Debt and Hope: ROI of the First Few Years

Millennials have debt. A lot of it. The price of college continues to rise, but we all know to get ahead a Bachelor's degree is a bare minimum, so we pay the price and take out loans. The average millennial's accumulated debt post-graduation is $30,000. If you went to a private school, like me, you're looking at upwards of $60,000 in debt upon graduation (if you were as lucky as I was to get at least a partial scholarship).

So you would think with all that debt, we would be saving every penny. Nope. Just like the rest of Americans, we have an insatiable hunger for consumer goods. For millennials, however; our spending habits are not completely driven by consumerism. It's partly driven by a sense of hope for things to come.

When previous generations entered the workplace, they had either no debt or a negligable amount of Federal fixed rate loans that could be paid off in a few years. The debt was paid down, and then people moved on to saving for their big investment: a home. Millennials; on the ther hand, had to adopt a different mindset. Because there was a need to take on so much debt at a young age (before producing any income), millennials had to consider their education as their big investment. There was a fundamental shift in perspective in deciding which investment would garner the most return. Now, as millennials exit college, we feel as though we have already made our big investment and certainly are working on paying it down. Post graduation, millennials are living at home with their parents and/or renting for many years because the thought of saving up for another big investment seems nearly impossible.

Most smart millennials have read enough Suze Orman to know that we should simply make the minimum payments on our student loans for the full term to build credit and because we don't have the means to pay any more than the minimum. The millennial is left with a target expendible income that is seen as too little of an amount to make an impact if saved. So, that amount is spent--on dining out, on clothes, and on technology. These are items that are within reach financially and create a sense of accomplishment in the short term. These things also present an image of status and confidence. We feel as though it tells our employer, "This is where I want to go, and I'm going to get there."

After a few years out, and a few raises into that first job--some millennials begin to feel that a home purchase may be within reach, and will begin to save. The time in between graduation and the second or third raise is the perfect opportunity for consumer marketers to push trendy "status" products on to millennials. Help us present an image of professionalism, confidence, and hope for the future, and we will spend 100% of our expendible income on your product(s).