NerdWallet's Smart Money Podcast - Overcoming Millennial Money Problems for Financial Wellness

Episode Date: September 7, 2023

Discover how global events molded millennial finances, and hear ideas for addressing economic challenges and financial trauma. In this Nerdy deep dive, personal finance Nerd Tiffany Curtis joins host Sean Pyles to discuss millennial money woes, from generational financial trauma to structural challenges that have made financial life more difficult for Americans between 27 and 42 years old. They discuss the changing ways that generations are studied and explore how world events such as the financial crisis and the COVID-19 pandemic have shaped people’s financial attitudes.  Tiffany also talks with Angela Moore, certified financial planner and founder of Modern Money Education, a financial education firm. They discuss the historic and present-day factors that have shaped millennials’ relationship with money and ways that they can take ownership of their finances. They also debunk myths surrounding millennials and money, the impact of the internet on financial empowerment, how the millennial pursuit of happiness impacts their career choices, lifestyle, and relationship with money. You’ll walk away with valuable insights into the tools millennials can use to empower themselves financially, including organizing finances, setting goals, and understanding the importance of insurance and estate planning.  In their conversation, Angela and Tiffany discuss: millennials, financial behavior, modern money education, generational financial trauma, wealth inequality, financial attitudes, career choices, generational divisions, disability insurance, estate planning, money management, generational wealth, retirement planning, budgeting, and financial goals. 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.

If you are of a certain age, anywhere from your late 20s to your early 40s, you have no doubt found yourself at some point reduced to your generational status. You are a millennial. And while every generation has its benefits and burdens, some also bring a specific, shall we say, attitude to the table? I think that a lot of millennials are getting to the point where they do not care what, you know, their parents think or anyone else for that matter. They want to focus on happiness. A big theme now is my job has to be fulfilling. My job has to make me happy. I have to enjoy what I'm doing to a certain extent, right? There has to be that balance to life and a lifestyle element to it. Welcome to NerdWallet's Smart Money Podcast. I'm Sean Piles.

And I'm Tiffany Curtis. This episode kicks off our nerdy deep dive into millennials and money. We're going to explore what makes millennials unique in how they make money, manage money, and talk about money. We're also going to explore how millennials have opened the door to wider conversations about generational financial trauma and how they've gone about defying expectations about what their financial lives are supposed to look like. Okay, so Tiffany, I am going to ask you the question that I ask all of our guest nerds for this special series. Why are we doing this exactly? You and I are both

millennials, so I'm guessing that is part of it. Yes, that's definitely a part of it. I just turned 30. Congrats. Thank you. I wanted to do a special series on how we relate to money because there are a lot of myths about millennials and money. There's the misconception that we're simply bad with money, not working hard enough. It also feels like general financial advice and ideas about what financial wellness should look like. Don't take into account all of the significant events that we've lived through and how those events and generational trauma impact our relationship with money. Yeah, absolutely. And one thing that's really interesting to me is how the experiences

we have at really formative times in our lives shape the way that we think about our own finances and the economy for years to come. Folks in Gen X and boomers also lived through things like the 2008 financial crisis and the COVID-19 pandemic, but by virtue of being in different places in their lives, they may have been shaped by these events in different ways than we millennials were. Well, speaking of millennials, Tiffany, let's talk about this generation that we are a part of and also the whole idea of generations. First of all, can you please give our dear listener a refresher on how millennials are defined? Yes. So they're generally defined, as you mentioned at the top of the show, as people who are between 27 and 42 years old. So they were born between 1981 and 1996. So their

formative years happened during and around the millennial. Although you were born in the early 90s, you probably don't remember how wild Y2K was. Y2K is such a throwback. I was nine when Y2K happened, or I guess didn't happen. I spent New Year's Eve at my grandmother's house in small town Minnesota. And I remember being very bored, but also feeling like I was in a relatively safe spot in the event that every nuke in the world was detonated at once or something like that. We all thought that was maybe going to happen. Well, I think we also do want to acknowledge some of the problems that arise when we divide people up into generations, right? Millennials are not really one monolith, nor are boomers or people in Gen Z. And speaking of Gen Z, the boundaries between one generation and the next can feel a little bit arbitrary.

