NerdWallet's Smart Money Podcast - How Millennial Money Woes Are Reshaping the American Dream

Episode Date: September 21, 2023

Experts discuss how millennials are redefining the American dream and finding ways to thrive despite hard economic times. Have you ever wondered how younger generations are maneuvering around traditional milestones in the face of mounting financial hurdles? That’s what Personal Finance Nerd Tiffany Curtis discusses with Dr. Jatali Bellaton, a neuropsychologist and the founder of Brilliant Minds Unite, a youth and adult financial literacy movement. She dives into the daunting financial realities of skyrocketing home prices and crippling student loans, and the impact these have on the dreams and aspirations of millennials and Gen Zers. She explains how to think about investments to make life easier down the road, and the pitfalls of rushing into societal norms without taking time to first reflect on what it is that you really want. Dr. Michael G. Thomas, Jr. then joins the podcast to unpack the emotional turmoil brought about by financial struggles, particularly within marginalized communities. He analyzes the damaging effects of comparison and the role of shame in deterring people from seeking financial support, and advocates for a shift in perspective in order to alleviate feelings of anxiety and embarrassment. Tiffany wraps up the show with host Sean Pyles in a brief reflection on our special series on millennial money, as well as what it means for how younger generations are redefining the American dream. In this conversation, you’ll learn about: financial uncertainty, the new American dream, economic challenges unique to younger generations, millennials, gen z, economic barriers, median home prices, societal norms, emotional weight, marginalized communities, how to take advantage of financial opportunities, financial wellness, student loan debt, financial anxiety, and the psychology behind financial shame. To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [e-mail]. Like what you hear? Please leave us a review and tell a friend.

It's the American dream. Get a good job, buy a house, retire. You've heard it all practically since the cradle. But it's not so easy these days to achieve that dream, especially for the younger generations, including millennials. So some are giving up, and some are finding their own version of the dream. I think that we have to take fair off the table because there's very little in life that is actually fair. What we can do, though, is that we can tool up in such a way to actually understand core tenets of economics, core tenets of entrepreneurship, core tenets of financial literacy, core tenets of investing. Welcome to NerdWallet's Smart Money Podcast. I'm Sean Piles. And I'm Tiffany Curtis. This is the third and final episode of our nerdy deep dive into millennials and money. Today, we're going to address some of those milestones we all expect and are told to expect

from our financial lives. What do those milestones mean? And what happens if we can't achieve them the way we were told to? And if we can't achieve them, then what's next? How do we not see it as defeat, but instead as opportunity? Maybe it's time to change the milestones and shift our expectations to be more reflective of the times that we're living in. Well, Tiffany, over the span of the series, we've laid out why it's been difficult for us millennials, and I'll say Gen Z for that matter too, to hit some of those milestones, like buying a house and saving for retirement.

We've had a lot thrown at us. Yeah, there's so much that we're up against. The median home price in America is $416,000 for the second quarter of 2023. Let me say that again. $416,000, according to research from the Federal Reserve Bank of St. Louis. Yikes. And here in the Northeast, where I am, the median is $789,000. Okay, should I say it again?

Yep. Yikes. That is bananas, Tiffany. Speaking of bananas, I still buy the cheapest ones I can find, which means I'm in no position to buy a house anytime soon. And I read that the National Association of Realtors says the median homebuyer is 36 years old. That's way past the age when our parents were able to buy their first homes. And of course, now interest rates for mortgages are making things worse. But Tiffany, homeownership isn't the only sign of being a grown-up.

No, it's not. But it's always been a big one, especially here in America. We're also supposed to be saving for retirement and saving for marriage and kids and for those kids' college funds. When we're still trying to pay off our own college loans, it can feel very overwhelming. Well, then let's talk about that, shall we? I want to hear how we can take those expectations and turn them into a new reality, maybe a new American dream. Yes, let's get into it. All right. Well, we want to hear what you think, too, listener, to share your ideas, concerns, solutions around millennials and their money issues.

