Millennials Are Growing Up—But They’re Still Making One Huge Mistake

Having grown up with social media and in a time of financial crisis, Millennials lean on each other for financial advice. Is this anyway to build a nest egg?

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Millennials are maturing in some surprising ways. Their work ethic is stronger than most believe. They are more aware of what it takes to build a nest egg than other generations, and they’ve done a decent job getting diversified.

But the Facebook generation is taking too many wrong financial cues from one another, a new survey shows. Three in four 25-to-34 year olds (a group that includes older Millennials and younger Gen X members) look first to their peers for money guidance, according to the survey from the American Institute of CPAs and the Ad Council. To get young people’s attention, the Ad Council and financial website Feed the Pig just released a series of humorous public service advertisements about saving.

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Millennials came of age during a time of financial crisis, bank failures, and a personal bankruptcy and foreclosure boom. One result is a deep lack of trust in financial institutions. So it’s no shock that the group leans on social media for guidance about money, as it does for everything from what movies to see to what news to follow.

Two in three wants to keep pace with peers on where they live and what they wear, and the types of places they eat and the gadgets they carry. But Millennials aren’t just trying to keep up with the Joneses; in many cases they are willing to sink to peer levels even though they may have greater ability to, say, save for retirement or retire student debt.

Peers have never been a great source of financial information for any generation, and along with those surprising positives noted above this one also has some serious flaws. According to the AICPA:

  • 61% of 25-to-34 year-olds need family money to make ends meet, and more than half say the need will persist for at least another year; 8% say it will persist at least another five years.
  • 45% use a credit card for necessities, and 70% define financial stability as being able to pay all bills on time.
  • A bill collector has contacted 28% in the last 12 months.
  • 24% have missed a credit card or other debt payment in the last 12 months.

“As the saying goes: Be careful about the company you keep,” Ernie Almonte, chair of the AICPA National Financial Literacy Commission, says in a release. “Many young adults are building financial foundations with the wrong blueprints.”

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This is an age group that must begin saving now. The social safety net is fraying; pension and Social Security benefits are eroding. The one advantage that young people enjoy is time—40 years to earn, save and let their investments compound. An extra 10 years of growth can be the difference between a $1 million and a $2 million nest egg at age 70.

If they are taking their cues from peers who never miss an iPhone upgrade but have boomeranged home with Mom and Dad, they are headed the wrong direction.

21 comments
CloverKesson
CloverKesson

"Boomeranged home" sounds like a fine home health care plan to me. The nuclear family that pays its bills is often understaffed for raising children and caring for the elderly. Instead of paying it forward, we should be paying it back. All of it.

Haeley
Haeley

Sorry to say that the last 3 of those 4 bullet points apply to me.  Sometimes you dont realize how crap you are at something until it is in front of you in black and white.

EthanGarrettPerry
EthanGarrettPerry

I am 18, having just graduated high school. I have no plans for college, though I have taken AP (college level) classes, and was offered a spot in several universities. It is not ignorance that makes my generation not crave money, it is intelligence.

 An American businessman was visiting a small fishing village in Mexico. He saw an elder fisherman coming in to dock with his daily catch when he asked "How long it it take you to catch that?" to which the fisherman replied "Just a little while. It provides my families immediate needs." The American says "Well why not fish longer? What do you do all day?" The Mexican replied "I sleep in late, I take siesta with my wife, I play with my kids, I sit in the evenings with my amigos and I sip wine until the stars shine over the water." The businessman replies" Ah but my poor, ignorant, Mexican friend, I have an MBA from Harvard. If you fish twice as long you can buy two boats, and then four, and then an entire fleet of boats, and then you can enlist a crew to work in your stead, and then you can sell your fish directly to a food supplier and cut out the middle man. Then, after all that, you can sell the shares in your company and retire a very rich man." The fisherman replied to this "And how long will this take?" The businessman replied, confidently "Only 15-20 years." The Mexican, skeptical of this idea, then queried "And then what?" To which the businessman put his arm around the fisherman and replied, smug in his brilliance "Oh my poor, poor ignorant friend. Then you can move to a small fishing village where you will sleep in late,  take siesta with your wife, play with your kids, sit in the evenings with your amigos and sip wine until the stars shine over the water."

