Some Millennials Are Doing Great. What Are They Doing Differently?

Jean Chatzky

Google the words “millennials” and “money” and you get no shortage of gloomy headlines:

66% of Millennials have Nothing Saved for Retirement (CNN)

Millennials lost money to scams more often than their grandparents (USA Today)

Will FOMO Ruin Retirement for Millennials? (Forbes)

So, you can understand why the release of a study that put a much better spin on the story garnered so much ink. Bank of America’s 2018 Better Money Habits Millennial Report pointed out that those born between 1981 and 1997 are doing just as well or better than older generations when it comes to money management and career confidence.

Among the findings: 63 percent of millennials are saving, 59 percent feel financially secure, and 73 percent of millennials who have a budget stick to it every month, or most months. Millennials also know how to advocate for themselves at work; 80 percent of millennials who asked for a raise in the past two years received one.

The truth is actually somewhere in between. A greater percentage of millennials are living at home than did previous generations, some millennial women aren’t realizing the level of career success of their mothers or their Gen-X peers, and a scary-sounding term, the “millennial disadvantage,” describes the increased income inequality, growing house prices, and lower income mobility that the generation has experienced overall.

Of course, every generation has its success stories and its failures, but it seems that an increasing number of millennials are starting to figure out this whole adult life thing.

Who are these successful members of the millennial generation and what are they doing differently?

They’re leaving it to technology.

“They’re automating it all-savings, investing, credit card payments, you name it,” says Peter Faust, CFP, wealth advisor with Tanglewood Total Wealth Management, a wealth management firm in Houston, TX.

 “The millennials who are doing a good job don’t really even have to think about it. The 401(k) contributions and savings are all going where they’re supposed to go, automatically.”

Apps like Wealthfront, Mint, and Acorns have changed the game, connecting people to their budgets and savings like never before, says Connor Swofford, co-founder of Paytronage, a dual-sided marketplace connecting institutional sources of capital to students interested in receiving income share agreements, or ISAs. (ISAs differ from a traditional loan in that they have no interest or principal, and your rate is based on your predicted future income. An ISA is based on payable years, not a payable amount.)

“You can just look down at your phone and connect with your portfolio in a matter of seconds,” Swofford says. “You can invest your spare change into paying off your student loans or see instantly how much that latte you just ordered is going to set you back. You’re so much more connected to your money than someone who balances their checkbook once a month.”

They’re the older members of the cohort.

“If you were born in 82 as opposed to 92, you are going to be more comfortable in your financial path. You’re not out at happy hour every night,” says Arian Vojdani, an investment strategist at MV Financial.

According to a report by NPD Group, it’s the younger millennials overall who feel more optimistic about the economy. They spend more money on prepared foods and at specialty beauty and apparel retailers than do their older counterparts. Meanwhile, older millennials are outspending the younger set when it comes to home and kid-related purchases. That more responsible, more parental mindset is showing up in their saving and investing behavior (not to mention surveys that ask about it.)

There’s no doubt that the millennials who are doing the best are the ones who have reached the point where their focus is on buying homes and raising families, Faust says. “These are millennials who have made the conscious decision to save for their future. Of course, it’s easier to do that with a higher income,” he says.

They (gasp) listened to mom and dad. 

“There’s nothing genius or secret going on,” says Vojdani. “They haven’t cracked some unknown code in the market. The millennials who are doing well are doing things that their parents did, like putting away 10% of their income, contributing to their 401(k), not living beyond their means, having an emergency fund, you name it. Some of the techniques have changed, but the playing field is the same.”

Some of them might even be doing it better than their parents, Faust says, since they have access to savings vehicles that were just coming about when mom and dad were entering the workforce-IRAs and 401(k)s both came onto the scene in the 1970s.

“Most millennials recognize that the onus is on them to save,” Faust says. “They know that pensions are an anomaly. If they get a raise, they aren’t succumbing to lifestyle creep, they’re going to ramp up their 401(k) contributions, and sock away as much money as they can.”