Fraught with worry over high housing costs, impending student loan payments, and compounding credit card debt, millennials face financial challenges unlike other generations. Yet they’re still the generation that’s most money obsessed—and the one that wants to show it off.
While more than half of affluent millennials say they’ve been “greatly affected” by the cost-of-living crisis, 59% feel it is important to “look or appear” financially successful to others, according to a recent Wells Fargo study. This is yet another sign of “money dysmorphia” (as Intuit Credit Karma dubs it) in which people obsess over the idea of being rich so much so that they lose sight of the actual state of their finances.
What’s even more telling is that Wells Fargo’s study actually focuses on “affluent” millennials who make at least $250,000 per year, which means it’s not just lower-income young people who feel the need to keep up with the Joneses, so to speak. More than 40% of the approximately 1,000 respondents said it’s important to have visible signs of wealth, whether it be purchasing a fancy car, clothing, or place to live. By comparison, just 21% of Gen Xers, 8% of baby boomers, and 7% of the silent generation feel the same.
“Affluent millennials are, in fact, working hard and gaining financial success,” Emily Irwin, managing director of advice and planning for Wells Fargo, tells Fortune. “Yet, they’re grappling with this external image, and, as a result, there’s a growing trend to present themselves with an image that isn’t reflective [of] their actual financial situation. For some, it could be even be a ‘fake it until you make it’ mentality.
Even some of the wealthiest millennials face “money dysmorphia,” and more than 40% of them have to rely on credit cards or loans to fund their lifestyle—all while accumulating debt, the Wells Fargo survey shows. The national average debt among credit card holders during the fourth quarter of 2023 was $6,864, according to LendingTree. And millennials are among the consumers struggling most with unpaid balances.
“Millennials have seen the largest increase in their delinquency rates and now have rates definitely above pre-pandemic levels,” New York Federal Reserve researchers said in a November 2023 press call. “Given the strong labor market and general economy, these increases are somewhat surprising.”
Social media fuels spending anxiety among millennials
But it’s not so surprising how much millennials spend when we look at how easily and how often they’re influenced by social media—whether in the form of advertisements or subtle (or not so subtle) nudges from influencers.
“We live in a hyper-sexualized, distracted, visually curated society now all narrowly tailored into the confines of the infinite scroll,” Christopher M. Naghibi, executive vice president and chief operating officer at First Foundation Bank, tells Fortune. “Endless pictures and videos … are put in the face of the viewer and it is simply human nature to want to be as beautiful, well traveled and, more than anything else—rich.”
And the data shows that affluent millennials are no different. Nearly 30% said that they buy things they can’t afford in order to impress others or “fit in” with a certain lifestyle, the Wells Fargo survey found—and another third reported lying or exaggerating about their finances to keep up appearances.
“For millennials, being the first generation on the internet means that ‘keeping up with the Joneses’ isn’t just having the best of something on your block or in your neighborhood, it’s feeling pressure to match the level of consumption of a much wider net of online influencers,” Jonathan Ernest, an associate professor of economics at Case Western Reserve University, tells Fortune. “This also means that millennials may perceive more benefit from owning luxury items, as they earn the admiration of not only their peers, but also their friends, family, and followers from a larger online presence.”
But Irwin warns this “charade” isn’t sustainable.
“It’s a vicious cycle because most people are reluctant to talk about their actual circumstances, and instead it’s the image of ‘I’m living my best life,’” Irwin says. “Now, it would be great if the trend would segue into: Share what you’ve done to be so financially responsible. How freeing it would be if everyone ‘put their cards on the table,’ and not receive judgment or embarrassment.”
Millennials aren’t letting inflation, debt, and student loans get in their way of a lavish lifestyle
Despite being a highly educated generation with staggering student loan debt, millennials look past these longer-term costs and instead choose to live in the moment, experts agree.
“Coupled with the fact that millennials as a whole may find more value in indulgences after putting in the work to become the most educated generation in American history, it’s understandable how a small splurge on a luxury item can seem an insignificant cost in the face of seemingly insurmountable student loan and housing costs,” Ernest says.
But in some cases, making expensive purchases like buying a home despite high mortgage rates could make sense for millennials because saving account yield rates have been relatively lower.
Millennials “may have rationalized that it may have made sense to stretch for a dream home versus allocating dollars to a savings account that wasn’t yielding a high interest rate,” Irwin says. “And it may make sense—assuming they’re setting aside funds for emergencies and not incurring revolving debt, like credit card debt.”
In terms of tips for fighting money dysmorphia, experts agree that thinking long-term about purchases can make a difference. Irwin says she challenges millennials to not indulge the “consumer fix” or “purchasing high” from buying something new, and others encourage millennials to take a look at long-term financial planning.
“Paying off high-interest loans, and thinking of the opportunity cost of spending a dollar today as the lost ability to earn interest on investments for tomorrow can help millennials reconsider whether that next luxury purchase is truly worth the cost,” Ernest says.
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