Leave us a voicemail or text the Nerd Hotline at 901-730-6373. That's 901-730-NERD. Or email a voice memo to podcast at nerdwallet.com. So Tiffany, where do we start today? Well, we're going to start today with those expectations we were talking about. The financial milestones we're supposed to achieve by this or that age in life. And for some advice, I turn to Dr. Jatali Belleton. She's a neuropsychologist and the founder of Brilliant Minds Unite, a youth and adult financial literacy movement. Welcome, Dr. Jatali. So glad you could join us on Smart Money today. Thank you so much, Tiffany, for having me. So let's talk first about how we define the traditional milestones or markers of adulthood.

If you were to put together a list, what would be on it? For me, some of the obvious ones are buying a home and saving for retirement. But what would you say would be on that list? I think it's really important that we diversify our portfolio and making sure our credit is where it needs to be. So I feel like a lot of people don't realize the power of credit in America. And I think that credit has become more powerful than even cash. So sometimes you have cash and you don't have good credit, and that would impact, like, let's say if you're purchasing a home, the price of that home monthly, right? It impacts even how much you pay for a vehicle. And so for me, when I think about milestones of being an adult and truly being a financially responsible adult, that is one of the first things that come to mind is how do you diversify

your portfolio? And how are you making sure that your credit is on point? You have business credit, you have personal credit, you know, you just, you are at your 100%. And for folks who may have never heard the term portfolio, may you briefly tell us what that is? Your portfolio is your money and where your money is allocated. So we tend to associate homeownership, being able to save for an emergency, for example, with being successful. What role do you think meeting these expectations or not plays in how we view our success?

I like to say that it's so important that we align ourselves with our goals and our visions and we don't rush ourselves. So when we see our friends buying houses and we just run and buy a house and we do the same thing just because we want to be on the same trajectory as those people, what ends up happening is sometimes we actually don't realize that those people sometimes will fail, right? And what I mean by that is I've known lots of people who bought houses at 22 years old and by the age of 27, 28, ended up losing their houses because they couldn't afford the mortgage. So I sometimes think that we have this over-glamorized view of what it is to

have a house. Is it fair to say that it's been harder for the millennial generation to reach these goals, in your opinion? And if so, what are some of the reasons behind that? I don't necessarily think that it is harder for them to reach these goals. We have had a lot of moments like the 2008 crash in real estate, which hurt and impacted a lot of people. Then we had COVID. But I also do feel like, unlike any other era, we're noticing the way social media is allowing people, especially if an entrepreneur, depending on what your brand is, to put themselves out there more. So we have more DEI opportunities. I feel like at the end of the day, we can focus on the bad, but the positive, which is what I like to focus on, the solutions to the problems, is the fact that now with social media and everything else, rather you have a course that you're making millions of dollars online or you're working corporate and now you can Google how to negotiate a raise.

I feel like a lot has changed. So I think that there's also an emotional component to this whole conversation beyond talking about just owning a home. And this experience isn't unique to just me, but I know I grew up being told to find a quote unquote good paying job that would allow me to retire, to work hard. And I've been told to put most of my time and energy into my job. And I think that millennials are pushing back against that message where we are de-centering work from our lives. Yes, it's important, but we are wanting our lives to be more well-rounded and to be focused on more than just work. So can you talk about the impact you think millennials have had on the way we view work and

career building? I think it's so important that we're now shifting and we're now saying things like, hey, you know what? We are going to enjoy our lives. It's not always only about the dollar. And I think that this younger Generation Z might have inspired us to be a little bit more unapologetic about that. I think it's time that maybe while we push back as millennials, that it creates a space where the companies and corporations actually create a more welcoming environment for us to want to stay in a corporate setting? I think that what you're getting at

throughout this conversation is the idea of feeling empowered. So financial literacy is one way to do that. And I know that you focus a lot on financial literacy and young people, and it's something that a lot of us have never been taught. So when we're thinking about these financial milestones, the idea that we're supposedly working toward them, what's your message for millennials who are trying to figure out what they want their lives to look like and advice for how they can achieve those goals? The first thing I say is, what luxuries do you want to have? Create a budget around what it is that you think is luxurious life. Because we all have different standards as to what luxury is.

