 2014 at 7:26 am

    There’s certainly no one single factor, but, I think it’s a confluence of issues for our generation. Student loan debt is a huge burden for many people and it impacts their ability to buy a home, save, and invest. Plus, the job market has been terrible for years and if you weren’t able to get a job right out of college, you still might not have one (or not a job that’s a lucrative career path). I also think there’s much less of a focus on material wealth for our generation, which is good to an extent, but might induce some folks to think it’s OK not to save any money.

  • Reply Courtney December 16, 2014 at 11:35 am

    We are still saving for our first home, wanting to put a full 20% down and have a little savings on the side as well before we take the plunge. It’s taking much longer than I expected and we are starting to feel a little frustrated as we see friends our same age buying beautiful homes, some are even on their second home (we’re talking beautiful kitchens, granite countertops, 5+ bedrooms). I wonder how many of them are truly making enough money to make these purchases in their 20s. We hear all the time about how our generation wants to live at the same lifestyle our parents have after 30 years of working. I think it’s in part due to our generation trying to live a little too big too fast. However, I think a huge huge part is the cost of college tuition + a poor job market. Altogether, I’m not that surprised that the statistic is this low.

    • Reply Joanna January 4, 2015 at 11:57 pm

      We’ve seen similar scenarios. After speculating over and over, Johnny and I have started trying to just not speculate as to how people our age are “affording” what they are. In the end, it doesn’t matter. All that matters is that you and your husband are doing what’s best for the two of you, and it will pay off in the long run. You’re doing a great job. And we can totally relate to how hard it is to save up 20% and still have savings left over… you guys aren’t alone in that!

  • Reply Katie B. December 16, 2014 at 11:47 am

    I didn’t learn much about savings until the past few years (I’m 29). I always just thought I needed a savings account and that 10% (we do the 10/10/80 plan) of my income should go there. HAHAHA. HA. HA. HA. No, no, naive little Katie. That 10% needs to be spread over a number of things – retirement savings, 401K, college savings, emergency fund, etc. And 10% may not even be enough for all of those things.

    I also think a lot of young people have an “all or nothing” mentality. This is a habit I am learning to correct in myself. For example: my husband (a grad student) & I can’t really swing putting much more in our retirement savings at this time. Since I am a university employee, it is mandatory for me to participate in our State Teachers Retirement Fund at 7.5%. So that’s good, but it isn’t enough. I want to do more. So I opened a 401K that I put a whopping 1% of my income in each pay period. It’s an incredibly meager contribution and sometimes I’m like “why am I even doing this!?”. But it is a reminder to me that we have a goal and that even the smallest contribution is better than no contribution. And as I get raises and all that jazz, I can slide that little percentage up a hair and eventually it will be at the place I want it to be.

    If your family can’t afford to save the “ideal” amount, don’t worry about it. Start somewhere… even if it is 1%! I think we are often hoping that we’ll “arrive” at some sort of amazing financial state one day and THEN we’ll start saving… but what we need to do is save NOW and continue to save over a long period of time rather than try to put in a burst of funds at the last minute.

    • Reply Joanna January 7, 2015 at 10:28 pm

      I think you’re totally right about the “all or nothing” mentality of young people. It’s so much harder to see the big picture or to even consider it when we’re young. We can’t imagine that even a little amount of saving will make a big difference in the long run. You and your husband are doing what’s right. Your mentality is changing, and when you do have more money to put away in retirement, you’ll already be in the habit. Keep up the good work!

  • Reply Jenna December 17, 2014 at 3:51 pm

    For me its definitely about education. When I left home and moved into my first apartment, I barely knew how to write a check and I had only enough saved for my share of the deposit. (I think my roommate borrowed her half from her parents). I spent a big chunk of my paycheck on move-in necessities, I don’t think I even had enough in the bank to cover the next month’s rent. I just had no idea what I was doing! All I thought I knew was that I was supposed to strive towards building credit, and I did that by applying for every card under the sun and then maxing them out. LOL Here I am years later still trying to unlearn some of my terrible spending habits…
    I do believe that so much debt and financial woes of our generation could have been prevented through education, and that needed to start BEFORE college! Not after you’re already drowning in student loans and credit card debt!

    • Reply Joanna January 7, 2015 at 10:31 pm

      I am right there with ya! I had NO IDEA what I was doing when I started college… so many naive/bad decisions were made without my even realizing it. It would have helped so much to have had even a little financial guidance back then!

  • Reply Danielle December 23, 2014 at 2:00 pm

    I agree that it’s not all lack of financial education, although I do think they should add more personal finance to high schools. Personally my fiance and I basically pay a mortgage in student loans each month and started out making very little right out of college. Now with my fiance sick and unable to work, it’s even more of a struggle. So I think it’s a complex issue but one that needs to be addressed, so thank you for sharing!

    • Reply Joanna January 7, 2015 at 10:38 pm

      Something’s gotta give with the tuition costs. They’re out of control… I really hope it’s a problem that’s been solved by the time our kids go to school. In the meantime, it sounds like you and your fiancee are doing your best, so well done.

  • Reply Gingerbread Goodies + Santa's New Tiny Reindeer March 11, 2016 at 1:33 pm

    […] Why Can’t Our Generation Save Money? I agree with Johnny. I don’t think it’s lack of financial education necessarily. My fiance and I basically pay a mortgage in student loans each month, and out of college I started with a job making less than I made typing bills for a trucking company. So I’d say it’s complex, but frustrating regardless! […]

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