The One Weird Trick for Millennial Financial Success

So The Atlantic ran this article with the headline “Millennials Who Are Thriving Financially Have One Thing in Common,” and, like you do for these kinds of stories, I tried to guess the One Thing before I clicked on the article.

Is it a job with a living wage?

Housing that costs less than 25 percent of their income?

The ability to put a percentage of their income into savings each month?

No student debt?

Do they just never drink lattes? Always take their lunch to work? Make their bed every morning? What could it be?

And then I clicked the link.

These Millennials have something very special: rich parents.

Oh.

I guess that was kind of obvious, or at least the sort of thing that would make a bigger difference than, say, the latte factor. How do these rich parents ensure their children’s financial security?

These Millennials have help paying their tuition, meaning they graduate in much better financial shape than their peers who have to self-finance college through a mix of jobs, scholarships, and loans. And then, for the very luckiest, they’ll also get some help with a down payment, making homeownership possible, while it remains mostly unattainable for the vast majority of young adults.

Wait, a lot of parents try to provide some kind of tuition support, even if it means skimping on retirement savings or taking out a second mortgage. And these parents aren’t “rich.” The Atlantic pulled their data from a Zillow study that corroborates this:

Of those who completed a post-secondary degree, 61 percent (or 28 percent of all young adults) received financial assistance from their parent(s), including cases where the parent(s) took out a loan to cover the child’s post-secondary educational costs.

So… not rich. Not poor, probably, but not necessarily rich. But the Zillow study continues with what they term “the funnel of privilege:”

In total, 9 percent of all young adults who received parental support for their education also received family support in funding their down payment. Looking at the data in another way, 3 percent of all young adults received parental support for both education and buying a home.

And those three percent are the “financially thriving” Millennials with theoretical “rich parents.”

So let’s rewrite that Atlantic headline to make it a little more accurate: Some Millennials receive parental support for both college costs and homebuying costs, helping ensure their financial stability in adulthood. Other Millennials create financial stability through a combination of income, budgeting, planning, saving, investing, and luck — the usual components of financial success.

And you don’t need rich parents to thrive financially.

Although they probably help.

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