Millennials and money

Moderated by Rick Badie

The millennial generation, the grandchildren of baby boomers, has got some issues with money. Many fear the stock market, according to a Wells Fargo survey, and would rather pay down debt first than save for retirement. Today’s guest writers say such a lack of economic confidence makes millennial financial planning a challenge.

Millennials should start to save now

By Marc Daner

As millennials toss their graduation caps this summer and hope to soon land their first real jobs, they will face managing their finances while in the red.

According to a recent Wells Fargo study on millennials, 54 percent say debt is their “biggest financial concern currently,” surpassing day-to-day expenses. Forty-two percent say their debt is “overwhelming,” double the rate of baby boomers surveyed for comparison.

And while most consider themselves savers, 51 percent are putting off saving for retirement until their 30s.

We wish they wouldn’t wait. In our business, we believe in the value of regular, disciplined saving no matter the level and at every age. We also believe that starting out young on a savings journey is crucial. For this generation, saving shouldn’t be an either/or option. It’s crucial for millennials to manage their debt today and start saving for the future.

Millennials disciplined at saving early, regularly and saving as much as possible can greatly benefit from the power of compounding. It may help them create a more confident financial future.

Our study surveyed millennials between the ages of 22 and 32. Boomers surveyed were between the ages of 48 and 66. Millennials talked about the barriers they faced when it comes came to saving money. For 87 percent, they literally don’t have enough money to start saving. Another 81 percent are focused on first paying down their debt first.

About half say they aren’t very confident in investing in the stock market for retirement, but many are already in the stock market through an employer-sponsored plan. In fact, 72 percent who are saving said they are in a 401(k) plan.

Perhaps these young adults have watched their parents lose big in the stock market. This has created a lasting imprint, which is understandable. Still, we need to remind this generation that because they have time on their side, they are better positioned to ride out the highs and lows of the stock market.

This generation, like others before it, needs to set aside time to learn about investments and draft a retirement savings plan. Millennials need to take ownership of their finances in order to build a foundation for a more secure retirement.

We’re hopeful that millennials will be able to thrive, despite the economic odds they may face. It’s time for this generation to translate its  optimism into action by taking some basic steps to build a financial foundation.

* Begin saving as you pay down debt.

* Create a retirement road map, either online or with a financial adviser, to set clear goals for saving and spending in order to accumulate enough for your future. If you’re saving in an employer-sponsored retirement plan, consider setting annual automatic increases to ensure this remains a priority.

*Invest a small amount in the stock market to potentially give yourself a clear picture of how compounding returns help as you build finances for the long term.

Ultimately, the key for millennials is to put a financial plan into action, so their beliefs become a reality.

Marc Daner, managing director-investmets for Wells Fargo.

Overcome investor fear with history

By Clint Gharib

Millennials are afraid to invest in the stock market. Who can blame them?

They came of age during one of the worst economic recessions in our country’s history. They graduated into an economy with high unemployment rates and watched families lose their homes and/or retirement savings. It’s no wonder they are scared and exhibit investment behavior more like those who came of age during the Great Depression than their parents.

The challenge financial advisers face today is to figure out how to get millennials excited about investing. For that, I look to history.

Periods of economic recession have generally produced the greatest innovations. During economic “good times,” companies are not apt to change what made them successful. But when tough times hit, companies and people look for ways to make more with less, which leads to innovation. Each U.S. recession was different in size and duration, but all were solved with innovative thinking that led to new technologies that, in return, led to growth. I believe we are living in one of the greatest periods of innovation and investor opportunity in history.

Let’s take a quick look back.

The Great Depression saw the birth of television, radio, home refrigerators, nylon, antibiotics and the electron microscope. The last global recession, from 1969 to 1982, saw the microprocessor, LCD matrix, pocket calculator, cell phone and PC invented as well as the creation of the Ethernet, Internet and MS-DOS. The dot-com recession in the early 2000s gave us the iPod, “cloud computing” and Internet search engines.

These are just a few examples of the innovation that came from past economic recessions. The financial impact from the investment opportunities created by these innovations was tremendous.

We have already begun to see innovative technologies resulting from the most recent economic recession that have the potential to be as revolutionary as the microprocessor. Inventions like 3D printing, the reversal of aging in cells and holographic interfaces can create tremendous investment opportunities millennials should want to capitalize on.

I believe that reflecting on the past, combined with education about investment options, is a good way to alleviate the fear and doubt of millenial investors. We still face numerous challenges, but strong investment opportunities exist, and more are being created every day by innovative thinkers. Emotions are part of our nature, but millennials would be doing themselves a disservice to allow fear to keep them from building a strong financial future and capitalizing on the innovation brought about by the recession.

