Most people know that millennials are having a hard time with debt. While it isn’t completely their doing, this generation is said to have a different mindset towards money, spending, and going into debt. Debt should always be the last option and should be avoided at every cost. Millennials are not the best about spending, but they have been handed a bad deal in a lot of ways. Their parents were taught that using credit is good, but in reality it is only beneficial when you pay off the debt immediately. Taking on financing that you don’t have is risky, and you should always be ready to pay the money back immediately.
Arguably the biggest problem for millennials is student debt. Whether it’s from their parent’s encouragement or on their own volition, millennials have taken out student loans in droves. The issue surrounding student debt is enormous and this has a lot to do with the mindset that surrounds loans and going into debt. You can not only see it in the words of this generation, the number show that millennials are struggling with keeping out of debt.
Overall Debt of Millennials
A survey from Business Insider, which was conducted with Morning Consult, showed that from the over 2,000 people surveyed, 51.1 percent of millennials who admit to having debt, 67.4 percent of them are stressed out about it. Almost a quarter of these individuals have taken out personal loans and 28.4 percent of them have student loan debt. 46 percent of millennials think that they better off than other generations despite this. Even though millennials perceive that they are doing better than others, the mindset was handed down by their parents, and it has led to a lot of people taking out loans that they shouldn’t have and going into unnecessary debt.
The Mindset towards Debt
Changing the paradigm is intimately involved with altering the mindset of our citizens. If we perceive that taking out loans is just something people do when they need to get by, we will always fall into the cycle of debt. There needs to be a shift in the way we think about it. For example, we think of student loans as a justifiable way to pay for school. It isn’t. People are still struggling to pay back their loans from years, even decades ago. Most need to work while they are going to school and a lot afterwards to keep up with the payments.
You should only take out a loan when you have no other choice. This can sometimes be the case for student debt, but for most other cases this is not the way you should go. As it turns out, the number of people who use them when they have no other option is small. For example, 25 percent of people who take out 401(k) loans do so to make ends meet. This is according to a study from Greenwald & Associates. On the other hand, 23 percent use these loans to pay off other debts, which is not really paying off the money at all.
This mindset that taking out loans is innocuous needs to be changed, or else the debt problem will continue. The only valid reason to go into debt is when the situation is so dire that it will actually harm you or someone you love not to pay for it. If you are trying to pay back other finances that you owe, there is no reason to take out additional credit.
While millennials are independent, there still needs to be work done on this outlook. If you are reliant on loans or other means of finance to get through the week or pay for things, it may be time to think about your overall situation. The only way to view debt is like a plague. You should avoid it until the end, until you don’t have any other options, until you are unable to come up with any other solutions like borrowing from a loved one or selling objects you don’t need. As soon as we change this mindset, the debt in our country will decrease.
You may be interested in: “What is the millennial generation?”