The Millennial Generation is saddled with many problems, not the least of which is a series of unflattering, and usually false, stereotypes. Ready or not, this demographic group, by its sheer size and coming-of-age status, is set to lead this nation and determine its economic future.

Millennials, also known as Generation Y, were born between the early 1980s and the early 2000s. That’s pretty much everyone now in their 20s and 30s. They measure 83 million strong and hold about half of all jobs in the U.S. They have been characterized as lazy, entitled, selfish, difficult to manage in the workplace, and narcissistic. Yes, those are apt descriptions for some, but it’s unfair to tar the entire generation. Most are hard-working and energetic, and as a group, they are the most educated generation ever. But these millennials face some very serious problems that previous generations did not.

Three of the most pressing issues are historically high student loan debt, homeownership that is out of reach for many, and a significant delay in getting married and having kids. Their lives have been shaped by two of the most cataclysmic economic events in the history of our country – the Great Recession of 2008-09 and the current Coronavirus-related slump. These are events that are likely to reduce both their wealth and opportunity for decades to come and mold their views for the rest of their lives.   

Millennials are now going through a once-in-a-lifetime downturn – for the second time in just a dozen years.

According to Reid Cramer of the Initiative of New America, “just as Millennials begin to approach their prime work and family-forming years, poor finances are complicating how they assemble the building blocks of success.”  He says that stagnant incomes, rising debts, and a broadly weakened financial profile “have given rise to a new narrative: Millennials appear unlikely to replicate the economic success of their parents and grandparents.”

Inevitably, this creates a real sense of economic instability that will stay with them for the rest of their lives, just as our parents and grandparents were forever scarred by the memories and lessons learned during the Depression of the 1930s. A 2015 study by Standard & Poor’s found significant similarities between Millennials and the Silent Generation born in the mid-1920s through the early 1940s – both having witnessed major financial crises during formative and early adult years. As a result, both generations tend to be more financially conservative, keeping larger amounts of cash on hand, and holding less in stock market investments. This results in less asset-building over their lifetimes.

Many studies have shown that people who are early in their career development during an economic crisis are at a lasting disadvantage. As The New York Times recently reported, their wages, opportunities, and confidence in the workplace may never fully recover. The Times article quotes the University of Rochester economics professor Lisa Kahn as saying recession graduates seem more risk-averse. “People that graduate into a recession don’t change jobs as often as people that graduate into booms,” and job changes are one of the best ways to get a significant raise. Various studies have shown that Millennials who entered the workforce during or shortly after the Great Recession have suffered significantly higher levels of unemployment and underemployment compared to people at the same point in their lives from previous generations.

The oldest Millennials graduated college shortly after the bursting of the tech bubble in 2000-01; those who are now in their early 30s graduated in the aftermath of the Great Recession; and the youngest Millennials are just starting their careers in the midst of the pandemic. Young workers who were already economically fragile are being especially hard hit in the current crisis, especially those who were part of the ‘gig economy’ and depended on a series of part-time jobs.

Compounding those traumas, the generation is saddled with enormous college debt, mainly because the cost of a college education has soared astronomically over the past 30 years. In total, Millennials have racked up nearly $1.6 trillion in student loan debt. That’s an astounding number.  It reduces their take-home pay, which in turn limits their ability to buy a home. That has limited their interest and ability to get married and start a family, all of which reduces their ability to accumulate wealth.

Kathryn Edwards, a labor economist at the Rand Corporation, told Bloomberg News that this generation is walking a tightrope, with danger on all sides. “It’s hard to imagine someone making it through both of these recessions in this age group,” and escaping unscathed, she said.

In fact, Millennials overall entered this current downturn with fewer resources, compared to previous generations at the same age. They are woefully unprepared to handle the financial stress of a layoff. A recent survey shows that more than half of Millennials are concerned they may default on their loans within the next 12 months. The average student loan debt tops $32,000.

These factors have long-term implications for these young men and women, and the economy as a whole. Massive debt obligations could keep this generation from spending, and our economic growth is primarily fueled by consumer spending. Also, recent reports show that people under the age of 40 are bearing the brunt of the layoffs from the pandemic.

Annie Lowrey, an economic writer at the Atlantic, calls Millennials “the lost generation.” She says they will be the first generation in modern American history to end up poorer than their parents. A lot is riding on their success, and without a dramatic change of fortune, this entire generation could miss out on the chance to reach its full potential.

Despite all of these obstacles, the outlook is not totally bleak. Many millennials are firmly on a solid career path that should not be derailed by current events. And as the economy starts to recover, it could provide new opportunities for others who had trouble finding a foothold. Also, a new report from the Center for Retirement Research at Boston College notes that millennials “have several decades to make up for this rough patch. There’s no reason they can’t overcome the setbacks with some pluck and determination.”

In order to prosper, it is critically important for this generation to learn and apply the basic tenants of financial planning that have worked so well for previous generations. That includes saving, investing, debt repayment, and other healthy financial habits. We recently wrote a series of articles on financial literacy and how to avoid the money mistakes that people commonly make in every decade of their lives. The series can be found here, including 9 Common Money Mistakes People Make in Their 20s and 11 Common Money Mistakes People Make in Their 30s.

The bottom line is that millennials face many challenges, but with proper planning and guidance, they can chart a path for a successful financial future.