Millennials Want to Be Rich More Than Anything
Since 1966, the Higher Education Research Institute has been conducting a study of first-year college students to determine personal goals and values. This collection of data has offered research a chance to see how priorities change over the years, and there are striking generational differences in the results. Recent research at San Diego State University combined the data from this research with additional studies, and the results were published in the Journal of Personality and Social Psychology.
The most striking generational difference is the change of relative importance of “being very well off financially.” 44.6 percent of baby boomers considered this goal essential or very important. Through the period when Generation X entered college, 1979 to 1999, 70.8 percent of college freshmen believed it was essential or very important to be well-off. For millennials, or Generation Y, with students entering college from 2000 to 2009, this rate increased to 74.4 percent. In 1978, being rich ranked 8th among all the goals listed as choices in the survey, and since 1989, this goal has consistently ranked first.
Other goals on the list that lost ground due to the surge in the desire for financial success above all else include developing a meaningful philosophy of life, declining in importance from 73 percent to 44 percent and keeping up with political affairs, declining from 50 percent to 35 percent. At the same time, some goals that may not be directly related to being rich increased. Creating artistic work (painting, sculpting, decorating, etc.) increased from 15.5 percent to 16.0 percent from baby boomers to millennials. Influencing social values increased from 32 percent to 40 percent.
Why are young people significantly more concerned with financial security, and if this concern is so much higher, why is financial literacy in young people lacking to such a degree as reported constantly in the media including financial blogs?
I see two significant influencers of attitudes in college freshmen. The first is a reaction from their parents’ attitudes. Baby boomers’ parents might have lived through the Great Depression, perhaps as kids. The experience of financial difficulty sticks with this generation as they mature and have families of their own. While one reaction to parents whose philosophies of money have been shaped by hardship would be to put an extra emphasis on financial independence within a family, it’s more likely that financial struggle helped people understand that there is more to life than having money, and this is the attitude that was passed down from one generation to the next.
As the baby boomers built their own success as adults and benefited from the clear economic expansion after World War II, financial success was within reach and became a new goal. Suburbs blossomed, and television opened people’s minds to consumer culture. This openness combined with the ability to earn enough money to cover more than just the necessities shifted the culture, and these attitudes weren’t unnoticed by baby boomers’ children, Generation X and millennials.
The second significant influencer is popular media. As mentioned above, the availability of television shaped American attitudes. National programs offered millions of families a glimpse into the best of what the consumer culture had to offer. It wasn’t just Lifestyles of the Rich and Famous, it was the popular sitcoms that projected an idea of what life should be like in the home. I noticed during the recent recession, television programming tended to reflect more financial escapism. People seem to enjoy watching programs featuring rich and upper-middle class lifestyles, and this type of programming has flourished in recent years.
A combination of these influencers likely contributed to Generation X’s and millennials’ stronger focus on their goal of “being well off financially.” There is still a broken connection between this goal and the behaviors that help individuals reach the goal. Consumer debt is still a problem. College graduates lack understanding of basic financial principles, and often make mistakes that may or may not be corrected by the time they start families of their own. Perhaps the real goal is not being well-off, but appearing well-off. When financial independence seems out of reach, young people are willing to settle for looking or feeling rich. This is an approach focused on the surface, just appearances, rather than one based on making the tough adjustments required to fix the fundamental financial issues. It’s faster, more convenient, and outwardly identical to a point.
It’s perhaps why people who play the lottery are more likely to have low incomes, and maybe it contributes to the appearance that people living on welfare might have expensive-looking phones or other accessories; in a world without hope for financial success, the only way to satisfy the need for “being well off financially” is through objects acting as external symbols of wealth.
American Psychological Association, via MainStreet
Great article Flexo, and some interesting observations. So many are wealth driven in their pursuits. People are sacrificing free time and family time to work 80 hour weeks and buy a bigger boat than their neighbor. Do you see a paradigm shift coming in the future? Perhaps some things (e.g. the economy) were not meant to grow indefinitely.
Thanks for the post!
There’s so much more to WANT these days, things that people take for granted that everyone should have. Smartphones, game consoles (I know people who have three different kinds), big TVs — and all three tend to invite add-ons such as apps and ownership of multiple games and movies. People take it for granted that they need Netflix streaming, cable TV, high-end Internet access, text packages and the like. Some take it further: They need to upgrade all these things on a regular basis.
The way our cities/suburbs have developed, a two-car family is often the norm. But I also have talked to people who aren’t doing so well financially yet talk about the car their kid will “need” as soon as he gets his driver’s license.
Dinners out were unheard of when I was a kid but even people who are in debt routinely eat outside the home. Two pairs of shoes — school shoes and church/special occasion shoes — were how I was raised, but kids (and adults!) seem to “need” multiple pairs of footwear.