mazzy
mazzy

Well I am of this generation and do quite well running my own business. But, the fact is the young today are saddled by the old through finance and entitlements, tell me who the greedy entitled individual is: the kid who graduated college and cant find a job to pay the loans back they didn't understand, or the old farts who want to become the "foremen" of the economy. Those individuals want to retire at 55, earn a steady return from children's student loans that can't be defaulted on, and  "social security" which is a TAX to the young because they will receive probably not a dime of the money back. They hide out in the capital gains rate club house of the economy and raise income taxes to pay for national debt created so they could retain more and more of their income. They are now pulling up the rope ladder.

Self entitled, greedy, lazy people? How about the boomers who came into this world with their "divine insight". The ones who gave the middle finger to every generation before by disregarding their way of life, their morality, and their lack of extremism. They tried and failed to prove their divinity and spent a couple decades doing drugs, living in communes (religious or otherwise), preaching to the generation that won the free world all without even trying to understand any sort of historical context.

The boomers have time and time again shown their inability to empathize with any situation but their own. They were born in to a meadow of freedom cleared by their parents and decided having the world handed to them on a platter (spoiled princes) was the new normal. I'm sure anyone who thought otherwise was an unindoctrinated fool. They disregard the poor as unmotivated, and they are critical of the young who are forced to pay for the same educational parity they were given for free (bachelors degree is the new high school diploma). They also ridicule the "starbucks kids" with their iphones for protesting their limited economic opportunity (occupy), making fun of their agenda and how they look. I wonder, boomers, what the older ones thought of you, protesting Vietnam with your crazy long hair, burning flags and smashing cars. I'm sure they also wondered why you couldn't shut up and pay for your freedom the same way they did. But wait, WW2 and Vietnam were completely different right? Now take a hard look at the economic realities then and now.

DavidFrank
DavidFrank

In early days it used to be better

mariavaldesign
mariavaldesign

Gee . . . the same institutions who told us at 17 and 18 years old to take out the biggest student loans possible to fulfill our "collegiate dreams", sold us into financial slavery in order to perpetuate the unsustainable reality of plush retirement for the previous generations, the institutions that cannot guarantee a 401k will not be lost before we reach an appropriate age to utilize it are now criticizing us for turning elsewhere for financial advice?

Millenials would have to be complete bafoons if we believed 'expert advice' anymore. Look at where it's taken us!

If there's anything we should be commended for it's our tendency to question and not take authority at its word. My peers my not be 'experts' but they certainly would've used more common sense than the current banks of today.

SilentCalFan
SilentCalFan

Government is the problem.  Argentina is a classic example of how bad political leadership can ruin an economy.  In the US we had great economies under Harding and Coolidge and again under Truman and Eisenhower.  How?  Slash the size of government, lower taxes, reduce regulation.  In short, get the government out of the way and the economy will boom.  All Democrats and some Republicans favor big government; get rid of them and the future will be bright. 

Matt12032
Matt12032

To some of the old people on here criticizing the younger generation as lazy, etc, your opinions are not appreciated or taken to heart. Your viewpoints reflect a lack of appreciation for the complexity of the societal and economic challenges that are facing the younger generation.

I am a young millenial in his late 20s who is doing very well. I have a high-paying job, and I live in a house I own where I rent out a couple of rooms. I have no debt of any kind, no car payment or student loans, apart from the mortgage which the tenants mostly pay for me. I save about 30-40% of my income every month. I am hard-working and smart, but so are many of my young friends (isn't everyone above the average? :) However, most of my friends are struggling and can barely get by with their monthly income. But, I don't judge them. Rather, I try to help them by encouraging them in their job/career searches, giving them financial advice where appropriate, and generally being supportive and non-judgmental. 

People want to do well and most people are willing to work hard if they feel they will be fairly rewarded. The problem is the economic conditions to support enough good jobs for most are not there right now, due to many complex factors including boomers staying in jobs longer, increased competition from and outsourcing of jobs to foreign countries, the long-term rise of the cost of oil and coal and its drag on the economy (to me this is actually the most important, since energy is absolutely critical to the economy), and corporations who put profits to shareholders above paying a fair wage.

