Many millennials are feeling financial strain, even with decent incomes. For instance, Nadia, a UX designer earning $91,000, often spends more than she makes just to keep up with social expectations. Despite her careful budgeting, she finds herself with just $340 left in her checking account halfway through the month. “I just exist. And existing costs more than I make,” she says.
This isn’t just about spending too much; it’s about the pressure to perform. Over 80% of millennials report feeling this social pressure, according to a 2023 study in the Journal of Consumer Psychology. Many young adults feel the need to align their spending with what their peers deem normal or desirable even when it’s beyond their financial reach. This “visibility tax” makes them feel like they have to spend money to fit in, putting significant strain on their finances.
Marcus, another millennial, earns $78,000 but faces similar issues. He lives in a costly neighborhood and works in an environment where how he presents himself is critical. Even everyday expenses can feel like a burden. He says he can’t show up to meetings looking less than professional, which he equates with caring about his job.
Sociologist Elizabeth Currid-Halkett highlights the concept of “inconspicuous consumption,” where individuals spend on things like organic groceries and trendy gyms to feel a sense of belonging. This type of spending doesn’t always feel like a choice but rather a necessity for social acceptance.
Financial therapist Brad Klontz describes this intersection of self-worth and finances as “financial enmeshment,” especially affecting millennials. They often navigate between wanting financial stability and feeling pressure to maintain a certain image, learned during formative years like the 2008 financial crisis.
Nadia made a bold move by relocating to a less trendy area and cutting back on her social spending. While she worried about potential judgment from friends, a few voiced envy over her choices. Now, she saves 15% of her income for the first time in four years—the shift has changed her anxiety from keeping up to pondering what was lost in the pursuit of appearances.
Jess, another millennial, is auditing her own spending to distinguish between wants and the fear of social consequences. “Ninety percent of the time,” she finds, she buys things out of a fear of what she might lose socially if she opted out.
The financial struggles of millennials aren’t failures of budgeting but rather a reflection of a system that pressures them into performing a lifestyle that doesn’t match their incomes. It’s a loneliness shared by many, where everyone feels like they’re alone in their financial insecurity.
In this context, understanding finances is more than just crunching numbers; it’s also about recognizing the social dynamics at play. Figuring out what aspects of their spending they can step back from could be a powerful act of self-acceptance for millennials.
