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Millennials and Money
May 9, 2017

A new generation strives for financial independence.

They're poised to overtake the baby boomers as the largest living generation. Within five years, they're expected to make up half the global workforce. Yet millennials face distinct challenges as they strive to achieve financial independence. These challenges can have unexpected impacts on their family members, who may find themselves providing prolonged financial assistance.


Millennials are often well educated, tech-savvy and frustrated that they're unable to find opportunities to succeed. However, they can take charge of their finances – whether they're looking for work or already in a chosen career – with the help of some straightforward steps.


Get back to basics

The word “budgeting” sends shivers through people of every generation, but balancing income and expenses (essentially, living within one's means) is critical to developing a strong financial foundation now and in the future. Budgeting starts with a two-step process:


1. Take a snapshot of “now”

A bank account statement shows clearly if more money went into the account than out or if more money went out of the account than in. A surplus is an opportunity – to pay down debt, save and invest. A deficit means it's important to look for ways to either boost income or cut expenses.


2. Find a comfortable balance

Everyone has a unique balance of income and expenses – a balance that enables them to reach their goals and that they can sustain, month to month and year to year. Dividing expenses into two separate categories – “needs” and “wants”– makes it easier to find ways to trim costs and save more.


Pay off debt as quickly as possible

When paying down debt, it's generally a good idea to focus on loans with the highest interest rates first, and always aim to pay more than the minimum. Interest payments weigh down any budget, and reducing what you owe leaves more money to go towards other priorities.


Start small with investing

Investing isn't just for people with lots of money. A range of financial options can help put investing within reach.


Plan for what-ifs

Life's full of surprises, so it's important to build an emergency fund. This money can help answer what-if questions, including one that haunts many young people: “What if I lose my job and can't pay my bills?” Try to save six months' worth of living expenses that can be accessed right away when needed.



Not all parents of millennials have children who are struggling financially, of course –but many do. Even in the face of these trends, there are ways for parents of millennials who are having trouble becoming financially independent to help, without necessarily jeopardizing their own savings or retirement plans.


Manage debt

While parents shouldn't ignore their debt, some may consider slowing down debt repayment or tapping into the equity they've built up on their homes to help their children. Once millennials are able to support themselves financially, parents can redouble their efforts to pay down their debt. Many experts strongly recommend that debt be eliminated before retirement.


Encourage financial responsibility

Children who move back home after graduating from college can contribute to the household financially. One way to structure monetary payments is as a percentage of a child's income, so their contribution is manageable from the start and increases with their salary.


Model good financial behavior

Even grown-up children look to parents for guidance, so get them involved in discussions about the household budget, and share successes at paying down debt, committing to saving for the future and realizing retirement dreams.



One of the most effective ways to achieve everyone's objectives is to talk to an advisor as a family. Working together, millennials and their parents can build a comprehensive financial plan that improves their situation today and gives everyone more confidence in the future. Click here.