Millennials have an average of $ 27,900 in debt, including non-mortgage loans, according to new data released today by Northwestern Mutual. Gen Z, of which the oldest is now 22 years old, has an average debt of $ 14,700.
Having significant debt at a young age "is the new normal," said Chantel Bonneau, wealth management adviser at Northwestern Mutual. "There are many people who leave school and before they start their first job, have debt. It's a different situation than it was 30 years ago."
Millennials' main source of debt is credit card bills, and Gen Z is student loans. In a previous poll by CreditCards.com, 40% of millennials said the reason they had a credit card balance was daily expenses like groceries, childcare and utilities, and about 20% pointed to unexpected emergencies such as medical bills and car repairs. Bonneau said that discretionary expenses such as vacations and eating meals also contribute to credit card debt.
Approximately 45% of millennials and 43% of Gen Z reported debt at least monthly ̵
Debt – from student loans in particular – has become a regular part of the millennial financial picture. In a report earlier this year, the Pew Research Center said, "The proportion of adult adult households with possible student debt doubled from 1998 (when Gen Xers were 20 to 35 years) to 2016 (when millennial errors were that age). In addition, the median the amount of debt was almost 50% greater for millennials with outstanding student debt ($ 19,000) than for Gen X debt owners when they were small ($ 12,800). "
Last year, millennials had a median household income of about $ 71,400. Pew – but thanks to their debt, the savings are saved behind what older generations had in the bank at the same age. The average net wealth of millennial households was about $ 12,500 in 2016, compared to $ 20,700 for Boomers-led households of the same age in 1983.
It can be difficult to save when more than 10% of income goes to consumer debt , Said Bonneau.
The average debt in all age groups, excluding mortgages, is $ 29,800, down from $ 38,000 in the 2018 Northwestern Mutual survey. "The fact that there has been some improvement in the level of debt from year to year is good, but the number remains worrying, "said Emily Holbrook, senior director of planning at Northwestern Mutual, in a statement.
In the midst of speculation about a looming recession, Bonneau said people with debt should look to their finances to think of a plan in case they should fall on hard times, including how much debt they have, how much of their income goes against debt payments each month, and what their interest rates are.
For this study, Northwestern Mutual examined 2,003 American adults over 18 years of age.