I will not go on here any longer, but I'd like to invite older people reading this to reevaluate their view of the younger generation and to at least appreciate that among any group, there will be great complexity and variety. To be blunt, painting the younger generation with a broad brush as lazy and no-good makes you seem like nothing more than a simple-minded, unempathic fool, whether or not that is actually the case.

TenthDevil
TenthDevil

There needs to be more jobs paying a decent wage for the  Milennials to stop relying on their parent.s I know, because I am the parent of 2.

AlexCarrausse
AlexCarrausse

If they were paid more like their parents were, yes they could save. 

Topher
Topher

Rather not invest in saving a currency that I don't believe is sustainable.

MirriamEgglebrecht
MirriamEgglebrecht

Start saving? What in the H are you talking about? Paul Krug says we need to borrow and spend more to grow the economy. 

JeradAndersen
JeradAndersen

The Millennials age group discussed in this article is one who graduated from high school and college during the biggest economic recession since the Great Depression. We've had to fight tooth and nail to rise above our stereotypes as lazy, self-centered, tech-addicts by the aged class of bloated-salaried, inner-child loving, tech-retards known as the Baby Boomers. And while some Millennials have been developmentally stunted by ridiculous "helicopter parents" who unhealthily baby them into their adulthood, and meaningless trophies-for-all pseudo-psychology, others have had difficulty finding gainful employment simply because of the poor timing hitting the market (aka their age). I recognize that my personal situation fills the statistical status of "outlier" as my family does quite well, but I do know/ have known too many people of this generation who ended up giving up on themselves, because they felt the society around them had given up on them first. Why keep fighting for the good jobs when there are no truly good jobs? Everything on the "entry level" either has no prospect of future advancement, bad pay, bad benefits, or some combination therein. Boomers want a well-trained, hard working, experienced, college-educated, creative, critical-thinking employee for ridiculously low pay. Why not? Millennials have been coddled their whole lives (by their Boomer parents) and they don't need anymore damn handouts!


The dismissive tone taken by this article, and far too many Boomers, in calling Millennials irresponsible agitates me to no end. I'm sure Dan Kadlec believes a $20K starting salary is great for a college grad... because it sure was when he graduated. It's just a failure to recognize that that was 30+ years ago! With inflation that would actually be $47K now (not knowing his exact age I simply used 1983-2013 at http://www.bls.gov/data/inflation_calculator.htm). The entire middle class is shrinking because the rich upper class (populated by older generations) is devaluing the purchasing power of the dollar through inflation at a rate far higher than wages are increasing. Every year the gap between super-rich and everyone else gets wider and the vast majority falls farther behind. The factor making this actually into a talking point is that you can put a face on this effect - the Millennial. But of course, by all accounts it is all our own fault.

jmanpc
jmanpc

I'd like to offer a little context from the perspective of a millenial.

First of all, I feel lucky to be in my position. My wife and I graduated college in 2010 and got married in late 2011. We have enjoyed success in our careers and make a decent income. I'm in the mortgage industry and my wife is a manager at a daycare. We both work full time (and then some) in jobs we hate that are very demanding. I keep dozens of clients happy-ish and she juggles all the responsibilities of running a school.

To give an idea of our standard of living, we own a small house in an okay neighborhood in suburbia, drive aged cars and occasionally go out to eat, normally at fast-casual places on our fancy nights.

We save what we can, which is about 5% of our income. Aside from that, we feel like we barely get by every month. But where does the money go? We both work long hours for decent-ish pay (in comparison to my peers), so we ought to have nice things, right?

A full quarter of our take home pay goes to pay student loans. Then we have to deal with other parasites, like mortgage insurance (which as a mortgage banker, I understand the need for, but it's frustrating to pay the bank's insurance and receive no benefit), the high cost of gas and groceries and increasing health care costs despite the fact we rarely require medical attention. Thankfully we do not have any credit cards to pay.

