4 Biggest Obstacles Millennials Face in Saving for the Future

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 A 2023 study by LendingClub found that 73% of millennials are living paycheck to paycheck. This means that, for the large majority of an entire generation, money is going out just as quickly as it is coming in, leaving little to no ability to save for their future. This data leads to one big question: is the problem internal or external? Turns out, it’s both.

GOBankingRates spoke with financial experts to discover the four biggest obstacles millennials face in saving for the future.

Cost of Living

According to Shawn Carpenter, chairman and CEO at Stock Alarm, this external conundrum is just simple math.

“For millennials, saving money often feels like being caught in quicksand,” he said. “Many people are struggling with student loans, exorbitant rent and daily expenses, while their wages remain stagnant, failing to keep pace with the increasing cost of living.”

In fact, data from Securian Financial assessed that each household currently spends $11,500 more in 2024 to maintain the same cost of living as it did in 2021. Saving for the future is difficult when one’s purchasing power is decreasing in real time.

Lack of Knowledge Paired With Information Overload

Millennials came of age being told a secure financial future was as simple as working hard, earning a four-year degree and getting a job. After the Great Recession, however, millennials were stuck figuring out other money-making alternatives — and typically online.

“There is so much information available to them — do they fully understand how to interpret and implement it?” said Brett Bernstein, CEO and cofounder at XML Financial Group.

It is for this reason that Robert Johnson, chairman and CEO at Economic Index Associates, said many millennials fall prey to fads like crypto and meme stocks which have “never been a good place to invest.” After all, anyone can call themselves an expert on YouTube.

Gina Knox, CEO and financial coach, added that many millennials currently think real estate — a prospect that may already feel out of reach for them — is the only way to achieve wealth through passive means and this is simply not true.

Social Pressure or Visibility

The first generation to grow up with the internet, millennials have become accustomed to not only displaying their lives on Instagram for all to see, but tracking the lives of others to see how they compare.

“There’s the ‘Keeping Up with The Joneses’ scenario where they spend more than they should to keep up with others,” Bernstein said, who wondered how so many can afford expensive purses and trendy Pilates classes.

“They aren’t saving,” he added. “Plus, the younger generations love to travel. Consumer debt is back up to record levels post pandemic.”

While he acknowledged that everything is growing more expensive due to inflation outpacing wages, he pointed out that lifestyle also has to do with the choices you make. Bernstein recommended a better alternative for putting away money is trying to live below one’s means.

Mentality of Instant Gratification

Chalk it up to technology or social media, but millennials want pleasure without delay. And this can hamper their financial prospects.

“We always stress that true wealth is made over the long term. The excitement of being in the now and having the instant gratification of placing a trade and making a few dollars needs to be replaced with a discipline to invest continuously and not touch the investment,” said Chad Olivier, certified financial planner (CFP) and CEO of The Olivier Group.

And that’s not always easy with excessive stimuli in the environment. Bernstein cited the example of a kiosk inside a Dunkin Donuts he initially thought was an ATM — turns out, it was for trading bitcoin and it was accessible 24 hours a day. Johnson said that because millennials desire instant rewards, they aren’t taking enough risk, which is actually the biggest risk of all. He stated that growing their savings is about weathering market volatility through patience and long-term investments in diversified index funds.

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