Dave Ramsey: Millennials and Gen Z living at home are a ‘trainwreck’

This cohort (ages 18 to 29) is driving luxury growth in the U.S., according to a December report by analysts at Morgan Stanley. The analysis found that living at home freed up the spending sprees of older Gen Zs and younger millennials, allowing them to buy designer handbags and watches. Ramsey, a self-made millionaire and author of numerous personal finance books, highlighted the trend on a recent episode of “The Ramsey Show.”

“So let me get this straight. You’re living in your mom’s basement, but you’ve got a Coach purse,” Ramsey said. “Here’s what’s going to happen — you can’t avoid life, it’s coming up your ass. Mom can’t protect you. ”

Saying the trend will lead to a “train wreck”, Ramsey blames not young adults but their parents for raising and “taming” helicopters that are “out of control”.

“The problem is you’re in debt, you’re not making enough money and you’re not doing enough to go out and change it,” added co-worker Jade Warshaw. “Mom and Dad can’t do it for you.”

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But the situation is a bit more complicated. The economy, not parenting or lack of willpower, keeps many young adults living at home. (Ramsey’s team did not respond to a request for comment.)

Living at home can help young adults save money

Millennials, a highly educated group that graduated from the Great Recession and its aftermath, entered a tough job market while saddled with massive student loan debt. Since then, many have been able to make strides toward building wealth, but the long process to get there has led them to marry, start families, and buy homes later than their parents did—if they even participated in those life milestones. at all.

“It’s almost as if we don’t want millennials to have a piece of the American dream,” said Andre Perry, a senior fellow at the Brookings Institution. Fortune in November.

Gen Z has also faced its own financial struggles, with the older generation thrown into the tail end of their careers by the pandemic and a dismal job market. Although they gained an edge in employment as the labor market recovered and the threat of recession motivated them to save more than other generations, many doubt that they will be able to save enough for retirement and/or a home.

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Both generations now face 40-year high inflation for the first time, and some can’t afford a roof over their heads. U.S. rents rose so much last year that Americans now have to work six hours more a month to afford it than they did before the pandemic.

According to a survey by PropertyManagement.com, 39% of millennials who moved back in with their parents in the past year did so. More than half said they returned home to save more money.

This is proof that living at home with parents can be financially viable. “It’s not necessarily seen as a negative thing, as long as there are clear fiscal goals,” Doyle Williams, CEO of Country Financial, said in 2018, adding that it can help millennials build an emergency fund and save for a down payment.

At the time, the National Financial Security Index found that 35% of millennials still lived at home with their parents. In a PropertyManagement.com survey today, it’s one in four. A separate study found that nearly 30% of adult Zers still live at home with their parents, and the rising cost of living is keeping them from moving out on their own.

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Of course, some young adults prefer to treat themselves—after all, Gen Z is motivated by material goods more than any other generation, and they started spending on those expensive items earlier. But when it comes to those who live at home, that doesn’t mean they don’t spend money too. Nor does it mean that every boomerang child splurges on luxury.

Many just hope that living with their parents will help them one day afford what was once more easily attainable for mom and dad.

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