The Great Recession created a domino effect of financial struggles for millennials — here are 5 ways it shaped the generation

Getty Images

• Millennials came of age during the Great Recession, which created a domino effect of financial woes for the generation.
• The financial crisis is a key player in the Great American Affordability Crisis, in which millennials struggle to afford staples like housing.
• From creating a generation gap to causing millennials to delay life milestones, here’s how the recession has defined the generation.
• Visit Business Insider’s homepage for more stories.

The Great Recession affected many Americans, regardless of age, but it hit millennials particularly hard.

It’s one of the key events that shaped the generation, Jason Dorsey, a consultant, researcher of millennials, and president of the Center for Generational Kinetics, previously told Business Insider. During this time, millennials were coming of age, meaning they were kickstarting adulthood amidst the financial crisis and its post-recovery period.

Read more: The Great Recession split the millennial generation down the middle, creating 2 groups with very different financial habits

The ongoing fallout of the recession is a key part of the Great American Affordability Crisis that millennials are experiencing, in which they struggle to afford staples like housing and healthcare.

The recession ultimately created a domino effect that put millennials financially behind and on a slow path to wealth accumulation. Here’s how it affected the generation.

The Great Recession created a millennial generation gap.

Scott Dudelson/Getty Images

The Great Recession has divided millennials into two distinct groups — those who took the greatest hit from the recession and dealt with a tough job market, and those who experienced the recovery period, entering a better job market. In a nutshell, the oldest millennials went through the eye of the storm, while the youngest millennials caught the tailwind, Dorsey said.

Dorsey called the Great Recession an "extremely formidable and difficult event" for the oldest millennials. Older millennials are still recovering from the recession, while younger millennials have more time to plan financially, he said.

It put older millennials at risk of becoming a "lost generation" in terms of wealth accumulation.

Matthew Sperzel/Getty Images

Because they’re the slowest cohort to recover from the Great Recession, 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. 

"The Great Recession led to a very tough job market, wage stagnation for those that had jobs, student-loan debt that was increasingly hard to pay, and rising costs of living around the country," Dorsey said. 

By watching the recession unfold, younger millennials became risk-averse.

Rich Fury/Getty Images for Coachella

Since younger millennials didn’t experience the financial crisis directly, they were able to observe it — and learn what to do and what not to do, financially speaking.

According to Dorsey, they got the benefit of learning from older millennials without having to go through some of the economic pain the older cohort experienced — and from which that cohort is still recovering. This has made younger millennials more aware of the risks of a bad economy and more practical when it comes to money, from saving for emergencies to contributing to a retirement account, Dorsey said.

In 2014, the investment-banking company UBS found that millennials were the most financially conservative generation since the Great Depression. And 93% of millennials are  wary of investing, Rebecca Lake of SmartAsset reported, citing a 2015 Capital One study.

See the rest of the story at Business Insider

See Also:

• What Rupert Murdoch’s life is really like: How the mogul grew his media empire and $7.35 billion fortune, weathered scandal, and became engrained in international politics
• The life and rise of billionaire investor Peter Thiel, the PayPal cofounder who called Google ‘seemingly treasonous,’ wants to get injections of young people’s blood, and is Trump’s biggest Silicon Valley supporter
• Donatella Versace just dropped $5.6 million on a pink stucco villa in Italy that’s hosted famous guests like Ernest Hemingway and Walt Disney — take a look inside the mansion.

SEE ALSO: Millennials have been called the ‘brokest’ and the ‘richest’ generation, and experts say both of those are true

DON’T MISS: Meet the average American millennial, who has an $8,000 net worth, is delaying life milestones because of student loan debt, and still relies on their parents for money

Source: Business Insider – hhoffower@businessinsider.com (Hillary Hoffower)