Millennials are known as avocado toast-loving, latte-swilling spendthrifts—here's the reality

As millennials begin to turn 40 in 2021, CNBC Make It has launched Middle-Aged Millennials, a series exploring how the oldest members of this generation have grown into adulthood amidst the backdrop of the Great Recession and the Covid-19 pandemic, student loans, stagnant wages and rising costs of living.

For the last decade, headlines have decried millennials as lazy and entitled, failing to live up to their parents' success because of carelessness with money.

Picture avocado toast-consuming, latte-drinking, yoga mat-toting 20-somethings who live in their parents' basement, always job-hopping and drowning in debt. This trope quickly came to define the generation, born between 1981 and 1996, in many a media narrative.

Over the years, the data did indicate that millennials were, on average, slower to reach certain milestones than previous generations. According to the Pew Research Center, millennials on average have delayed or forgone marriage more than previous generations and have been "somewhat slower in forming their own households." Many also do, or did, live at their parents' home longer than their parents did.

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But that wasn't because an entire generation of 70 million-plus didn't know how to pull up its bootstraps and get to work. It's because, as studies show, it faced one setback after another: Stagnant wages, ballooning student loan debt and increased medical and housing costs combined to ensure that millennials on average have less money to spend than did previous generations.

Those without a college degree face even worse odds of attaining a well-paying job. In 2018, Pew found that households headed by a millennial with a bachelor's degree or higher earned a median adjusted household income of roughly $105,300. Those headed by high school graduates earned roughly $49,363. At the same age, baby boomers without degrees earned $51,287 to $54,026 in 2017 dollars on average (those with degrees earned $80,552 to $95,182 in 2017 dollars on average).

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As trite as the attack line sounds now, it has never been avocado toast or $5 lattes holding back tens of millions of 20- and 30-somethings from achieving certain milestones. The oldest members of the cohort — who were born between 1981 and 1988 and start turning 40 this year — graduated into the worst economic downturn since the Great Depression, making them, in the words of the St. Louis Fed, a "lost generation."

Workers experience 70% of their total career wage growth in the first 10 years of work, according to the National Bureau for Economic Research. Missing even a year or two at the start of a career can stunt earnings for the rest of it.

But millennials' bad luck continues as a result of more recent financial trauma: NBER reports it takes 10 years to recover from a setback like a recession — meaning many were just beginning to feel comfortable when the Covid-19 pandemic and ensuing economic crisis hit, impacting younger workers and older millennials entering their peak earning years particularly hard, per Pew.

"We have our adult lives bookended by major economic catastrophes," says Stefanie O'Connell Rodriguez, a 34-year-old personal finance expert and host of the "Money Confidential" podcast. "That feels very defining."

O'Connell Rodriguez says the narrative that millennials are irresponsible with their money is overblown. Millennials do have some different expenses than prior generations did at the same age — but they're still essential.

"Everything we call frivolous is really just an indicator of the time we live in," says O'Connell Rodriguez, highlighting streaming services and other forms of technology that didn't exist 15 or 20 years ago. "And everyone is spending money that way, not just millennials."

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These media narratives were always indicative of a monolithic millennial, O'Connell Rodriguez argues: white, college-educated and upwardly mobile. And it simply doesn't exist. Before Gen Z, the millennial generation was the most diverse in U.S. history. Ascribing an entire generation's money problems to brunch never made much sense and covered up the systemic problems millennials have faced and will continue to face.

As it turns out, millennials spend their money largely on the same things as anyone else. Housing is the most burdensome monthly expense for one-third of older millennials, according to a recent survey conducted by The Harris Poll on behalf of CNBC Make It. It surveyed 1,000 U.S. adults ages 33 to 40 on a variety of topics. After housing, groceries and debt are the most burdensome expenses. Lattes didn't make the list.

To their credit, at the same time that older millennials have earned less and paid more for necessities like housing and health care than their parents, they have also started saving earlier for financial goals like retirement, says Kelly Lannan, vice president of Young Investors at Fidelity, citing surveys.

"There is confidence in this group, even though they went through the recession and the pandemic," Lannan says. "We always focus on the bad, but we've seen a lot of optimism with millennials." 

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While so-called success followed a fairly static path in older generations — land a good job, get married, buy a house, have kids — millennials have simply started to do things in their own order, says Lannan. That's partly out of necessity, she says, and partly because some want different lives than their parents. Fidelity has found, for example, that more millennials consider mental and physical health an essential expense than did baby boomers and Gen Xers.

Their consumption habits are also more likely to be driven by their values or morals, says Lannan, pointing to ever-increasing interest in sustainable investing and recent pushes to make workplaces more diverse.

As millennials get older, Lannan says, they're actually reaching those so-called standard milestones. Now, millennials represent the largest cohort buying homes. As more and more enter their 30s and older, the number of millennial homeowners will only increase.

Lannan suggests that millennials turning 40 view the middle-age milestone as an opportunity to reflect on and reset their spending, savings and investment goals.

"Forty can be a scary age, but it doesn't have to be," she says. "Embrace it and use it as an opportunity to take a look at your finances."

CNBC Make It will be publishing more stories in the Middle-Aged Millennials series around student loans, employment, wealth, diversity and health. If you're an older millennial (ages 33 to 40), share your story with us for a chance to be featured in a future installment.

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