A woman I know who’s in financial straits shops at thrift stores. (So do I.) One of her acquaintances complimented her on something one of her kids was wearing — but when she learned where the item was purchased, she made a face and said she would NEVER shop at Goodwill.
Attitudes have changed, helped greatly by media of course. It’s hard to buck the trends when your kid wants to know why he doesn’t have Wii and PlayStation like all his friends do. But if you can’t afford it, you need to hold the line.
(That thumping sound is me getting down off my soapbox.)
I’m a Millennial, though perhaps not a typical one. I’m 27, born in 1984. Growing up I never really wanted to be rich, just have enough to do what I wanted, knowing that I have no desire for a big house or a fancy car. But more lately, I am much more focused on money because I am struggling financially under the burden of enormous student loan debt, and just a little bit of extra income would make a big difference in my life (being able to move out of my parents’ house). So it still isn’t about richness for me, but about attaining that level of enough for right now.
A lot of my cohort have also seen how fragile financial security can be. We saw our parents seem to be doing so well financially, with the big houses and multiple cars, when we were younger. They may have been living on credit, but we didn’t see that. Then, when we were finally old enough to understand our parents’ finances, everything was falling apart, retirement savings were destroyed, houses were foreclosed on. I think some of the impulse to be rich is an impulse to avoid financial fragility. (Of course my parents could have managed their money better all along and did not have to be so financially fragile, but that is cold comfort when you know that there is always going to be a level of collapse that could destroy your finances.)
This is a very interesting article, and I agree with you that the media has a lot to do with it. From music to television programs our generation is bombarded with how the rich and famous live and we want to be like them.
This could be a reflection that baby boomer generation took financial success for granted more often than recent generations. People list among their goals things they don’t have or fear they won’t be able to obtain. For example, I don’t see “being able to feed myself” or “being allowed freedom of religion” given as an goals since the vast majority don’t worry about those things or take them for granted. The more people worry about financial future the more that becomes a goal.
It could also be a reflection of the changing demographic among college students. 50 years ago the college students were more likely to be upper class individuals who have the luxury of not worrying about money so much. Today college attendance is much more wide spread and also generally viewed as a key to ones financial success.
I would imagine that having seen many people struggle during the recent economic and housing crisis, they are putting greater emphasis on financial independence, and being well off financially is likely the closest approximation to that on the survey.
I think some of the influences comes from how millennials view the world. They grow up in their parent’s McMansions, not realizing that it took the parents 20-30 years to be able to afford one. The millennials think that when they move out at 18 that they should have one as well.
I think you are missing the easy point that the millennials grew up with lots of money for the most part, think about it, the age range cited for this group is around 1979-1994 (aside: I was born in 1975 but I definitely have more in common with gen Y than gen X) – so the midpoint is 1986 or so. If you were born in 1986, your parents taxes just got a whole lot more favorable and were about to participate in some of the biggest run ups in stocks and housing prices in history. The parents of these people were essentially gifted money – something that hadn’t happened before in history and is unlikely to happen again (Yes there will be bubbles here and there, but there wont be economy wide bubbles like that again). So these kids grew up with parents that could milk easy stock gains and easy housing prices to pay for many many toys and gadgets.
It’s easy to see why they want to be rich, they grew up rich! Anyone in that group that has any insight at all to the current problems with the economy will probably only want to be rich more as it is so much more a distant dream than it was just a few short years ago.
That’s a pretty sweeping generalization. I was born in 1986, and was raised by a single mother of three. Let’s just say the above scenario isn’t even remotely familiar.
The 25 & Older population just surpassed 30% with Bachelor’s Degrees too – so we know that more people are attending school than ever. How much of this is selection bias? The last few people who truly valued being rich are now about to go to school?
One aspect that was not mentioned here is that people who entered college between 2000 and 2009 were old enough to notice the bursting of the tech bubble and possibly even the S&L crisis. Those who entered college in 2008-09 saw a huge stock market crash. None of these things point to financial independence being easy. In fact, they all point to the importance of disciplined saving and investing.
Why does this generation stand out? Success is more than money. If you are only thinking aboput monetary success, you will probably fall short. If you pursue a career because you like it and are good at it, you will probably be successful. The money will follow.
That is a no-brainer; we are bombarded by lifestyles we cannot really afford by the media, and at the same time it becomes harder and harder for us to afford medical care, food, and other basic needs. So of course money takes front stage.
How about the fact that this generation has seen very young innovators in the tech sector make millions, sometime billions in a very short time. We see stories all the time of people trying to invent the next big thing. We don’t really see many stories about all of those who fail and go into serious debt.