Millennials are in a lot of debt, and it’s had a significant impact on the course of their adult lives. 

That’s the finding of a new study on millennials in debt and income by Real Estate Witch. The study found that a staggering 72% of millennials are currently holding some kind of non-mortgage debt, with the average millennial debt burden coming in at $117,000.

If that sounds like an insurmountable amount of debt, some millennials agree with you. 6% of respondents said they don’t think they’ll ever be able to pay off their debt.

So how, exactly, did millennials get here? And how is it affecting their lives? Let’s break down some of the survey’s findings.

A Significant Number of Millennials Have Given Up on Homeownership and Children

For many millennials, carrying their debt has been so burdensome that they’ve given up on reaching traditional milestones like having children or buying a home.

According to the study, 30% of millennials who don’t already own a house think they have zero chance of ever being able to afford one. That’s a sobering finding: nearly a third of millennials who haven’t yet bought a home have simply given up on what’s widely accepted as the safest way to build wealth. 

Why? Well, buying a home requires sizable cash down payment and a decent credit score. If you don’t have those, it’s unlikely you’ll ever be approved for a mortgage. Homeownership probably seems like an impossible dream for millennials who have nothing left after basic expenses and debt payments.

Equally sobering is the fact that a full quarter of millennials (25%) who want children have put off starting a family because they simply can’t afford to have children. These aren’t extravagant dreams — these are conventional and, for previous generations, attainable desires. So why are they out of reach for so many millennials?

Millennials Have More Student Debt Than Any Other Generation 

Any conversation about millennials and debt has to start with student debt. Nearly 15 million millennials have some student debt — more than any other generation. Even that number doesn’t quite convey just how many millennials borrowed money for school. The survey found that only 8% of respondents, or fewer than one in twelve, had never taken out any student loans.

The overall numbers are alarming: 48% of millennials have some student debt, with the average balance being $126,993.

To put it in perspective, the average U.S. home, according to Zillow, is worth just under $356,000. So, the average millennial student debt holder is already about a third of a house in debt.

Tuition costs have skyrocketed in recent years and have doubled since 2004, according to Educationdata.org. The increases have been so steep that older millennials have about $111,000 in student debt, while younger millennials who went to school more recently have about $135,000 in debt.

A big reason that millennial student debt has been so problematic is that it hasn’t translated to career earnings. In 2022, the average U.S. full-time worker earned about $54,000 a year, but Millennials are lagging. Nearly half of millennials (40%) make less than $50,000 a year, and almost a fifth (19%) make less than $25,000 a year.

That’s led to a lot of borrowers’ remorse. Almost a quarter of millennials (22%) regret taking out student loans, and another 24% wish they’d chosen a more lucrative career.

But student debt isn’t the only problem for millennials — it’s only one piece of the puzzle.

Millennials Have a Lot of Credit Card Debt

Although Millennials are most associated with student debt, surveys have shown that they’ve racked up other kinds of debt, too.

After student debt, the most common kind of debt held by millennials is credit card debt. Over two-thirds of millennials (67%) are carrying credit card debt, making it more common among this generation than student debt. 

The average credit card balance among millennials is $5,349, which is lower than the U.S. average. However, keep in mind that millennials are relatively young and haven’t had a lot of time to rack up credit card debt. Average credit card debt was 20% higher among older millennials. 

A quarter of millennials owe $10,000 or more in credit card debt, and 29% don’t pay off their total balance every month. This suggests that many millennials are using credit cards to pay for necessary expenses, but this decision could further sink their financial prospects.

As this high-interest debt balloons, their debt burden exponentially increases while also dropping their credit score. 

Millennials Lack Money for Important Expenses Like Insurance

With Millennials putting so much of their income toward their debt payments, other expenditures have fallen by the wayside. One of the biggest is insurance premiums.

One recent study by the Life Insurance Marketing and Research Association (LIMRA) found that more than half of millennials (55%) had no life insurance coverage at all and that 35% of those millennials said they didn’t have it because it was too expensive.

A 2019 study by HypeLife Brands, a marketing agency targeting millennials, found a similar trend concerning car insurance: while 84% of older drivers had car insurance, only 64% of drivers between 18 and 29 did. Even drivers who do have car insurance worry about what happens if they can’t pay their car insurance deductible.

The study findings show a massive gap, and some of those young drivers are going without car insurance simply because they can’t afford it. After all, the average cost of car insurance is nearly $1,800 a year, according to Bankrate.

Still, there’s a light at the end of this tunnel. 2022 found that a staggering 80% of millennials overestimated the cost of life insurance. This means if they’re simply educated about the true cost, it’s likely that many more millennials will buy insurance. 

Rising Housing Costs Have Put the Squeeze on Millennials

A lot of millennials’ financial troubles can be attributed to bad timing. While tuition costs were skyrocketing over the past two decades, so were home values and rents. As a result, Millennials have not only had to take on unprecedented levels of student debt but have also had to put forth an unprecedented percentage of their income towards keeping a roof over their head. 

Experts suggest spending only 30% of your income (or less) on housing, but two-thirds of millennials spend more than that. The average millennial spends nearly half of their income (47%) on housing. 

With low earnings, high housing costs, and unprecedented debt, many millennials’ financial woes start to make sense.

Millennials Have a Poor Savings Rate

A lot of millennials haven’t saved much money, which, in light of the above facts, isn’t surprising. After all, you can’t save money you don’t have.

About one in seven millennials have no savings at all. A quarter of millennials don’t think they could cover an unexpected $500 expense, a third doubt they could cover a $1,000 emergency expense, and nearly half (48%) couldn’t cover a $5,000 emergency expense. 

Taken together, these findings paint a discomfiting picture of the millennial generation. Stretched to their financial limits, they’re putting half their income toward housing, another big chunk towards their debt, and little or nothing into savings. 

If they’re lucky, they’ll continue to fly by the seat of their pants, getting by. If they’re not lucky — well, things could get a lot uglier than they already are.