Are you a yacht person? Or are you a person who has a one bedroom apartment and you never want to have children? And you're like, I am so happy because I have all these little cafes near me. Are you a farm person? The first part is knowing who you are as a consumer. What increases your morale? What is the thing that you feel like, I could do this almost every day and not be tired of it? What does your best life look like for you? If you need a million dollars, if you need $2 million, you need $10 million, if you need only 100,000, how many years can it get you through? And then the next question becomes, now that you've created the number and you have this budget, how many years can that be sustained? And are you thinking about the impact of inflation? What happens if you live until

you're a hundred years old? Are you putting yourself in a position where you can have the luxurious retirement home or things of that nature, regardless of whatever else is happening. Do you have life insurance? Do you have health insurance? So I definitely tell people, if you're starting to think about these things, having life insurance, having health insurance, understanding even life insurance, you can have it for as little as $10 a month, making sure that if God forbid you die tomorrow, that your funeral is not a GoFundMe situation and is not a burden to your family. Are you living with welfare means? But even in the middle of that, we have to show up for ourselves and give self-love, make time for the vacation, and then also making sure that you're not just only relying on savings

because if you save and you don't invest, that is the worst mistake I think a lot of individuals can make. You're just like starting with the budgeting aspect of learning how to save and budget to create wealth, there are so many different people that you can look at and lean upon that have just an amazing sense of knowledge that can help you on YouTube learn how to bring things from the online virtual world to the real world. And lastly, I want to circle back to the topic of wealth inequality and the impact of that as millennials try and reach these goals, because I think it's important to acknowledge that there are very real systemic barriers. So what do you think that the impact of that is even feeling like you don't feel empowered, feeling like it is difficult for you to advocate for yourself because you are someone who has been historically disadvantaged.

How do you think that impacts how people view these milestones and how they feel when they have difficulty reaching them? So the impact to me is so many levels. You know, we have limited economic mobility when we feel that way. I feel like it hinders what you believe you can do. And part of me even leaning towards neuropsychology was going into the school systems to teach financial literacy and having eight-year-olds telling me that they'll never be multimillionaires. And it was like, you're eight. How can you automatically count yourself out? There's an inequality of opportunities that they just, the government just removed affirmative education policies, right?

That were allowing us to go into these Harvard and Yale type schools and get an education and give us contracts. So it's mind blowing because I know that there is something unprecedented happening right now. You know, a small portion of our population holds a significant portion of our wealth and control. But yet when we talk about consumers, we have billions of dollars. And when we decide to boycott and not shop at their brands and when we decide not to show up to work, the infrastructure and that small portion of people who have the wealth, it would crumble. So I think that this is an opportunity and it's a time that

we really just need to band together. We really need to protest. So accountability and empowerment. 100%. Thank you, Dr. Tushali Bellison for helping us out today and for having this conversation with us. It was my pleasure. I really appreciate it. Dr. Bellaton's point about not getting caught up comparing your achievements to those of others, especially those posted on social media, is particularly resonant with me. Everyone has their own financial and personal challenges and hits milestones at their own pace. So I don't see

a lot of use in making yourself feel bad about where you are because of where someone else is or where they appear to be. I do realize that I've been very fortunate and that my career has allowed me to accomplish many of my own goals. And for the goals that I have yet to achieve, I'm focused on the steps that I can take to hit them, however long that may take. Whatever anyone else is doing and what they think about my life and my finances is frankly not my business. If I had a glass of something, I would toast to that. No, but seriously, it's so easy to fall into a pit of comparing ourselves to others when that energy can be better spent taking small steps towards tending to our finances. But of course, there's no shame

if you find yourself playing the comparison game from time to time. Well, as we noted earlier, given the challenges facing the millennial generation, some members of that generation might find themselves just throwing up their hands and slipping into nihilism. Why even try for the American dream if there's just no way you'll achieve all of it? But that's not a good idea, is it? Truthfully, I'm not sure the idea of the American dream, as we know it, has ever really resonated with me because even now it has never been fully accessible for marginalized people. But there are definitely ways, realistic ways, for struggling millennials to start improving their finances and become more resilient for the next crisis that comes along. So next, we're going to hear from Dr. Michael G. Thomas Jr. He's a lecturer at the University of Georgia's Department of Financial Planning, Housing, and Consumer Economics, where he teaches about the impact of compassion and empathy on financial well-being.

