How The Lavish Lifestyle Of Millennials Has Landed Them Into $3.8 Trillion Debt In The US

Over the past decade, the young generation has been pretty quick to adopt the YOLO (you only live once) motto, isn't it? Living the present to the fullest instead of leaving everything for the future has become a common phenomenon among millennials.

And even the numbers are proof. Like the case of 31-year-old Kate in the US, who has attended 19 weddings, out of which she was part of the bridal party for 12 of them.

And with the weddings came expectations. From matching dresses and shoes, travelling to the venue, going for a bachelorette, to the gifts, the costs behind these lavish experiences have now landed youngsters into trillions of dollars in debt.

The Luxurious Lifestyle Of Millennials In The US

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Though she now earns around $70,000 per year and does a fair amount of budgeting, that wasn¡¯t the case in her mid-twenties. Then, she was more "financially irresponsible" while earning around $45,000 per year¡ªless than many of her friends and certainly not enough to spend thousands of dollars on multiple weekend getaways a year.

From plane tickets, Airbnb stays, car rentals, celebratory dinners, and so on, she estimates having spent $18,000 on other people¡¯s weddings and events over the years¡ªwith around $8,000 to $10,000 of that accruing into credit card debt.

But she is not the only one doing so. Plenty of millennials in the US can relate to Kate. As the generation has come of age, gotten married, had children, and turned 30 (and then 40), events like bachelorette parties, weddings, and even birthday parties have become more lavish and indulgent.

"If I look back at when my older friends and older siblings were in their mid-twenties, were they doing this? Absolutely not. They did not travel like this; they did not have the expectation of doing all of this," she says, as per the Fortune report. "Even from the first wedding I went to 10 years ago to now, it¡¯s a different expectation."

When Expectations Land You Into $3 Trillion Debt

And for many, the expectations can lead to taking on debt. In fact, people in their thirties accumulated a record-high debt of over $3.8 trillion by the end of 2022¡ªup 27% from 2019, according to the Federal Reserve Bank of New York. Much of that is mortgage debt.

But another sizable portion is credit card debt, and it¡¯s on the rise¡ªmillennials have an average credit card balance of $6,750, 26% higher than the average three years ago, the Wall Street Journal reported. Thirtysomethings also boast the highest rates of credit card delinquency compared to any other age group, according to the New York Fed and Liberty Street Economics.

Also Read: Americans' Credit Card Debt Rises To All-time High Of Nearly $1 Trillion

Other Factors Behind Soaring Debt

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Of course, birthday celebrations and over-the-top bachelorette parties aren¡¯t to blame for an entire generation¡¯s growing debt balance.

Much of it can be attributed to factors beyond the individual millennial¡¯s control, like the increasing cost of living, outrageous childcare costs, massive student loan debt, rising credit card interest rates, and the fact that many are in the life stage of buying big-ticket items like a house or a car. Millennials aren¡¯t the only ones to experience FOMO. But the social pressure they face to attend all these milestone events is real, and the costs are growing, says Ted Rossman, senior analyst at Bankrate.

Millennials Indulging In Experiential Spending

Experiential spending is more important to younger generations and likely reflects part of their growing indebtedness.

Especially post-COVID lockdowns, demand for experiences¡ªfrom Taylor Swift concerts to summer travel¡ªhas increased dramatically and has not subsided much yet. ¡°It does seem to be a growing trend. There is something generational about it,¡± says Rossman, noting that Gen Z is already facing the same spending pressures. ¡°Young people love experiences.¡±

Yet, while it¡¯s easy to commiserate over student loans or inflation, there¡¯s something about not being able to afford your best friend¡¯s birthday brunch that¡¯s more difficult to put into words, says Kate. ¡°Why did no one ever have the bravery to be like, ¡®Guys, I can¡¯t do this. This is not a good use of my money¡¯?¡± she says. ¡°You didn¡¯t want to be the only one. It¡¯s very overwhelming in that sense.¡±

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Also Read: Research Analyst Vatsal Nahata Shares Tips On Saving Money

When Millennials Can't Afford What They Are Doing

Blame social media, says 31-year-old Kate. Between TikTok travelogues of destination bachelorettes and Instagram feeds filled with event recaps, there¡¯s pressure to create and attend more and more once-in-a-lifetime events. "Everything has to be milked to the nth degree for any milestone," she says.

Still, while the highlight reels are made for some nebulous digital audience, the money they cost to produce is very real. While she's had fun on the trips she¡¯s been on, Kate has some regrets, mentioning how much further along her retirement savings could be if she attended fewer trips.

It¡¯s easy, in theory, to say no to things you can¡¯t afford. Less so when you want to be there for your friend, and doing so might highlight your own insecurities about your salary or spending habits. Kate wishes she pushed back more when she was younger.

¡°What felt the most stressful was the lack of conversation about it. Money is so hard to talk about, especially in your twenties,¡± Kate says. ¡°God, does anyone else feel overextended by this? Am I the only one who can¡¯t afford to be doing what I¡¯m doing? Is anybody else stressed by this, or am I the one friend who can¡¯t seem to get her finances in order?¡±

She says it¡¯s easy to fall into the spending trap when it's as normalised as it has become. In some friend groups, it¡¯s not so much a question of whether a bride will want to go on a weekend getaway for her bachelorette party, for example, but rather of where she wants to go, Kate says, as per the report.

But as she¡¯s gotten older, Kate says the conversations around the events have changed. There¡¯s less pressure to appear like you can afford to do everything.

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