Three Tips to Help Millennials Strengthen Their Finances

Six in 10 Millennials feel good financially, but they could benefit from additional planning, especially when it comes to weathering economic hiccups and taxes in retirement.

A muscular Millennial man works with a barbell in a gym while looking at his cell phone.
(Image credit: Getty Images)

If you’re in your 30s or early 40s, chances are you’re a member of the Millennial generation. Millennials — defined as being born between 1981 and 1996 — today represent the largest generation in the U.S. by population. Their transition into adulthood coincided with major economic events including the dotcom bust of the 2000s and the Great Recession in 2008 — followed by a long and robust bull market and a global pandemic that threw day-to-day life into a tailspin.

Now, as they enter their peak earning years, Millennials face another macroeconomic mixed bag: The job market is remarkably strong, but they’re feeling the squeeze of higher inflation, rising interest rates and cooling real estate valuations.

Their lives are complex, too. Many are balancing careers, families and other immediate responsibilities, while planning and saving for the future.

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New research from Ameriprise Financial confirms what many already know to be true: Millennials are in a busy season of life. More than half (56%) of the 1,500 Millennials we surveyed as part of the study said they are stressed about balancing multiple financial priorities. They’re also concerned about broader economic forces. An overwhelming majority (90%) said they are very or somewhat concerned about elevated inflation, tax increases (84%), a recession (83%) and high interest rates (80%).

Millennials show a stronger sense of confidence

That’s not to say their outlook is gloomy. In fact, six in 10 (61%) reported they feel positive about where they stand financially. A similar number, 58%, said they believe they are doing better money-wise compared to their peers.

What accounts for their optimism amid the complexity of their situations? In our research, we found a correlation between Millennials taking control of what they can with their finances and an increased sense of confidence. If you find yourself managing competing priorities for your time, money and focus, keep these tips in mind for staying on top of it all.

1. Be proactive to weather current economic conditions.

Rather than simply fretting about economic conditions beyond their control, an overwhelming majority (95%) of the Millennials we surveyed have taken actions to lessen the impact: 60% reported cutting back on spending, and 48% indicated that they have boosted their savings rate.

If you’re feeling overwhelmed by inflation and the rising cost of living, take a page from these investors and do what you can to control your spending and put more money into savings. Even small adjustments can help you better understand and improve your cash flow.

Work toward building an emergency fund that you can tap for unexpected expenses that will inevitably pop up down the road. Generally speaking, most investors should have three to six months of living expenses easily accessible to use in an emergency.

2. Take friends’ advice with a grain of salt.

Nearly a quarter of Millennials (22%) have turned to family and friends for financial advice, according to the research. While it’s natural to get advice from people close to you, keep in mind that taking advice from unqualified sources could be costly. In fact, 37% of those who said they’ve acted on bad advice received it from a friend — and they lost an average $17,000 as a result.

Too many learned this lesson the hard way. It’s one thing to listen to advice, but any financial decision you make should be consistent with your long-term objectives and your views on risk.

Consider consulting a seasoned financial adviser who can provide advice tailored to your situation. Research shows doing so is worth it: Millennials who work with a financial adviser are 31% more confident in their finances compared to those who are going it alone.

3. Gain flexibility in retirement with tax diversification.

Many Millennials are off to a great start with retirement planning. On average, investors in their 30s and 40s started saving at a median age of 25, earlier than the median starting age for those in Generation X (age 28) and Baby Boomers (age 30).

However, they often overlook how their hard-earned money will be taxed in retirement. No one wants to pay more in taxes than they have to, and the research shows Millennials may be at risk of doing just that. Fewer than three in 10 Millennials (28%) consider tax diversification when investing for retirement, and more than one-quarter (27%) do not know the tax treatment of their investment accounts.

If you’re wondering whether there’s a tax optimization opportunity for you, first review the tax treatment of your accounts. Second, consult an adviser for guidance on how to create a tax-diversified retirement income strategy. Tax diversification means saving money in accounts with different tax treatments at the time withdrawals occur.

For example, if you make pre-tax contributions to a workplace plan like a 401(k), all withdrawals from the plan during retirement will be taxed at ordinary income tax rates. If you make after-tax contributions to a traditional IRA, the earnings only will be taxable at retirement. If you save money in a Roth IRA today and the holding period requirements are met, all withdrawals will be tax-free in retirement. This provides a great deal of flexibility in managing your tax liability in retirement, giving your nest egg more bang for the buck.

Millennials have a lot to be proud of. They’ve built a solid financial foundation even as they’ve taken on new responsibilities and weathered economic uncertainties. As their lives and estates continue to grow in size and complexity, I encourage them to seek the advice of a qualified financial adviser who can guide them along the way with advice tailored to their unique situations, needs and goals for the future.

The 2023 research was created by Ameriprise Financial Inc. and conducted online by Artemis Strategy Group from January 19 to February 14, 2023 among 3,518 Americans ages 27–77. Millennial respondents have $25,000 or more in investable assets, and Gen X and boomer respondents have $100,000 or more. The sample is weighted on region and by generation on age, gender, race/ethnicity, assets, and income based on the Federal Reserve 2021 Survey of Household Economics and Decisionmaking (SHED). To ensure sufficient response sizes for additional analysis, Ameriprise oversampled investors who identify as millennials. For further information and details about the study, including verification of data that may not be published as part of this report, please contact Ameriprise Financial or go to

Ameriprise Financial and its affiliates do not offer tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specific situation. 

Investment advisory products and services are made available through Ameriprise Financial Services, LLC, a registered investment adviser. 

Investment products are not insured by the FDIC, NCUA or any federal agency, are not deposits or obligations of, or guaranteed by any financial institution, and involve investment risks including possible loss of principal and fluctuation in value.


This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Marcy Keckler, CFP®, CRPC®
Senior Vice President, Financial Advice Strategy and Marketing, Ameriprise Financial

Marcy Keckler is the Senior Vice President, Financial Advice Strategy and Marketing at Ameriprise Financial. She leads the overall strategy for financial advice at the firm, including the Ameriprise Client Experience and Confident Retirement programs. Marcy has been with Ameriprise Financial (formerly American Express Financial Advisors) for more than 25 years in a variety of positions in financial planning, marketing and interactive development.