Millennials owe an average of $27,900, not including mortgages, according to data released by Northwestern Mutual. Believe it or not, Gen Z, the oldest of whom are now 22 years old, already have an average debt of $14,700!
Chantel Bonneau, a wealth management advisor at Northwestern Mutual says that having sizable debt at a young age “is the new normal.” “There are lots of people who exit school, and before they start their first job, have debt. That is a different situation from 30 years ago.”
There is a difference though. Whereas millennials’ main source of debt is credit card bills, Gen Z’s is student loans. In a poll by CreditCards.com, 40% millennials stated that the top reason they carried a credit card balance was daily expenses such as groceries, childcare, and utilities, and about 20% pointed to unexpected emergencies such as medical bills and car repairs.
According to the study, about 45% of millennials and 43% of Gen Z reported feeling guilty about their debt at least every month.
Particularly from student loans, debt has become a regular part of the millennial financial world. Pew Research Center said in a report that “The share of young adult households with any student debt doubled from 1998 (when Gen Xers were ages 20 to 35) to 2016 (when millennials were that age). In addition, the median amount of debt was nearly 50% greater for millennials with outstanding student debt ($19,000) than for Gen X debt holders when they were young ($12,800).”
Across all age groups, the average debt, excluding mortgages, is $29,800, down from $38,000 in Northwestern Mutual’s 2018 survey. “The fact that there’s been some year-over-year improvement in debt levels is good, but the numbers still remain worryingly high,” said Emily Holbrook, senior director of planning at Northwestern Mutual, in a statement.
Upon speculation of a looming recession, Bonneau suggested that people with debt dwell on their finances to think of a plan in case they fall on difficult times, including how much debt they have, how much of their income is going toward debt payments each month, and what their interest rates are.
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