Welcome, Dr. Thomas. So glad you could join us. Thanks for having me. I really appreciate it. So in the first two episodes of the series, we've talked about how things like home buying and having savings have become harder to access, as well as how economic disparity is widening. And these are just some of the things contributing to millennials having this collective feeling of nihilism. Are there any other elements that you think have contributed to this feeling? impact on the economy. The first being the great recession, and then most currently, the pandemic. And what we don't talk about in the financial services space is that financial shocks are par for the course. And I think what's incredibly important to understand as it relates to notions around nihilism and impact of the economy is that if you give it a little bit of time, what happens is it does turn over.

And when it turns over, then abounds significant opportunity. however, is that when individuals are laden with student loan debt, rising costs as it relates to rent, food prices, what happens in these instances is that when things turn over, and then when there are opportunities to invest or to purchase homes at lower rates, let's say that the home prices come down, it's very difficult for individuals to right the ship in order to take advantage of the opportunity. And then by the time that they position themselves to take advantage of the opportunities, it feels like, man, something else just happened again in terms of navigating the process. And I think that this is a very important life lesson in a lot of regards, is that when navigating your financial journey, millennial or otherwise, we're in a space where you have to stay ready so you don't have to get

ready. And it's a tough pill to swallow at times because it does mean that there are concessions that are going to need to be made. However, a 10-year stretch, a 15-year stretch of being ready to take advantage of a significant financial opportunity could be absolutely the thing that sets you up for the rest of your life. So there can be a lot of shame around financial struggles. And I think that millennials are more open about having strained relationships with money, and we're having more conversations about the things that impact our financial stability, how can we move through shame around seeking financial help, be it from a professional or our community? I think that the very first thing that

we need to establish is that we've had a culture of shame for some time. So if somebody is struggling with shame, which is when we think about it, it's more of a notion of I am the mistake as opposed to guilt, which is this whole notion of I made a mistake, which is a very important conceptual difference. So when we're navigating shame, what happens is that we're making assumptions about self and character and who we are as individuals as we navigate our financial circumstances. So one of the devastating effects of shame is that it causes people to hide. And if I'm hiding in my shame, then what happens is that I don't want to be seen and I don't have the capacity for vulnerability because I don't want what I'm shaming myself for to be validated by the system or community that I'm navigating. Because then that just ultimately basically says that I am who I thought that I was. I'm horrible with money.

I can't stick to a spending plan. I'm not a good investor. Like all these. I'm horrible with money. I can't stick to a spending plan. I'm not a good investor. All these narratives that we share with ourselves. And so I did a TED Talk several years ago on financial empathy. And financial empathy is the antidote to shame, and more specifically, financial shame. And why I say that is that if shame causes people to hide, empathy encourages people to rise. And the beauty of empathy and its construct in neither is that individual extending themselves grace, understanding that there's a lot more to why someone made a decision than just a decision in and of itself. So I want to spin back around to the idea of this collective discontentment. And I want to know what you think the impact of this collective discontentment with our economic system might be?

What do you think the impact of that is? My struggle is, is that we still haven't learned the ultimate lesson, which is we still have to operate within a context and dynamics of the world with a certain level of autonomy, with a certain level of agency that is not overly reliant on the system. Because my issue is, and I've seen it over and over again, is that when things are going well, guess what? We're not having this conversation. So the issue here, and we see this and it bears out in the data and in the studies, is that when we're in a downturn in our economy, people feel the impact of it. They feel doubly worse about it, which then puts us in a state of nihilism.

The issue though, is that when things are going well, home prices are relatively affordable, interest rates are at a good space. Nobody then still questions the very system that created the environment for this to happen. So the issue here is that we can't collectively say, oh, woe is me when the system isn't working in our favor, and then turn our eyes away when it's working well for us. That therein is a struggle because it's still the same system. And is that fair or is that not fair? Well, I think that we have to take fair off the table because there's very little in life that is actually fair. What we can do, though, is that we can tool up in such a way to actually understand core tenets of economics, core tenets of entrepreneurship, core tenets of financial literacy, core tenets of investing. What I'm getting at is that it's this notion of thinking for yourself and engaging in a space that actually is self-centered. And we've also talked about the ways that millennials can still work towards financial wellness in the face of money struggles, starting with the kind of

