00:00Younger generations today have a lower purchasing power of about 86%
00:05than those of the baby boomers when they were in their twenties.
00:08All this because of the high prices of real estate, automobiles and education.
00:13Millennials and Generation Z are often accused of spending all their money on expensive breakfasts,
00:19but is this really the problem, or are they simply facing a much more difficult economy?
00:26See for yourself.
00:27In 2022, when the average millennial reaches 33 years old,
00:31the price of a typical house in the United States will be $43,000,
00:35while the average income of households will be only $700,000.
00:39With this income, they would have to spend everything for a little over 6 years to pay the total price of a house,
00:46which does not seem very realistic.
00:48And it's worse in the United Kingdom,
00:50where the cost of housing has been more than 9 times higher than the average income over the last decade.
00:55Baby boomers, born between 1946 and 1964, lived at a time when life was much more affordable.
01:03In 1988, when the average baby boomer was 33 years old,
01:07the average price of a house was $1,000,000, while the average income was $2,7000.
01:13This represents a 4-year house income gap, which is much more affordable.
01:19Some baby boomers could even repay their house in a year or two.
01:23So, what is the reason for all this?
01:26Unsurprisingly, while inflation has not ceased to increase,
01:29the price of houses has increased even faster.
01:32For example, a $1,000,000 house in 1990 would cost $3,777,000 today,
01:38far exceeding the cost of other goods and services.
01:41In addition, in the 1970s and 1980s,
01:45the American population was weaker and the demand for housing was lower.
01:50Baby boomers got married earlier, combining their income to invest in real estate.
01:56For their part, members of the Y and Z generations remain single for a long time
02:00and often choose to live with their parents to save money.
02:04School fees have more than doubled since the 1990s
02:08and student debt has reached a staggering $1,700 billion.
02:13The average salary of students at the end of their studies has tripled to $3,000.
02:18It is not surprising that young people have to make some important decisions,
02:22such as buying a house or starting a family.
02:25And even if more and more people get a university degree,
02:29salaries do not follow the increase in the cost of living.
02:32The starting salary of graduates often ranges between $5,000 and $6,000,
02:37which is barely enough to cover student loans,
02:40student loans, rent and other expenses.
02:43And that's not all.
02:44Car monthly payments have reached new heights.
02:48The average monthly payment is $716 per month
02:51and loans can last up to 69 months.
02:54High interest rates are still aggravating the situation,
02:57leaving many young people in debt from car loans and credit cards.
03:03Many people judge their success in life by observing their parents.
03:07If your parents had a solid financial situation,
03:10there is a good chance that you have one too.
03:13And for a long time, the goal of most families was simple,
03:16to do better than the previous generation.
03:18But this is becoming more and more difficult.
03:21In the 1940s, about 90% of people ended up making more money than their parents.
03:27If we go to people born in 1980, this figure fell to only 50%.
03:34In other words, half of today's people do not make more than their parents,
03:38which is a significant change compared to previous generations.
03:42It is therefore not surprising that many people do not seem to be financially ahead.
03:47A CNBC survey revealed that only 36.5% of adults
03:52say they are doing better than their parents.
03:55An even larger proportion, 42.8%, says they are less well off.
04:00The remaining 27.2% seem to be at about the same level.
04:04And here is the most surprising.
04:06Those who are in the age group, between 35 and 65, are the ones who suffer the most.
04:12This age group is in great difficulty compared to the previous generation at the same age.
04:17They are confronted with the flames of real estate prices,
04:20student loans and the increase in the cost of living.
04:24And the salaries do not follow.
04:26I can give you some other examples.
04:29Between 2005 and 2014, 97% of Italian households saw their income stagnate or decrease.
04:36And if we take into account taxes and benefits, this figure goes to 100%,
04:42which means that all households have been affected.
04:45The United States also experienced difficulties during this period,
04:49with more than 80% of households having no real growth in their income.
04:55Fortunately, thanks to tax cuts and other benefits,
04:58most families have still seen their income available.
05:02The money they can actually spend has increased.
05:05And yet, in some respects, younger generations are doing better than their parents.
05:10For example, in each new generation, people are more likely to go to university.
05:16Generation X has more higher education graduates than Baby Boomers,
05:21and Generation Y is the most educated generation to date.
05:24Nearly 40% of its members have at least one degree,
05:28against only 25% of Baby Boomers.
05:31A higher level of education generally means higher incomes,
05:35which could explain why the members of Generation Y
05:39on average had more wealth at the age of 33-34 than Generation X and Baby Boomers at the same age.
05:47The quality of life has also increased.
05:50Even if things are more expensive today, they are also better in many ways.
05:55Take cars, for example.
05:57The cheapest car today is much safer, more reliable,
06:01and has better features than the cheapest car from 20 years ago.
06:05Technology, health care, and daily necessities have also improved considerably,
06:11which makes life easier in many ways.
06:14Younger generations have more freedom and legal protection than their parents.
06:19Not so long ago, people had less rights in terms of wages, housing, and loans.
06:25Unfortunately, wage gaps and financial obstacles still exist,
06:30but some laws have allowed younger generations to more easily build a heritage,
06:35and also to access more advantageous jobs.
06:39It is interesting to note that parents still have good hopes for the financial future of their children,
06:44despite all the financial difficulties that people face today.
06:48Let's see.
06:49About 42% of adults think that the next generation will have a stronger financial future,
06:55although this figure falls to 40% for people aged 35 to 64, according to a CNBC survey.
07:02Parents, however, are even more optimistic.
07:0559% of them say that their children will be more financially comfortable,
07:09while only 1 in 5 think they will be less well off.
07:13So, maybe the heritage is the key.
07:16After all, many parents plan to give their children a financial boost.
07:21More than 75% of them declare that they will leave money by will.
07:25But no, the heritage is not the absolute priority when it comes to really helping children to succeed financially.
07:32Here is what, according to parents, can really make a difference.
07:3643% of them believe that the most important thing is to have a stable job.
07:4120% think that it is to have a fully paid education.
07:45And only 15% say that it is the heritage that matters most.
07:49In other words, if a little financial help never hurts,
07:53most parents believe that a good job and a solid education
07:57will be more useful for the future of their children than a heritage.
08:01Now let's go back to the seemingly innumerable financial challenges faced by young generations.
08:06There are actually a few measures you can take to improve your situation.
08:11First of all, try to spend your money in a smart way
08:15by keeping your rent or mortgage payments below 30% of your gross income.
08:20The same rule applies to car payments.
08:23Keep them below 10%.
08:26Start investing early and open a savings account.
08:29250 dollars per month invested for 40 years could reach nearly 1 million dollars
08:34thanks to compound interest.
08:37Then, changing jobs can lead to an increase in wages from 10% to 30%.
08:42And it's a great way to increase your income over time.
08:46Do your best to first reimburse high interest rates loans,
08:50such as credit card loans or car loans.
08:53This allows you to free up money to save or invest.
08:57And yet, the generational debate is far from being resolved.
09:00Who had the hardest life?
09:03The older generations often criticize the younger ones,
09:06saying that they don't work as hard or that they are too distracted by social media.
09:11But as we can see, the data paints a different picture.
09:15Millennials and Generation Z are not lazy.
09:18They simply try to navigate in a world that is financially unfavorable to them.
09:23And while it is true that society has progressed in many ways,
09:27the economic challenges that young generations have to face are unprecedented.
09:32So, what do you think?
09:34Are millennials and Generation Z really in a more difficult situation than baby boomers?
09:40Or is it simply because we spend too much time on our phones?
Comments