53% of Millennials Say They're Better Off Financially Than Their Parents

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  • Homeownership could be a means of financial stability, but it's not the only option.
  • There are different ways to attain financial stability, like building savings, funding a retirement account, and getting life insurance to protect your loved ones.

That's actually pretty surprising.

Ask any parent, and they'll probably tell you that a big goal of theirs is to set their kids up to do better than they did financially. And in a recent survey by Rocket Mortgage, a good 53% of millennials say they are, indeed, doing better than their parents did at the same age.

One reason for this could be that younger generations are delaying having kids. That means they're spending less money on childcare and incurring fewer expenses.

But homeownership could also be a reason for millennials feeling more financially secure than their parents. In fact, according to the aforementioned survey, 62% of respondents with a mortgage feel they're better off than their parents were at the same age. But only 46% of those who rent their homes feel the same.

It's easy to see why homeownership might lend to more financial stability. But it's definitely not the only means of getting there.

Renters can attain financial security, too

Interestingly enough, it may have been easier for younger workers to buy a home 20 years ago than it is today. Yes, mortgage rates were high back then. But home prices were more moderate.

As of the end of 2022, the average U.S. home price was close to $300,000, as per the S&P/Case-Shiller National Home Price Index. But 20 years ago, it was around $127,000. And while it's easy to argue that wages are higher today than they were two decades ago, wage growth hasn't doubled like home prices have.

In 2002, U.S. median household income was about $42,000. These days, it's about $71,000. So based on household incomes and home prices, younger workers 20 years ago may have had an easier time, or at least a comparable experience, of buying homes than today's younger workers.

As such, we can't necessarily point to homeownership as the main reason so many millennials today feel more financially secure than their parents. And we also shouldn't make the assumption that renters are at an automatic disadvantage when it comes to attaining financial stability.

Sure, renters don't have home equity to tap. But they might be saving themselves a whole bunch of money by virtue of not owning homes -- and not having to cover the many costs associated with them, from property taxes to homeowners insurance to maintenance and repairs.

A hearty savings account balance could lead to financial security

It's hard to say why so many millennials feel better off financially than their parents were. But either way, if you want to get to a good place financially, you don't necessarily have to push yourself to buy a home.

Rather, build yourself a safety net. Have a solid emergency fund with enough money to cover three to six months of living expenses. Start building a nest egg by funding an IRA account or 401(k). And put life insurance in place to protect the people who depend on you for financial support.

Homeownership can be a great thing, financially speaking, for those who can swing it. But it's not the only way to achieve the goal of feeling good about your financial picture.

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