KEY TAKEAWAY: Since 1996, the average net worth of consumers under 35 has dropped by 35%. Millennials are saddled with very large and unavoidable expenses that reduce their spending power when it comes to the discretionary purchasing that gets marketers so excited.
At least two major factors are impeding millennial spending power right now: housing and student debt.
There’s a good reason why millennials are reaching these milestones later in life: they are significantly financially worse off than previous similar-aged cohorts. Since 1996, the net worth of consumers under the age of 35 has fallen by 34 percent. Homeownership for the cohort declined by more than 4 percent between 2007 and 2017. And the rise in the education level of millennials hasn’t come cheap: Between 2004 and 2017, student debt has increased for consumers under 30 by 160 percent. Typecasting the millennial as simply being “different” overlooks a much bigger factor—that of their economic constraints.

A growing share of the millennial’s wallet is going toward health care expenses, housing costs, and education highlighting not so much a change in the consumer, but rather a change in the economic pressures that the young consumer is under.
The median earnings for 25-year-old millennial men with a bachelor’s or higher degree were about $50,000 per year, which is slightly higher than for previous generations after adjusting for inflation. The median earnings for 25-year-old millennial men who have high school degrees or less were $29,000 per year, which is about $2,600 dollars less than Gen Xers and nearly $10,000 less than Baby Boomers received at the same age, according to Torche and Johnson’s analysis of U.S. Census data from 1975 to 2018.

Millennials buying their first home today will pay 39% more than baby boomers who bought their first home in the 1980s, according to Student Loan Hero. In fact, the value of homes has increased by 73% since the 1960s, when adjusted for inflation.
What’s this mean for brands?
Brands have looked at the numbers of Millennials as an opportunity, but they ignore their more significant financial struggles. Being a “hip” brand is not enough to target Millennials; marketers need to understand that they are frustrated and angry.
Higher healthcare insurance premiums are eating away at income, and in some cities, rents are higher than mortgage payments. Ms. Warren hit a great spot when she suggested that all student loan debt should be eliminated, but that’s not about to happen.
Targeting Millennials means that brands need to understand their mindset and struggles. If they don’t they are going to to lose a lot of money on irrelevant marketing.