relationship we have with money. We've also learned that millennials have been hit with significant events, like you mentioned. So what do you think are some next steps for our listeners and other millennials who are looking to work towards financial wellness? What words of advice or encouragement would you give? How we experience space and time is relative. There's no one that I know in our current space today that would go back to England in the 1600s and even replace their current lifestyle, regardless of where they are, with the lifestyle of a king during that time period. There's no air conditioning. There's no fast food. There's no Netflix. There's no toiletry and all these other different things

or whatever it may be. I even remember my great grandmother, how during the Montgomery bus day, make that walk in a summer heat to do X, Y, and Z and not make anything at all. But because she decided, regardless of the context of her situation, to show up, to continue to educate herself and to do all the things that she did, she created a legacy that ultimately afforded me opportunities that I never would have had if she would have said that, you know what, this is too hard. I'm going to give up. And I know that this is probably contrary to what we're going to hear in narratives that we're going to hear in and around the world today. But even when things are down, even when things aren't going the way that we hope for them to go, that there

is still a season of opportunity. And I would strongly encourage to lean into self-compassion, to lean in grace. And when you do that, what happens is, is that you start to gain your motivation back to take one step. And if you take one step, then you can take another step. And what happens is ultimately we start to develop momentum and we start to sow seeds precisely within a season where we need to sow seeds. Because guess what? This season's going to pass and the rains are going to come and fertilize all the seeds that were laid during the season if we could perceive and see through our circumstances and understand that opportunities still can abound. And I want to challenge whoever's listening right now, tune out the noise, get off the social media,

sit with yourself, go take a long, slow walk, feel the warmth of the sun, see the trees, the grass, feel the wind, and just exist and allow yourself to feel whole and complete within that moment and then gradually build from there. Dr. Michael G. Thomas, thank you for helping us out today. It was absolutely a pleasure. Thank you for your time. Sean, I love that a big takeaway from this conversation is that we don't have to simply struggle in silence or feel ashamed that we may not be where we want to be financially. And it's so important to acknowledge that significant factors like student loan debt

and recessions are heavily contributing to our financial struggles. And Dr. Thomas's focus on empathy and understanding being the antidote to shame is so important. Feelings of financial anxiety and shame do thrive in the shadows. The less we talk about them, the more powerful they can become, and the harder it can be to break these modes of thinking. But bringing light to your challenges, whether it is paying off student loans or trying to find a house, can bring light to these challenges and help you find solutions. And that can be really liberating. Yes. And as simplistic as it can sound, being open and compassionate with yourself can really

be the start of shifting the difficult feelings that we have when it comes to money and what we see as financial shortcomings. Right. So Tiffany, I want to thank you for leading this series and spurring conversations about what it means to manage your money as a millennial. After the past three episodes, I'm thinking about how one, it's important to honor the distinct ways millennials experience financial challenges. But two, we aren't powerless in the face of persistent difficulties. Our focus on community, rethinking our relationship with the economy and our jobs, and taking steps to improve our individual financial lives seem like some of the best tools at our disposal to bring about the change that we seek? You're welcome. I think there's so much more we could say about money

and millennials, but I think what we discussed was powerful. Some highlights for me were that, one, millennials aren't a monolith. We aren't collectively bad with money or lazy, and a lot of our financial challenges are tied to major events. Two, generational trauma is a real barrier to having a positive relationship with money, but healing is possible. And three, we get to decide which markers of adulthood are important to us, and working towards financial wellness isn't something you have to face alone. And that's all we have for this year. Do you have a money question of your own? Turn to the nerds and call or text us your questions at 901-730-6373. That's 901-730-NERD.

You can also email us at podcast at nerdwallet.com. Also, visit nerdwallet.com slash podcast for more info on this episode. And remember to follow, rate, and review us wherever you're getting this podcast. This episode was produced by Tess Vigeland and Tiffany Curtis. I helped with editing, as did Liz Weston. Kathy Henson helped with fact-. Kevin Tidmarsh and Kaylee Monahan mixed our audio. And a big thank you to the folks on the NerdWallet copy desk for all their help. And here's our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances. And with that said, until next time, turn to the nerds.