Millennial Money

Millennials have gotten a bad reputation regarding finance and their ability to save for a rainy day or retirement. However, a new “Relationship With Money” survey by financial services firm Edward Jones found that not only do more Americans born between 1981 and 1996 consider themselves “savers” than those in their parents’ Gen-X cohort (48 percent vs. 46 percent) but they also found that Millennials were better at socking away emergency funds (75 percent vs. 66 percent). “This debunks the myth that Millennials aren’t as financially focused as other generations,” says Edward Jones investment strategist Nela Richardson. This survey is not an outlier observation. It is supported by other research. The Federal Reserve Survey on Consumer Finances found that while Millennials are deep in debt, more than 42 percent have retirement accounts, the highest share for those under 35 years of age since 2001.

Part of what is driving Millennials’ emphasis on saving could stem from lingering memories of the Great Recession. “Back in the late 2000s, the oldest cohort of millennials entered the worst job market since the Great Depression of the 1930s,” says Richardson. “For younger millennials, watching their parents and other family members go through that experience may have also made them more aware of the risks of a market downturn or some other unexpected event, such as losing a home or a job, and so they’re more conservative when it comes to spending and saving in their adult lives,” says Richardson.

Note that one potential alarm bell uncovered by Edward Jones’ sampling of more than 2,000 adults nationally age 18 and over: While 92 percent were honest enough with themselves to recognize there was room for improvement in their financial health, the very thought of saving money made more than a third feel either “anxious” or “overwhelmed.”

Here are three tips in case any of this information resonates with you:

• Identify your money-related emotions. People often have emotional responses to money. Getting a big bonus at work can make you feel euphoric; agonizing over what to do with it can be paralyzing even as the logical part of your brain fights it out with the emotional part. What is key is knowing that letting your feelings dictate your spending, saving, and investing choices can lead to poor decisions.

• Develop a financial strategy. Keeping your cool starts with identifying your main goals – a down payment on a new home, college for your children, a comfortable retirement – and then sticking to a sound, long-term path for attaining them.

• Get an “accountability partner.” Meaning, someone with whom you’re comfortable sharing your finances. It could be a family member or a professional financial advisor, such as a local one at Edward Jones, who has the perspective, experience, and skills necessary to help you make the moves appropriate for your situation.

Saving money can lead to great wealth, and great wealth permits an individual to potentially become an accredited investor. This opens up new avenues for investments including Rule 506(c) offerings. To learn more about private equity and various financial topics, stay up to date at the VerifyInvestor.com blog.