And a lot of issues around money have nothing to do with whichever generation you're in. Having a tense or strained relationship with money isn't inherently unique to millennials. That's true. But I think you can make a case that there is a collective discontentment in the millennial generation. And you can definitely argue that's the first generation to grow up with the internet ingrained in our lives that makes us different from, say, Generation X. We've also witnessed growing economic disparity and insecurity, and we're the first to stare down a life deeply affected by climate change. And I also think it's fair to say this generation is disillusioned with the American dream. I think we more openly question who that dream is for and whether it's something

to still strive for. Yeah, amen to that. When I talk about money and the future with many of my friends who are predominantly millennials, many of them express a sense of despondence or that they feel like they'll never get ahead financially. But I don't want this to be too much of a bummer conversation. So Tiffany, let's talk about what is good. You mentioned the influence of the internet, and I would argue that has been a force for both good and bad. On the good side, it has allowed us to have really important conversations openly, publicly about all of those factors that you mentioned. Agree. And technology itself has brought changes to our financial lives.

For example, do you ever even go inside banks anymore or even like a real old fashioned brick and mortar store? We do have the world at our literal fingertips from the comfort of our couches. Agree. I do still go into banks too. Well, that is your own prerogative and good for you because I have not set foot in a bank in a long time. But I remember when we were first talking about this series, we ran across some interesting perspectives on this whole call me by my generation question, didn't we? We did. And I particularly want to cite the Pew Research Center, which issued an explainer this year that said it was going to change its approach to studying and reporting on generations. The biggest takeaway, I think, is that they are going to analyze generations when they have historical data that allows that comparison at similar stages of life. So for example, they would look at people

in their 30s and 40s across time instead of by arbitrary generational designations. And that makes sense to me. Me too. But for now, we're kind of stuck with millennials, right? As a generation. So let's talk about that. Yeah, might as well, right? Okay. Well, listener, we want to hear what you think. To share your ideas, concerns, solutions around millennials and money, 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, who are we going to hear from today? Well, we're going to start today with Angela Moore. She's a certified financial planner and founder of Modern Money Education, a financial education firm. She's based in Florida and calls herself an honorary millennial. Welcome, Angela. So glad you could join us on Smart Money today. Thank you. I'm excited to be here. So let's start with an overview of where millennials are in their financial lives right now. What stands out to you as someone who does financial planning with millennials? I think what stands out the most is that there's just so many competing priorities because we're kind of like a sandwich generation.

Many of us have parents that are getting up there in age, close to retirement age. So there's the need to potentially help them financially or help them plan for retirement, supplement their financial situation. And then many of us are beginning or have children at this point. So there's the need to plan for our children and their education and their everyday expenses and needs. And then we still have all these competing personal financial priorities, whether it's our everyday bills or our student loans, purchasing a home or other goals. And there's so much more to add in there. We don't have the same type of retirement benefits that previous generations had and housing prices and the cost of living in general has just skyrocketed.

What do you think are some specific events that have shaped this generation in terms of how we view the role of money and the attainment of it? I'm thinking about things like the 2008 financial crisis and, of course, the COVID pandemic. Can you talk about some of the ways that those events affected millennials' finances? Absolutely. The pandemic hit millennials very hard. The Center for Retirement Research at Boston College said that millennials were more likely to be laid off during the pandemic. The Pew part of it is that there was a study done by the National Institute is not, it's not really working for us, you know, and I didn't even mention the student loan situation. I mean, I've routinely seen people, clients that have 200, $300,000 of student loan debt. And so I think that forces you to have to think outside the box and be creative. If you're a millennial and you're seeing what's stacked against you, it's almost like, okay,

