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Making Your Money Last

Financial Tips You Can Learn from Millennials (Yes, Really)

Each generation seems to think the one that follows doesn't know what they're doing, but baby boomers who fail to recognize millennials' strengths could be missing out on some solid money and career strategies that they could benefit from.

Millennials: The generation that generates no shortage of news features and social media commentary.

But look beyond the tired, and often negative stereotypes and you’ll find a young generation beginning to create wealth by focusing on both traditional and nontraditional platforms and behaviors. Moreover, growing up alongside the rise of our digital world, millennials’ approach to saving and building their portfolios is intrinsically linked with how technology makes these financial activities simpler and more efficient.

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Working with multiple generations, oftentimes, within the same family, I’ve seen this evolution firsthand. The priorities and strategies of younger people today are markedly different from those of boomers and Gen Xers. And as millennials — roughly defined as those born between 1981 to 1996 — become the dominant driver in the economy, I am finding that this generation’s financial behaviors can offer tips that their predecessors might find useful (to a certain point, anyway). After all, with age comes wisdom, and the much-maligned millennials are getting older.

Millennial Investment Lessons: Stay on Top of Money Trends

Many millennials’ parents are of the baby boomer generation, which in turn was born from the generation that won World War II and largely built the middle class in the wake of The Great Depression. As such, for decades, the definition of success in America could have been described as owning a home in the suburbs, two cars, and having a pool in the backyard.

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Over the years, that model has been chipped away at, tweaked or transformed into something new. Younger people, in general, prefer to live in urban areas — and then get away, spending money on travel, concerts or high-end meals. This isn’t to say one way is better than the other, but millennials by far are more focused on experiences, rather than potentially overspending on material goods.

The differences continue in how millennials invest their money. Many investors in the boomer generation used a broker to conduct equity transactions. Gen Xers had more options, including lower-cost online trading platforms, and millennials have still more options, including many they have developed themselves to suit their economic environment and preferences. Acorns, whose founders recognized that people were spending more on coffee than on investments, offers a low-fee platform that automatically rounds up the change from purchases and deposits it into a robo-managed investment portfolio.

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Another generational behavioral difference is that 60% of millennials with at least $250,000 to invest place importance in investing in “socially responsible” companies, compared with 36% of boomers, according to a September 2018 survey. Socially responsible is a vague concept, to be sure, but as millennials age and have greater means to invest, as well as more disposable income, those companies with a positive perception, both from a social responsibility and a quality product perspective (think Starbucks or Costco), are likely to continue to benefit from their support.

Regardless of social responsibility, the standard investment advice for younger people is the same as it was for Gen Xers: Be aggressive when first entering the market, going for high-risk/high-yield assets, and lessen the risk over time. Millennials, however, tend to be more careful in their investing activities. Many may have seen their parents’ market assets plummet in the wake of 9/11 or, more recently, during the 2008 recession.

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That doesn’t mean millennials stay away from risky investments, and some gambles, of course, are more perilous than others. For example, a small faction of millennials still believe the struggling bitcoin is the best place to start saving. While that is a small segment of the millennials surveyed (5%), it was still five times more than Gen Xers.

The lesson there? A year ago — and minus some foresight — bitcoin might have looked like a great investment, so it’s worth it to at least pay attention to where younger generations are putting their money, be it a rising, socially responsible start-up or a fad you should avoid.

Keep Up with Technology, Too

It’s nothing revelatory to say that part of everyone’s behavior is spending way too much time with our devices, and particularly those from younger generations. It’s also not a shock to say a big reason why is that those phones, tablets and laptops make performing daily tasks, including financial transactions, easier and faster than ever before.

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For millennials, services such as Venmo — an app for making payments to friends or vendors — and online banking are not only on the rise, but convenient for any age group. Owe a friend greens fees? No need to visit the ATM — just make a few taps on your phone.

Young earners’ comfort with technology spreads into other areas that make their lives easier, notably in paying bills. Older people, particularly seniors, may be used to using their checkbooks to handle their bills, but would likely also benefit from setting up online payments — an easier and simpler way to make sure monthly bills are paid on time.

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While some businesses still require paying with checks or cash, a recent Federal Reserve study indicates their use is dying off. The world is becoming paperless, and it’s in every consumer’s, saver’s or investor’s best interest to adopt methods to manage your money without actually touching it. Online bill payment is a clear example of technology simplifying life.

Career Tips from a Job-Hopping Generation

Millennials are perceived as job-hoppers, averaging more jobs post-graduation than previous generations. A LinkedIn study found that between 1986 and 2010, the number of companies that college graduates worked for in the five years after graduation nearly doubled.

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So, what drives this job-hopping behavior among younger workers? One explanation is that millennials are not hard-wired to settle in at the first company that makes them an offer meeting their salary requirements. Rather, they make it a priority to find the right environment before they agree to terms. Another way to look at it is that companies are less loyal to their employees, too — with pensions all but vanished and job security, even for valued employees, no longer a given, millennials and employers are both contributing to this employment environment.

Boomers, generally, were trained to feel differently. A job was part of the checklist to achieving the fabled American dream, but they, too, should realize they don’t have to settle for any old position. Waiting for a dream job might sound like pie-in-the-sky optimism to a veteran worker, but the workplace is the greatest source of stress for Americans. It’s worth it for an employee at any age to try and find an ideal fit and negotiate a salary and benefits package that fits your needs. Then you might just be the optimist.

In a changing world, there are lessons to be learned from the next generation bringing new ideas to the table — without, of course, ignoring the strategies that have weathered the test of time. Finding the proper blend of approaches will ensure your funds are only growing along with age.

About the Author

Casey Robinson, CFP

Managing Director - Wealth Planning, Waldron Private Wealth

Casey Robinson is the Managing Director of Wealth Planning at Waldron Private Wealth, a boutique wealth management firm located just outside Pittsburgh. He focuses on simplifying the complexities of wealth for a select group of individuals, families and family offices. Robinson has extensive experience assisting multi-generational families with estate planning strategies, integrating trusts, tax planning and risk management.

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