Clint Gharib is founder of  The Gharib Group and director of investment products for J.P. Turner & Co.

8 comments Add your comment


August 21st, 2013
10:09 am

Hurrah for the millennials! They are one smart bunch! They want to pay off their debts and get rid of that drag on their lives.

If only our president and congress could get the same fever. The USA is frittering around with the greatest debt known in history. Citizens feel that drag in every way. Yet the government keeps right on spending more and printing more worthless dollars.

Perhaps the younger generations of our country will save us from bankruptcy. They sound smarter than the passing generation..So stop telling them NOT to worry about debt. They are smarter than that.

A bit of the shaky stock market later. Right now….DOWN with debt and debilitation

Don't Tread

August 21st, 2013
9:57 am

I would prefer to pay down debt rather than participate in the stock market roulette game. And I’m not a “millenial”. Any competent financial advisor will tell you not to invest in the stock market if you can’t afford to lose it, because that’s the risk you’re taking. Some people learned that the hard way.

An observer

August 21st, 2013
7:47 am

So we have a two opinion article written by two salesmen arguing for what? That millenials should not pay down their debts? Having the burden of a debt bill to pay each month or face bankruptcy or foreclosure is very stressful. Interest charges take away the potential to save.

Millenials should limit their spending as much as they can to first establish an emergency cash fund, second participate in a 401k plan to the extent an employer offers a match, and third pay down debt before they consider much else. Once debt is paid off they can consider spending a little more to live and “investing” some money. Bonds and stocks are low return investments right now until the fed figures out what it is going to do in terms of further manipulating the economy.


August 21st, 2013
6:47 am

The millennial generation is leaving college with a huge debt and reduced job opportunities. This is not entirely their fault. However, they have also been led to expect an easy road. How many have already held jobs and paid taxes? How many have purchased their own cars, paid their own rent, and cooked their own food? Drive down Highland Blvd. and see masses of millennials waiting to be fed at expensive restaurants. Check their shopping carts at the super market (if they happen to wander in there) – lots of frozen pizzas, beer, and readymades. Do they understand the markets, interest rates, value investing, social security, healthcare costs? Not much – from the conversations I have had. Many are whiners and have been indoctrinated in generational adversarial philosophy. They also are frequently poorly versed in important current events. This group may be easily molded by the right wing and could become dangerous. I think our educational system and parenting have let down the country – partially due to our own greed and lack of attention. What should be done at this point?

Jack ®

August 21st, 2013
5:13 am

Put the money spent on lotto, beer, cigarettes, sports events and movies in a savings account and you’ll be surprised at how fast it grows. Have a certain amount withheld from your paycheck to go into savings and you’ll never miss it.


August 21st, 2013
12:23 am

The state of the current economy is enough to scare anyone regardless of age. It often seems like the government punishes the responsible that choose to save while simultaneously rewarding the irresponsible. So, it is not wonder young people are confused.

We need sound economic policies that will get Americans back to work and stabilize a very fragile economy. By doing so we can spur growth in the stock market, increase confidence, reduce personal debt and increase the tax base. Many of our problems will solve themselves if the Government will simply get out of the way and allow the economy to actually grow instead of spending time attempting to equally divide an ever shrinking pie.

Most economic fallacies derive from the tendency to assume that there is a fixed pie, that one party can gain only at the expense of another. – Milton Friedman


August 20th, 2013
10:25 pm

Oh, these youngsters have nothing to worry about. Obama is going to tax all the (non-liberal) “rich people” (anyone responsible enough to work and save money) and give the youngsters FREE STUFF!

FREE housing, FREE medical care, FREE condoms, FREE injection needles, FREE call phones, FREE college “educations”, FREE food, FREE birth control, FREE abortions, FREE bus fare, FREE this and FREE that, FREE FREE FREE… all they have to do is remember who gets their easily-sold votes.

Sound money the key

August 20th, 2013
5:50 pm

Until the Federal Reserve is abolished and the power to manipulate the price of money is taken from the criminal banksters and returned to the marketplace where it belongs, nobody should have any confidence in the US dollar or any investments made with it (except of course gold). We have money that can be devalued at the stroke of a pen or the push of a computer key and thanks to Ron Paul these kids finally know that truth. A simple solution would be to end all capital gains taxes etc. on precious metals, eliminate the current legal tender laws that force payments and contracts in US dollars and allow the use of all competing currencies including gold. Only when people can save and transact in a currency that holds its value and cannot be manipulated by the criminals in government or the banking system will they feel confident again in the prospect that their savings will be worth something when they need it.

In the 100 years since the founding of the Fed, the value of the US dollar has fallen over 98%. All of this has been because of the actions of the Fed, not in spite of them. How can anyone ever stay ahead of that kind of theft of value?