well, how can I now separate myself from this situation and elevate, right? How can I transcend this situation? It's not necessarily because millennials want to be creative and want to do everything differently, you know, and then it's almost like you're getting judged for wanting to be different. You're getting judged for not taking a traditional route. One of the historic things that happened was our country did away with traditional retirement plans. Back in the day, a lot of U.S. workers had pension plans and it became very expensive to maintain these type of traditional retirement accounts or pensions. And so a lot of companies began to move to 401ks and 403bs and kind of what we call contribution type plans. And so what that

did is it shifted the burden of saving for retirement from the employer to the employees. The traditional advice that you got, you know, that older people got when they were younger, it doesn't work for our generation. It's not going to work. So what do you think is some of that traditional advice that isn't working for millennials anymore? I think the traditional advice is like, go to college, get a job, save your money, balance your checkbook. The standards hold true, right? But it's not enough anymore. Someone who's just working an average job, trying to save and trying to penny pinch and budget their way through their financial situation is not going to have enough money saved to live on

all throughout retirement. If you do the math, if you look at, hey, let's say I start working when I'm 20 and I retire when I'm 65. Okay, that's 45 years that I've worked. But let's say that I live to be 100 or 95, let's say, right? That means that in the 40 years that I've worked, I need to have saved enough to live on another 30 years. And I'm supposed to be saving this money, even with the high cost of living, the high cost of purchasing a house, the high cost of paying for education, the high cost of inflation. And on top of that, I'm also supposed to be navigating this tumultuous financial market, right? The investment market. It just doesn't add up.

So I'm wondering if you can talk about some of the misconceptions that other generations might have about millennials, especially our relationship with money and how we manage it? How do you think millennials are seen by the rest of society? I think a lot of society in the past, especially has looked at millennials as lazy. They don't want a job. I think those are the most common misconceptions I've heard. But in working with mostly millennial clients, I have to differ with that. I think that millennials are some of the smartest clients I've ever had.

They're extremely resourceful. They're extremely mature. It's not all about money for millennials. A lot of it is about health and wellness and balance. And I think that that's key. I think a lot of millennials do have a sound mind and they are aware of the financial situation and concerned with it. I just think that it's hard. It's extremely complex. From a financial standpoint, I think that millennials have actually done an excellent job of being aware of their financial situation

and taking steps to try to do the best that they can. Where do you think they're coming from, the misconceptions? A lot of older people are not aware of how much it costs to go to college now. You can easily spend $80,000 a year on college now. And it's just, there's a lot of things that the older generations just were not exposed to. Even finding a job. I mean, even me, when I graduated college, I graduated college in 2002, it was easy to find a job. But things are different now. Things are completely different. And even finding a livable wage, especially in some of these major cities, let's say you're earning $100,000, that's not a lot of money in a lot of these urban cities and these

environments. It's just not, it doesn't go very far nowadays. So we talked about things that older generations may not have been exposed to. So that makes me think of millennials and the internet and how we're kind of the first generation to really grow up in the age of the internet and this big boom with social media, especially. Can you walk us through the effect that you think that's had on how we view our finances? Do you think it's helped or hindered us? I think both. I think on the one hand, it's exposed us to so many different options,

so many different career paths, so many opportunities that we wouldn't have had if we didn't have access to information. But then on the other hand, there's the whole social media aspect and the comparing ourselves and everyone's out here living their best life on a yacht in some tropical paradise or whatever. And it just makes you feel like you're broke compared to everyone else. There's a lot of influencer type of content out there. And it's hard when you are putting your head down and you're working and trying to earn income and trying to save and trying to just create something. And it just looks like everyone else is doing so much better than you. It's both helped us in a lot of ways by giving us opportunities and exposure to things. But then at the same time,

it can be devastating in a lot of ways as well and overwhelming. And so subconsciously, you're holding yourself to that standard. It's almost impossible for us to separate the two, you know, internally in our brains. I feel like when it comes to social media and millennials and finances, it very much feels like it just kind of amplified that feeling of the have and the have nots, which makes me think of wealth inequality. There's a lot of research coming out about the wealth gap among millennials, especially racially, and the major difference in net worth between white millennials and Black millennials and other millennials of color. And wealth inequality is a source of

