Millennials face 'phantom wealth' despite net worth growth

Millennials have experienced a significant increase in net worth, largely due to rising home values and stock market gains. However, many still feel financially insecure, a phenomenon referred to as "phantom wealth." According to WalletHub writer and analyst Chip Lupo, despite millennials' wealth nearly quadrupling from $3.94 trillion in 2019 to $15.95 trillion, much of it is tied up in illiquid assets like real estate.

Forrest Webber, a millennial business owner from Huntsville, Alabama, expresses understanding of this feeling. He notes that while retirement accounts may seem secure on paper, they don't offer immediate financial relief during unexpected expenses. "Especially when it comes to a 401(k). They make you feel secure until a financial event comes up," he shares.

Webber highlights the challenges posed by inflation and the rising cost of living. "With inflation, it can feel like the essentials are getting more and more out of reach every week," he says. To manage costs, Webber frequents local farmers markets instead of larger chain stores.

Despite homeownership growth among millennials—62.3% of those aged 35 to 44 owned homes by the third quarter of 2024—the disconnect between perceived wealth and daily financial reality persists. As Lupo explains, "While home prices soared by 44% in just a few years...60% of Americans report dipping into emergency savings just to cover day-to-day expenses."

Melissa Murphy Pavone from Mindful Financial Partners points out that millennials are often asset-rich but cash-flow constrained due to economic pressures and life obligations. This sentiment is echoed by Jack Prenter, CEO of Dollarwise: "There is a cost-of-living crisis right now...you’re going to be struggling!"

Social media also plays a role in millennials' financial perceptions. Lupo states that "Thirty-six percent say social media makes them feel frustrated about their finances." Minimalism guru Joshua Becker refers to this as the “prosperity paradox,” where accumulating more money leads to feeling an increased need for it.

Job insecurity further contributes to millennials' financial anxiety. A Gallup report indicates that millennials change jobs frequently—on average every 2.5 years—with many engaging in side hustles for additional income.

Webber exemplifies this trend with his multiple business ventures including Bear Brothers Cleaning and The Trade Table online store. Despite these efforts, he notes the pressure: “You feel like you have to have multiple hustles to survive!”