Millennials have been called the 'brokest' and the 'richest' generation, and experts say both of those are true

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Are millennials rich or poor?

• Millennials have been called the "richest" and the "brokest" generation - which is true?
• A study from the Federal Reserve found that while millennial individuals have less money compared to previous generations at their age, millennial households have more money.
• Economic conditions have put millennials financially behind previous generations at their age, but a baby boomer inheritance, good savings habits, and low unemployment rates means they can catch up.

Society finds millennials to be pretty reckless with their money compared to previous generations - they take on more debt, have a "treat themselves" mentality, and are killing industries left and right because of their lack of financial stability.

But are these financial habits due to economic circumstances handed to them, or financial irresponsibility? It's hard to say when millennials have been labeled both "the brokest generation" and "the richest generation" by media outlets like Slate, Yahoo, and the BBC.

A report by the Fed published in November 2018 found that millennials' spending habits are similar to earlier generations - except they have much less money than Gen-Xers and baby boomers had at their age.

"Millennials are less well off than members of earlier generations when they were young, with lower earnings, fewer assets, and less wealth," the study said.

According to this analysis, millennials are poor, which led Slate to deem them "the brokest generation."

But in December 2018, the Pew Research Center published a study that found millennial households are earning more than previous generations did at their age nearly any time in the past 50 years. This research provided further support for the millennials-are-wealthy narrative, and Quartz called them "the richest generation."

So are millennials rich or poor? Turns out, they're both.

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Millennials are faring differently compared to previous generations when it comes to finances.

Pew looked at data for a three-person household income, while the Fed looked at data for individuals. Average real labor earnings for male household heads working full time were 18% and 27% higher for Gen Xers and baby boomers, respectively, when they were young compared with millennials, the Fed found. For women, the difference was 12% and 24% higher for Gen Xers and baby boomers, respectively.

But while the Fed found that individual incomes were falling for millennials, it did find that family incomes for married couples (aka, household incomes) grew, similar to Pew's analysis. Individuals are earning less, but households are earning more.

Both studies attributed the higher number of female millennials joining the workforce, compared to previous generations, as a factor behind the increase in household incomes.

That's from the perspective of aggregate incomes - when it comes to how millennials are faring financially, there's more to consider.

Read more: 7 of the biggest financial problems millennials face that their parents didn't

The Great Recession, increased living costs, and student debt have put millennials financially behind

"Millennials are much more complicated from a broad stroke financial picture than will easily fit in one financial box or generalization," Jason Dorsey, a millennial researcher, consultant, and the president of The Center for Generational Kinetics, told Business Insider.

"Millennials are a huge generation and range in age from the mid-20s to late-30s," said Dorsey, who finds both "rich" and "poor" labels to be accurate millennial descriptions. "The oldest millennials crashed right into The Great Recession, wage stagnation, and a rising cost of living. Younger millennials still are challenged by student loan debt but overall entered at a better economic time."

Millennials born in the 1980s are at the greatest risk of becoming a "lost generation" for wealth accumulation, according to a 2018 report by the Federal Reserve Bank of St. Louis. As of 2016, people born in this decade had wealth levels 34% below where they would most likely have been if the financial crisis hadn't occurred, the report found.

Because they entered the workforce during the Great Recession, they've been scrambling to catch up ever since and have been the slowest cohort to recover from it.

And while millennials have benefited from a 67% rise in wages since 1970, according to research by Student Loan Hero, this increase hasn't kept up with inflating living costs. Costs for childcare, healthcare, and entertainment have risen, and rent, home prices, and college tuition have all increased faster than incomes in the US, the organization found.

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Student debt is at an all-time high - and it's one of the reasons millennials are set back financially.

The latter is a particular problem - college tuition has more than doubled since the 1980s. The national total student debt is $1.5 trillion, according to Student Loan Hero, and the average student debt per graduate who took out loans is higher than ever, at $17,126, Business Insider reported.

Read more: Millennials are making what could be one of the costliest investing mistakes in history

Millennials are also spending more of their income than older generations on caring for aging family members, The Wall Street Journal reported.

This economic situation has led more than half of millennials to rely on money from their parents to get by, according to the Country Financial Security Index.

All of this paints a pretty dismal picture for millennials. But, there's a bright side.

A baby boomer inheritance, low unemployment rates, and good savings habits mean millennials can catch up financially

Because millennials have higher education levels and more time to earn and save, it's possible they'll have steeper income and wealth trajectories than previous generations and meet their financial goals in the end, the St. Louis Fed report said.

Millennials are also set to receive a wealth inheritance from baby boomers, which could make them richer than previous generations, Business Insider's Jim Edwards previously reported. Paul Donavon, chief global economist of UBS Wealth Management, told Edwards that because the millennial generation is smaller than the baby boomer generation they're inheriting from, wealth will be more concentrated upon transferal.

"From a big-picture viewpoint, millennials will likely receive the greatest wealth transfer in modern history - from the baby boomers," Dorsey said. "However, the reality is that baby boomers are healthier and living longer than even they planned, so that wealth transfer might not happen for 20-plus years."

He added: "Millennials will do better than they are often maligned by the general public, but they also got off to a slower start entering their wealth accumulation phase due to a variety of external events that were often out of their control.

Read more: Millennials are treating themselves to experiences - but it doesn't mean they're bad with money

"However, many Millennials are now older than most people assume, [and] are on the whole the largest generation in the US workforce, and paving a path that increasingly leads to financial self-reliance, even if that path was delayed when compared to previous generations' entry into adulthood," Dorsey said.

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Despite economic hardships, it's likely that millennials can meet their wealth goals in the end.

While outside conditions have left millennials financially behind, they're working hard to catch up. Economic conditions have made millennials more financially savvy, according to Shannon Insler in an article for Student Loan Hero.

"They are managing their money differently," she wrote. "More millennials are refinancing student loans, delaying a home purchase, and looking for creative ways to earn more money through side hustles."

Millennials are also saving twice as much as baby boomers, according to a NerdWallet study, meaning they could be on track to be richer than their parents.

"We are overall positive on how millennials will fare financially due to baby boomers retiring, potential inheritance, and the very low unemployment rate creating near-term job opportunities," Dorsey said.