generational financial trauma. So I'm wondering what does generational financial trauma look like to you? I'll tell you a quick story. When I first got in the industry as a financial advisor, I was working at a huge brokerage firm and we had cubicles and there was a young woman sitting across from me and she was on the phone with her attorney discussing her prenuptial agreement. Like it was nothing, you know, just casually discussing what she would like to have in the prenup and all these different things. And I thought to myself, wow, I've never heard anyone talk about this. And as I grew in this career, that's something I saw is that there are certain families that talk about wealth. They talk about estate planning. They talk about business. They talk about investments. They talk about all these things at the dinner table

on a routine basis. And in a lot of black and brown communities, especially, you could go your whole life and you've never had a conversation about those things we're just not typically exposed we're not at the table we're not in the room and obviously i mean we all know the history of this country there are certain families that have had generational wealth that came all the way from slavery times. The same goes for poverty. There is poverty that has been passed down from generation to generation. It's a poverty mindset. It's lack of knowledge, even.

It's behavioral patterns and habits that have been passed down. You saw your parents doing it, so you're doing it. And it's not just that. Then there's also obviously what kind of access to advice that you have. One of the things that really bothered me about my industry when I stepped back and thought about it later in my career was that most financial planning firms and brokerage firms, they cater to high net worth clients. And what that means is that they are looking for individuals that have at least a million dollars to invest with them. A lot of these companies don't even have any services that will cater to you at all. And so it's like, where do the rest of us go for financial advice? But I do think that

a lot of millennials, what's great about this is that because of the resources that we have, like the internet, for example, people are beginning to take these matters into their own hands and they're educating themselves. They're reading books. They're finding people like me to help them. They're listening to things like this. They are really trying to empower themselves, which we've always done, but there's now this access to information that wasn't really available before. And speaking of empowerment, what kind of advice do you give to your clients about how to deal with generational financial trauma? I think that seeking professional help in terms of therapy is not talked about. There's trauma, there's mindset and hindering beliefs a lot of times. So seeking therapy. The

other thing is associating yourself with like-minded people who are also trying to empower themselves. So find a Facebook group or whatever it is of people who are trying to financially empower themselves. And then lastly, find a professional to help you get your finances in order, whether that's a financial coach, financial advisor, financial planner, an investment advisor, like whatever. There's a lot of different types of financial professionals out there that can help you. There's even student loan specialists out there. So there's's a lot of different types of financial professionals out there that can help you. There's even student loan specialists out there. So there's just a lot of help nowadays and resources. You've touched on some resources already, but given everything that we've talked

about that millennials are navigating when it comes to their financial lives, what are some steps that they can take toward financial wellness right now, immediately, as soon as they're done listening to this? Yes. So the first thing you can do is take ownership and get organized. You want to have clarity around your current financial situation. So the first step is write out a budget, write down all of your monthly expenses and also any debt that you owe, anything like that. List it all on a piece of paper or a spreadsheet or whatever, just so you can have clarity around that. And then also list out how much income are you bringing home every month and then compare, right? How much is coming in versus how much is going out? That's the very first step. Once you've done that, you want to focus in on your goals. So many people have no clue what

they're trying to accomplish when it comes to financial situations. You could maybe have some short-term goals, maybe some long-term goals, but then the next step is aligning your budget with those goals, right? Every month money's coming in. Are you allocating that money in a way that aligns with what you are trying to accomplish in your life? That is the key. If you're not, if your money's just coming in and going out to all these random places and it's not intentional, you're not being intentional about how you're spending or where

you're putting your money, then that's where chaos sinks in. After that, I would say focusing in on eliminating debt, making sure you have an emergency fund saved, then reviewing your insurance, car insurance, really important, all the different types of insurance, disability insurance. You should know what disability insurance is and you need to make sure you have it. Because disability insurance is insuring your income. If something happens and you are disabled and can no longer work, how are you going to save for retirement? How are you going to buy a house?

