Calculating Risk and Investing Wisely

Lessons Learned From Millennials

Usually, the younger generation learns from the older one.  With millennials, it’s different.  We can all learn from how they handle their financial issues.

Here’s what they are doing that’s so impressive.

What’s a millennial?

A millennial generally refers to those born between the early 1980s through the 1990s, and it sometimes includes those born in the early 2000s.

The term “millennial” is also sometimes called Generation Y because it follows alphabetically after Generation X, which includes those born between the early 1960s and the 1980s.  “Millennials” and “Generation Y” refer to the same generation.

There are about 80 million millennials in the United States.  While they comprise most of the US workforce, they represent only 6% of all household wealth.

Bad reputation

Millennials are often viewed negatively in the media.  They have been labeled “lazy, narcissistic, and prone to jump from job to job.”

A particularly damning article in Time Magazine referenced a decade of sociological research supporting these stereotypes, adding that millennials are “even a bit delusional.”

There’s evidence that narcissistic personality disorder is three times higher for those in their 20s than those 65 and older.

Millennials believe they should have jobs with greater responsibility, and many feel they should be promoted every two years regardless of performance.

It’s not all bleak.

Millennials adapt quickly to technological change and are optimistic, confident, and pragmatic, which may explain why their financial habits tend to be exemplary.

Savings Habits of Millennials

Start early

According to a study by Charles Schwab, millennials start saving in their mid-20s, which gives them a significant advantage in reaching their retirement goals.

By investing their money earlier, millennials have a longer time to benefit from the power of compounding.  Compound interest is calculated on accumulated interest over time, in addition to the original principal, creating a “snowball effect” and accelerating returns.

It’s never too late to learn from this behavior.  Whatever age you are, the earlier you start investing, the more you can capture the benefit of compounding, providing you with more growth potential.

More savings

According to a study by the Pew Foundation, younger employees have higher overall plan balances in their defined contribution accounts (like 401[k] plans) than the previous generation.

Many millennials (71%) are saving for retirement in company-sponsored plans or plans they set up (like traditional IRAs) outside the work environment.  

A study by Charles Schwab found an increase in the savings rate of millennials from 7.5% of their earnings to 9.7%.

Many millennials may be motivated by a concern that Social Security won’t be available when they retire.  They are preparing for that possibility by self-funding their retirement accounts.

Another motivation is the expectation that they will live to age 100 or older.  They are gearing their savings to survive a longer retirement than previous generations.

Use of budgets

The financial issues confronted by millennials are daunting.  They include student loan debt, high rates of unemployment (they were almost four times as likely as other generations to be unemployed during the 2008 Great Recession), and the impact of Covid-19.

There’s evidence that millennials were early adopters of budgeting applications.  While only 4% of baby boomers use these apps, 17.5% of millennials do.  

Millennials are also more likely to use AI-powered virtual spending services to analyze their bank account balances, detect patterns, set budgets and save money.

The willingness of millennials to adapt to new technology plays a vital role in their savings success.

Investing Habits of Millennials

Millennials think about investing differently than other generations.

• They are more confident about investment opportunities in the short term.

• They consider themselves more knowledgeable about investing than other generations.

• Most of them don’t prioritize owning a home.

• They like to use technology to manage all financial affairs in one app.

• They are early adopters of artificial intelligence and consider it an essential part of any investment platform.

One-third of millennials prefer real estate as a long-term investment.

• They are more open to investing in cryptocurrency.  In 2021, 49% said they were comfortable investing in crypto, but that number plummeted to almost 29% in 2022.

Millennials maintain a dose of skepticism about investing in stocks.  One survey found that most millennials find information about investing challenging to understand. Many believe the stock market is rigged against individual investors.

Despite their affinity for cutting-edge technology, most millennials (72%) work with a traditional financial advisor.  Only 5% rely solely on automated advice.

Millennials are concerned about market volatility, tax increases, and slow economic recovery.  Seventy-nine percent believe working with a financial advisor helps them deal with these concerns while providing financial planning and someone who will listen to their issues.

Lessons learned

Millennials are more amenable to financial planning, perhaps due to their exposure to the Great Recession.

Millennials tend to focus more on long-term goals, which makes them amenable to investing in the stock market.

Millennials use technology to get control of their spending, set and monitor financial goals, and track their investments.

Millennials tend to prioritize debt payment because they are often burdened by student debt.  They are keen to live debt-free and start saving for retirement.

At Daner Wealth, we serve many millennial clients and take great satisfaction in building on these positive traits to help them reach their financial goals.

Usually, the younger generation learns from, the older one. With millennials, it’s different. We can all learn from how they handle their financial issues.


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