4 Financial Tidal Waves That Could Unexpectedly Crush Millennials

For better or worse, millennials will need to ride a financial tidal wave over the next few decades, and the unfortunate reality is it’s likely to get worse before it gets better. This is the sad truth many millennials face, forcing millions of individuals to make tough financial decisions. 

Between student debt, a cost of living that only seems to be going in one direction, and wage growth going in the opposite direction, it’s a perfect mix to stress millennials out even more. This is leading to a tidal wave of concerns millennials have to figure out how to navigate safely. 

Crushing Student Debt

Among the largest financial tidal waves hitting millennials is student loan debt. As of January 2025, the country’s total student loan debt was approximately $1.693 trillion. According to the Education Data Initiative, just under 47% of that debt belongs to millennials, with an average balance of $40,438. This amount feels like it is crushing any millennial hopes of retirement, travel, or just enjoying life. 

According to the Consumer Financial Protection Bureau, student debt is greater than any other kind of debt, except for mortgages, in the United States. Accordingly, 81% of college-educated millennials have at least one kind of long-term debt, including student debt, to contend with as they face the future. 

Overcoming Student Loan Debt

While any idea of wiping out large swaths of student loan debt fell apart during the Biden Administration, there is still hope. The best idea might be to try and refinance any student loans to see if a lower interest rate is possible. Better yet, create a more practical monthly budget that can help you add an extra $100 to your student debt every month, allowing you to pay it off sooner. 

Rising Cost Of Living

It goes without saying that one of the biggest challenges millennials (and every other generation) are currently facing is the rising cost of living. While housing is where this is most being felt, it isn’t just rent or mortgage costs, but even things like a gallon of milk, utility bills, and streaming services like Netflix and Disney+ are seeing price increases. 

The most challenging part is that while the cost of living increases, wages are either stagnant or not growing at the same pace as everything else. Looking more closely at home prices, Census data shows that since 1965, home prices have increased a whopping 118%.

Unfortunately, during this same period, wages have increased by 15%. As a result, the recommended millennial salary to comfortably afford a home today is $144,192, double the median household income. Similarly, urban rent has increased as much as 30% in the last decade, which takes a good chunk out of millennial budgets. 

Understandably, this is stressing millennials nationwide, but home ownership becomes even more of a struggle when considering rising insurance premiums, increased tax levels, and skyrocketing utility bills. 

Overcoming the Rising Cost Of Living

Unfortunately, overcoming the rising cost of living isn’t going to be easy, and we must recognize that co-living arrangements aren’t ideal for families. The same may be valid for relocating to more affordable cities or regions if you are already entrenched in a city and have a job you want to stay at. 

The truth, at least for now, is that negotiating rental agreements is still the way to go, otherwise, looking at more affordable neighborhoods is a real option. The same goes for focusing more on reducing overall spending by prioritizing only essential expenses, and building an emergency fund. 

Stagnant Wage Growth

When you think about stagnant wage growth as a financial tidal wave for millennials, it’s more than just wages, it’s also a career. For baby boomers, staying at one company and moving up the ladder over the decades was a real option. 

For millennials, staying at one company for more than a couple of years is a real accomplishment, as job hopping is often the way to see anything resembling a meaningful salary increase. There is also the reality that many millennials started looking for work during the Great Recession, which caused wage growth to slow. 

The same can be said for COVID, of which we are still feeling the effects of in the job market for companies that overhired and have recently let go of thousands of pandemic hires. When accounting for inflation, wage growth for millennials is as low as 1-2% annually, which is why the gig economy has taken on such a substantial role in millennial life. 

Overcoming Stagnant Wage Growth

As of March 2025, the global economy’s current state is uncertain, as tariff threats could lead to another recession. This would be yet another tidal wave hitting millennials, which is already a concern with AI potentially taking jobs. 

As a result, millennials must focus on building multiple income streams through the gig economy, freelance work, or side hustles. They also need to learn more about investing in the hopes of putting whatever money they can aside for the future. Finally, they must focus on upskilling, especially in-demand skills, to help them pursue new job opportunities. 

The Effects Of Economic Downturns

Knowing all of the above, it goes without saying that millennials continue to be very vulnerable financially right now, and the current economic climate isn’t going to improve things. Between job losses, reduced income, and waves of market volatility, things are arguably more uncertain than they have been in a long time. 

Millennials will need to figure out how to build more of an economic cushion, as challenging as it may be. Older generations, hopefully, had more established savings if a job loss happened, but the same is not true for millennials. This ties directly back to the idea of building up an emergency fund of at least six months. 

What’s worse is that all of these factors, including student debt, the rising cost of living, stagnant wages, and economic downturns, will, and to some extent, already have, combine to create the perfect financial tidal wave. The fear is that many millennials may not be able to recover for decades, if ever. 

Some Hope

The hope is that many millennials can focus more on reducing their overall expenses, even if it means sacrificing some hobbies and vacations they have been clinging to. This is a real-world effect of where the world is today in that some things we love have to be sacrificed for the greater good. 

Millennials will have to walk a financial tightrope for the foreseeable future. This means finding the right balance between needs and wants and learning to manage debt while trying to save. The hope is that by upskilling, saving, and moving to lower-cost areas, some millennials will show the importance of making sacrifices to find a better financial future. Others will follow this lesson and learn to better navigate the choppy waters that is their financial future. 

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