How are you going to do anything? So you need to make sure that you're insuring your income with disability insurance. And then another thing is estate planning. Everyone thinks that estate planning is only for wealthy people, but that's not the case. All of us should do an estate plan because an estate plan says, hey, if I'm ever in the hospital, who do I want making medical decisions for me? Who do I want to have access to my finances to be able to pay my bills and make sure my business keeps flowing and all these different things? It makes me think about how millennials are or aren't redefining what financial wellness feels and looks like for them. So I'm wondering if you could talk through what do you think that looks like? Do you think that we're redefining financial

wellness? If we are, how? Absolutely. I think that a lot of millennials are getting to the point where they do not care what their parents think or anyone else for that matter. They want to focus on happiness. And so a big theme now is my job has to be fulfilling. My job has to make me happy. I have to enjoy what I'm doing to a certain extent, right? There has to be, like I mentioned earlier, that balance to life and a lifestyle element to it. I think the other thing is that a lot of millennials are doing what I call thinking outside the box.

They are creating their own realities. A lot of millennials are starting to create their own businesses. They are leaving their own realities. A lot of millennials are starting to create their own businesses. They are leaving corporate America. They are creating new, innovative ways to make money and create multiple streams of income. And they're realizing that they need to increase their income in order to achieve financial stability. And I also think, you know, challenging societal norms.

A lot of millennials are not trying to buy a house. Some are not trying to get married. People are really looking at what makes me happy and what can I do to live the life I want to live in the most authentic way possible instead of what society expects of me. And so that's something I see that is unique to millennials. So it sounds like the honest is on millennials a lot to kind of come up with these creative solutions and figure out how to do things in a non-traditional way. Because like you said, the system isn't working for us, but if you could, how would you like to see the system better support millennials? Well, I think a lot of it is political. And I think we're seeing that some leaders are trying to address issues. Obviously, there's a whole lot of issues to be addressed. And so sometimes

our particular issues don't take precedent, but I think that they should because, you know, the baby boomer generation, which is our parents' generation, they are aging. They're retiring, going into Social Security. So the onus falls on the current working class to fund Social Security for them and fund retirement for them. And because there's not as many of us, right, there's a strain on the system. These are all major, major concerns. When you add it up and do the math, it's not going to work out unless something changes. So I think that, you know, hopefully as we become leaders and, you know, get into leadership, that we can help push forward change. Angela Moore, thank you so much for helping us out today and helping us

kick off the series. The pleasure is all mine. Thank you. I love how Angela talked about the importance of empowerment and community. You two discussed a number of big challenges that the millennial generation is facing. Wealth inequality, generational trauma, a difficult housing market. And these issues are real and hard to navigate. But at the end of the day, we still do have agency, right? We can decide what to do with our finances and can work to better our situations, even if the broader economic and societal context is difficult. We do have agency. We get to decide what our financial priorities are. And I think with open and honest conversations like these, we move a little bit closer to improving our relationship with money while we continue to hope that systemic change is on the way. Exactly. Hoping that systemic change is on the way and taking action to make that happen. So Tiffany, Angela touched on this a bit, but I know in our next episode, we're going

to dive even further into the idea of generational financial trauma. Yeah, we're going to talk with two guests who have spent a lot of time counseling and educating millennials on how generational trauma intersects with our finances and how we may not even realize that said trauma is at the root of our relationship with money. When we start talking about financial trauma in general, I think that there is a conversation that assumes people were coming from a place of poverty. And yes, that is very, very true for a lot of people. But there are also people who were raised in middle class, upper middle class, wealthy families who are dealing with generational traumas of their own with money.

For now, that's all we have for this episode. 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. Liz Weston helped with fact checking. Kaylee Monahan mixed our audio. And a big thank you to the folks on the NerdWallet copy desk for all their help. Also, a special shout out to Kathy Henson for all of her help on the series. 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!