Millennials and Money: What Works

Millennials and money

When I think of Millennials and money, I certainly have a great deal of empathy these days. The economic world has been exceedingly difficult and volatile over the last decade and a half. If I had some advice to pass on to them it would be similar to what my Mom passed on to me. She believed it was important to have dreams and aspirations, to set goals and drive for success, but you also have to be practical and disciplined and to prepare for the future prudently. 

You know, I am trying to plant those seeds with my Generation-Z daughters as they enter adulthood. I don’t want to be a “back in my day” grumpy old dad, but I’ll share a little epiphany that I heard from a buddy of mine, Andy, over lunch last week.  Andy and I went to graduate school together.  He has done quite well for himself, working in several private equity firms over the years.  He is married to a wonderful gal, Alison, and they have two kids about the same ages as Maeve, Phoebe, and Sophie.  For whatever reason, we got talking about our upbringings and the fact that my own family wasn’t well-off, but my mother always provided materially for me and encouraged me to succeed. Looking back, I know it wasn’t easy for her working on a substitute teachers’income to feed three kids. Andy smiled and said, “Look at where you are now Jeff, raising kids of your own. Your mom taught you to live in the solution, not the problem.”

Hmmm . . . Andy got me thinking.

You know, for many Millennials the start of the careers has been beset by challenges. They’ve lived through the Great Recession, the college debt crisis, and now the COVID-19 pandemic. I don’t want to feed into some of the current discord or rivalry I’ve heard, but I do believe they’ve faced broad early adulthood financial setbacks of greater significance than most of the recent preceding generations, including the Baby Boomers.  You’d have to reach back to Americans born in the first quarter of the 20th century to find more dire circumstances starting a career and families. Many of those Americans spent their early adulthood living through the stock market crash, the Great Depression, and World War II.  But there is still hope – after all, that generation showed so much resilience that they earned the title, “The Greatest Generation.”

We’re already seeing some positive signs as a result of the pandemic. For example, it has forced many Americans to recognize that they have to better manage their debt. Credit card debt shrank by $76 million in the second quarter of 2020, according to the Federal Reserve Bank of New York.  The average monthly amount of credit card debt we carry has dropped by over 9% according to NerdWallet, and overall household debt is down over $1000.  

Another silver lining is that many people, particularly Millennials, are taking a serious look at budgeting.  Sometimes it’s an external event that requires us to embrace the practical importance of developing a budget.  In the case of the pandemic, it has forced this on all of us. Millennials, who typically make up a significant portion of the folks filling up bars and nightclubs, are being forced to find less expensive (and less crowded) sources of fun.  Even those that are single and or childless are searching for ways to achieve greater financial stability.

If you’re seeking a simplified way to start budgeting, you might look at the “50-30-20” model. These represent your ratio of “Needs-Wants-Savings.”  In this situation, roughly 50% of your after-tax income would go to your needs, things like your mortgage and basic necessities. 30% goes to your wants, things like eating out and vacations. The last 20% then goes to savings – and not just pure savings, but also investing and paying down high-interest debt. In working a plan like this, we assume that the “needs” are the non-negotiables. When you get into the “wants,” is where things become optional.  For example, you can choose to opt out of certain wants, like the latest smart phone or going out and instead shift those resources to savings, investing, or debt repayment. Using the “50-30-20” model reinforces the idea of having a plan and a practical relationship with your finances.  It also adds discipline to the practice by having you write it down or put it into a spreadsheet, which will improve your ability to stick to your budget.  

Having a budget helps you develop the habit of saving and investing. It gives you an up-to-date awareness of what your debt to income ratio is, and helps you develop an emergency fund for unexpected events. Those that are new to budgeting often think things are well-in-hand, but find that they may have neglected to account for a car repair, or a lay-off or reduction in hours, which can throw even a solid budget out of whack. Applying a budget and following it with discipline can put you in position to start planning for retirement sooner rather than later.

Yes, it’s difficult out there for young adults and Millennials. Part of solving for a financial challenge or problem is the simple act of identifying it (and perhaps venting about it)! But then it’s time to take-action. Much of what happens in our finances, as in life, might be out of our control. But being part of the solution means moving past the frustration of today and planning for tomorrow. After all, it’s likely that the solution will come from ourselves and it just might be the only control we have.

So as always – be vigilant and stay alert, because you deserve more!

Folks, have a great Thanksgiving!

Jeff Cutter, CPA/PFS is President of Cutter Financial Group, LLC, an SEC Registered Investment Advisor with offices in Falmouth, Duxbury, Mansfield & Southlake, TX. Jeff can be reached at

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