I've been a saver my whole life. By the time I was 16, I had saved up $10k to buy a car from mowing yards since I was in middle school. Now we struggle to save any money and we are by no means living a lavish lifestyle.

Now keep in mind, my wife and I are the exception. We've got it good in comparison to our peers. Every article you read says millenials don't buy houses or get full time employment or get married, and we've managed to do all the above.

A great portion of my peers have remained single and are drifting listlessly through their 20s. They live with friends, sometimes 4 or 5 of em in a cheap 3 bedroom apartment, others still live at home with mom and dad. They work retail part time, maybe hold down 2 jobs so they can afford a cell phone, student loan payments, gas, car insurance, and not much else.

The sad part is, these are educated people! They have their degrees in history and business and education and art and computer engineering. They would all love to have a good job, a house, a dog and a new car. We've been groomed our whole lives to believe we were going to go to school, then get a good high paying job in a field we love.

Instead, we're being told to play with the hand we're dealt. Flip the burgers and polish the floors for minimum wage. We're criticized for being selfish and entitled by the very people who raised us to be the way we are. Millenials aren't entitled- we just want what we were promised the whole time we were growing up because we've done everything the doctor prescribed, yet we're stuck barely getting by.

So what you're left with is a deeply sarcastic and angst-ridden generation who has little to no faith in our seniors because so far, everything we've been told to do has been wrong. We played by the rules with the promise of a sunny future, but instead we've been met with a subsistence lifestyle and ridicule from boomers who still believe the world is like it was when they were our age.

The bottom line is we're tired of being told what is the best for us, because what we've been told is best all along has landed us where we are. To continue on that path is insanity. Rather than doing what those with gray hair say is best, we've decided to lean on one another.

TanmayLololAnaisPradhan
TanmayLololAnaisPradhan

 Wow, why don't you take a long, deep look in the mirror. Its the greed of  as***** like yourself, that has wrecked the economy, and made sure that young people will remain heavily in debt and unemployed.


Some nerve you have.

dave.dolan
dave.dolan

@TenthDevil No. the Millenials just need to GET themselves better jobs and not even consider relying on their parents as an option. Ever.

AliceWalker1
AliceWalker1

@JeradAndersen Maybe you don't believe you have to pay your dues before the high-paying good jobs appear.  My millennial daughter worked her butt off at an entry level job, which you disdain but which actually weed out the unmotivated, entitlement-minded workers.  Surprise!  It worked!  Her hard work and putting up with less than optimum conditions impressed the employers and she has continued to move up.  She is now a HIGHLY PAID "well-trained, hard working, experienced, college-educated, creative, critical-thinking employee" who earned her right to be there.  With your attitude, I don't see you going anywhere, yet I'm sure you will blame anyone other than yourself.


Read more: Millennials Are Growing Up—But They’re Still Making One Huge Mistake | TIME.com http://business.time.com/2013/11/01/millennials-are-growing-up-but-theyre-still-making-one-huge-mistake/#ixzz2jWjAn4w

RichardGlobalUK
RichardGlobalUK

@AliceWalker1 @JeradAndersen My friend, although I think a lot of the contrary responses to this article are a little over the top in a lot of respects you're being quite stubborn and unreasonable, ignoring the points made by the opposing side.  Not everyone has the facility of living for free and working internships to develop their careers.  A large portion of this generation are fighting for low paid jobs in the face of hundreds of competitor CVs (resumes).  I understand and agree with to a certain extent your view of lack of responsibility and self ownership amongst our generation however you've failed to take notes on the other societal influences and differences between this generation and your own.  Your anecdotal instance above doesn't reflect the general experiences of our generation.  For years I worked under the notion I would progress the ranks of my company's hierarchy but this didn't happen despite hard work.  I left and moved from the city to a more rural and cheaper area, used my social skills to manage to land a paid internship with a smaller company and have become upwardly mobile as a result.  I agree with your subtext of 'hard work pays' however it doesn't always and generalising an entire age bracket on one personal instance is a dangerous logic.

Warmest Regards, and I'm by no means being belligerent in tone, for this one must refer to the article in question.

Richard, UK.