The Changing American Dream: Focused on Being Debt-Free
"Depression-era parents taught, 'a penny saved is a penny earned,' " says Robert Wendover, director of The Center for Generational Studies. "But they didn't live in a consumer society like we have now. Millennials think that installment debt is not as important to pay off, it's not as high on their radar. How they will transfer that understanding to their kids still remains to be seen."
The traditional American Dream of owning a home and having 2.5 kids is quickly fading as younger generations strive to save more for retirement and become debt free.
Credit.com's latest survey found that for most respondents, their ultimate financial goal was retiring financially secure at age 65 (27.9 percent). However, a close second say being debt-free was their top priority. Those ages 18-to-24 were most likely to name being debt-free their top financial goal, and were least likely to cite home ownership or joining the 1 percent as their top ambitions.
The survey was conducted by GFK Custom Research for Credit.com, based on 1,000 interviews with Americans 18 and up.
Millennials have gotten a rude wake-up call post-recession, says Wendover, and for many reasons, their aspirations have changed.
"Five years ago, those 25-year-olds may have said, 'I want to be a millionaire by the time I am 30.' But the economics are very different, the optimism has dampened and their expectations have been lowered in the process."
Previous generations that had been through trying financial times, most notably depression-era parents, raised their children with certain financial mentalities, according to Wendover, and he says having parents with debt-free goals will undoubtedly shape future children.
Adam Levin, founder of Credit.com, says millennials are likely scarred by the debt it and its predecessors have accumulated and its long-lasting repercussions that include delaying buying a home, getting marriage and having children.
"This debt is a drag on the housing market, impacts decisions as to where people live, send your kids to school, and how much discretionary money you have," Levin says. "For many people, the definition of succeeding is now just surviving."
Values millennials pass onto their children will of course vary, but Levin says caution will be a common trait passed along.
"I think more people are trying to get their children into the mindset of buy what you want, do what you want, but make sure in the back of your mind there is that voice that says, 'be careful, this won't last forever,' " he says.
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