I have a draft of an article on my desk that is almost identical to Annie Lowrey's article. Which is really pissing me off at the moment. Why didn't I clean it up and send it out? Why am I such an idiot?
Lowrey talks about her grandmother's attitude towards money and wonders what permanent marks this economic downturn will have on this generation of kids. (I started off my article talking about my grandmother, too. Ugh!)
Lowrey writes,
The millennials’ relationship with money seems quite simple. They do not have a lot of it, and what they do have, they seem reluctant to spend. Millennials are buying fewer cars and houses, and despite their immersion in consumer culture, particularly electronics, they are not really spending beyond their limited means. Their credit-card debt has declined, most likely because many millennials cannot get a credit card, and in part because they know they cannot afford to spend now and pay back later. “They have this risk aversion that we’ve seen with millennials since they were teenagers,” Howe said. “It’s declining alcohol use, declining drug use. I mean, declining sex.”
Apt. 11d 
“Millennials are buying fewer cars and houses, and despite their immersion in consumer culture, particularly electronics, they are not really spending beyond their limited means.”
How about student loans? Presumably student loans have displaced car and house spending.
I think money is hard to understand. I have a book on hoarding where the author says that money is just too abstract for some people to get, so it doesn’t feel real to them until they transform it into stuff. The traditional envelope system is an attempt to make money more tangible and countable and budgetable.
http://en.wikipedia.org/wiki/Envelope_system
Otherwise, it’s easy to get lost in all the numbers and to not understand that all the spendable money is gone. (Hence the old joke–How can I be broke? I still have checks!)
Money itself is abstract and hard to understand, but credit is even worse. I think that most of us are incapable of dealing prudently with the amount of credit that is available in our society. I don’t think the average brain really understands credit. Credit somehow (and this sounds stupid but is true) gets processed as being “free” money.
I’ve had a somewhat complicated history with money.
1. In college I was a very low spender (a pulp paperback was a major splurge), but got one credit card and bought one pair of boots on it.
2. In the Peace Corps, I did an envelope system and for about a year saved half my salary for a plane ticket for a student.
3. As a newlywed, I threw caution to the wind and stopped trying to figure out the relationship between our spending and our income. My husband would make more money later, right?
4. Two kids later, with a nice five-digit income, and after living rent-free in college housing, I suddenly realized that we had debt and no house downpayment at all. Meanwhile, while we’d been in residence, housing prices had been rising 20% a year.
5. I followed my dad’s suggestion to have a look at Dave Ramsey. I read the book, listened to the show, and a year later we started the plan.
6. Six years later, we have no revolving debt, we have a paid-off car, we have a real beginning to retirement savings, and we are on track to put 20% down on a house later this spring.
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I always question style articles based on demographic data that seems to be first sourced by people’s friends and then supported with factoid statistics. My guess is a part of comparison of the 18 year olds in 1983 and in 2013 would include changing demographics, including the likelihood that they are more likely to be immigrants, children of immigrants, non-white, a feature that’s ignored in the linked article. True, changing habits and economic conditions might play a role, but, so, one might imagine, would being raised in an immigrant Hispanic family.
I often fear this kind of article sees a correlation and then attributes to the causation to the information they have at hand (watching some 18 year old they know make decisions about credit cards) rather than all the information they don’t know (all the 18 year olds they’ve never met).
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The comments on Lowrey’s article are interesting and a little dispiriting. The article itself is sort of a grab bag, would have been more coherent if it had separated out ‘long term traits which may be engendered in millenials by current conditions’ and ‘probably smart reactions by millenials to likely future conditions’. My own guess is that we will not have again the kind of buoyant economy which formed the backdrop for boomers’ decisions, and that bringing home cello packs of oyster crackers is going to be a more rational thing to do, in future, than it has been in the recent past. So if when millenials spend a buck, you can hear George Washington squeal, probably that is prudent of them.
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