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Here's why Millennials are Borrowing too Much to Maintain Affluent Lifestyles Amidst Inflation

A recent survey from Wells Fargo sheds light on the unique financial challenges this demographic faces and the consequences of maintaining a facade of affluence
Representative Cover Image | Pexels | Photo by Karolina Grabowska
Representative Cover Image | Pexels | Photo by Karolina Grabowska

As rising inflation triggers a shift in spending habits, affluent millennials are now grappling with the need to appear financially successful, and in that pursuit, they are even resorting to debt-fueled lifestyles. A recent survey from Wells Fargo sheds light on the unique financial challenges this demographic faces and the consequences of maintaining a facade of affluence.

While more than half of affluent Americans have scaled back on luxury purchases in the wake of the pandemic, affluent millennials, defined as those with $250,000 to over $1 million in investable assets, stand out for exaggerating their financial standing. According to the survey, 34% of affluent millennials admit to lying about finances, in contrast to 20% of Gen Xers and a mere 4% of baby boomers.

It's intriguing that despite economic uncertainties, a significant portion of affluent millennials is going to great lengths to project an image of prosperity by sticking to lifestyles that may no longer be sustainable with current income levels and the cost of living. A striking 29% confess to buying items they cannot afford simply to impress others, while 41% fund their lifestyles through credit cards or loans, surpassing the rates among Gen Xers and baby boomers.

The desire to simply maintain an appearance of success on the outside, especially in the age of social media, can be traced back to a mix of factors such as high inflation, a rising cost of living, and the resumption of federal student loan payments for those carrying such debts. The managing director of advice and planning at Wells Fargo, notes that despite these challenges, affluent millennials strive to convey a message of hard work and success, but maintaining this facade also costs them.

Cover Image Source: Pexels | Photo by Guduru Ajay bhargav
 Image Source: Pexels | Photo by Guduru Ajay bhargav

A significant 40% of affluent millennials admit to taking on more debt than they would prefer, highlighting the financial toll of maintaining an illusion of prosperity. In a society where money remains a taboo topic, individuals are reluctant to openly discuss their financial struggles, and this forces them to live up to unrealistic standards.

The survey also reveals that even in the era of social media showcasing seemingly lavish lifestyles, two-thirds of individuals are hesitant to engage in discussions about finances. This silence can fuel misconceptions about others' financial situations, as people tend to draw conclusions based on social media content, creating tension between appearances and the underlying financial reality.


Financial psychologist and certified financial planner Brad Klontz emphasizes the importance of understanding the "money stories" of individuals. These narratives, shaped by upbringing and early experiences with money, often influence spending and saving behaviors. Klontz points out that those attempting to project affluence may come from less affluent backgrounds, and their conspicuous consumption is not representative of genuine wealth-building practices.

Klontz lays emphasis on restraint as a crucial principle for wealth accumulation, and notes that ultra-wealthy individuals are more likely to showcase frugality than ostentatious displays of wealth. The key to growing net worth lies in not just spending recklessly evaluating cash flow, maintaining emergency savings, and contributions to retirement plans need to be kept in mind before making large purchases.