Most Americans are feeling the effects of inflation. A recent survey conducted by D.A. Davidson found that for 68% of Americans, inflation has significantly or at least moderately impacted their ability to afford basic expenses such as groceries, rent/mortgage, car payments and gas since January 2021 when inflation began to rise.
But some generations are feeling the effects of inflation more than others, and millennials seem to be impacted the most. Here’s a closer look at how millennials are being impacted by inflation more than other generations.
Millennials Are Finding It Harder To Cover Basic Expenses
The D.A. Davidson survey found that 78% of millennials report that inflation has impacted their ability to cover basic expenses — more than any other generation. For comparison, 74% of Gen Z, 71% of Gen X, 57% of baby boomers and 43% of the silent generation said that inflation has significantly or moderately impacted their ability to afford basic expenses.
As for which expenses millennials are finding it hardest to cover, a recent GOBankingRates survey found that increased gas prices are the No. 1 pain point, with 54% of those ages 25 to 34 and 56% of those ages 35 to 44 reporting that paying for gas is hurting their finances.
“Many millennials are still early in their careers and have not yet reached their peak earning potential,” said Andrew Crowell, vice chairman of wealth management at D.A. Davidson. “This means that their earnings may have already been stretched prior to inflation taking off. Many millennials are also burdened with student loan debt, which exacerbates their financial pressures.”
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Millennials Are Experiencing More Financial Stress
Inflation is causing financial stress across the board. The D.A. Davidson survey found that 61% of respondents have experienced heightened worry, anxiety or emotional tension related to money, debt and upcoming or current expenses since January 2021. But millennials are the most stressed out generation — 69% report feeling increased levels of financial stress, more than retirees (48%), the silent generation (35%), baby boomers (55%), Gen X (65%) or Gen Z (58%).
“Until this recent run, inflation had not exceeded 5% since 1990. Millennials may be feeling increased financial stress in part because they have never experienced this level of significant, sustained inflation before,” Crowell said. “The rising prices are hitting basics that we all use daily, like gasoline and food. With no certainty about how long high prices will persist, financial stress is understandable.”
This is especially true for younger generations, who may not have as much financial wiggle room as older generations.
“Millennials may have less saved up for an emergency than older generations, and unexpected expenses — or simply the possibility of a major surprise expense — can create immense stress,” Crowell said.
Adding to the stress caused by inflation is that millennials are at a time in their lives when they may be hoping to achieve several major financial milestones, such as buying a home, getting married and having children, Crowell said.
Millennials Are Canceling Vacation Plans
Americans are cutting back on numerous expenses amid inflation, including travel and vacation plans. The survey found that overall, 52% of Americans have canceled a vacation or scaled back vacation plans this year due to inflation. Millennials are the most likely to say that this is the case, with 59% saying they have changed travel plans due to inflation, compared to 56% of Gen Z, 55% of Gen X, 42% of baby boomers and 32% of the silent generation.
Although travel is not a necessity, taking a vacation is a known stress reliever that can help ease some of the inflation-related anxiety millennials are experiencing. Instead of canceling travel plans altogether, Crowell recommends setting a travel budget and sticking to it.
“Setting a travel budget is key,” he said. “Far from being restrictive, setting a budget allows you to focus your spending on what is most important to you. Secondly, be a smart consumer and use the internet to compare prices, shop for travel deals and explore alternatives. Use rewards points to pay for travel and hotels or secure bigger discounts to help stretch travel dollars. Finally, consider a ‘staycation’ close to home to help provide rest, rejuvenation and fun memories. Spending a three-day weekend in a motel a few cities away, for example, could still provide a needed change of scenery without breaking the bank.”
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