Money Advice for Millennials From a Baby Boomer

Today’s post is aimed primarily for the millennials out there, but if you’re older, one important way to help millennials deal with their finances in this complicated 21st century world is to give some sage advice and share some life experienced wisdom to them directly from your own life. If they even get one or two important points from you, consider it a success. Being a baby boomer myself, I know most of my own generation was not very tuned into parental advice given by the older generation back in the day. I think things are a little different today. That’s why this post is for you too, if you want to help a younger person. So here are some great financial strategies that I often preach and hope you will share with the millennials in your world!

Millennials face significant financial challenges as they build their future. That's why my experience and advice as a baby boomer may help. Here's my money advice for millennials to work with.

Some Things Just Never Change

The younger generation sometimes gets some knocks from us older folks and much of it is really undeserved. When I was a kid, everything from the way I dressed to the music I listened to was critiqued by anyone over 30 and that is more or less the way it has always been throughout the generations, hasn’t it? But even though my Mom and Dad may have had a problem with my “radical” interests, long hair, strange language, and anti-establishment mentality, it is the badge of youth to try and forge new ways in the world and seek a unique path to a successful future, at least that is always the plan.

But Some Things Do Change

Compared to earlier generations like mine (baby boomers), todays “of age” millennials are amazingly a very conservative bunch (some say they compare to the generation that sprung out of the Great Depression), but they do feel a little more optimistic about their financial future than we did back in the 60’s—and that’s for some good reasons. For one, they stand to inherit substantial wealth from their parents and despite all the writing you see about the dismal future of Social Security, record breaking student loan debt, and stiff competition for jobs, millennials do possess several key qualities that in the long-term that can forecast their success.

As the Rolling Stones Once Sang “Time is on My Side

The biggest thing, besides the knowledge of what they are facing, the smarts to strategize a plan, and the power of compounded returns, is their greatest ally: their youth. That’s because time is so much on their side. But of course, that’s only when they put it to good use. That’s why their investment strategy should include these key items.

Money Advice for Millennials – Strategies for Success

1. Make a Saving Plan and Stick to It!

I recommend saving 10% of every paycheck especially during the critical early years of earning, the twenties and thirties. More than any other generation, millennials prefer spending money on memorable experiences instead of material possessions. A plan can help you strike a balance between the “must-haves”—needs such as an emergency fund, house down payment, and retirement planning like an IRA or 401(k) and the “nice-to-haves”—wants like travel and hobbies and that special latte or concert.

Even if a 10% savings rate is unmanageable, as it is for many new young investors, just start with small amounts and commit to making gradual increases after earning raises and paying off your debt. Being a “practical” optimist about your finances can only help you reach your goals. Negativity will never accomplish that.

2. Set Up Auto Save

Make your savings automatic with transfers from your paycheck and it will be a great saving and investment tool that will help ensure you save before you spend. It’s the “pay yourself first” strategy made very easy for you. The pressures and emotions for saving are lifted by this process.

3. Invest with Dollar Cost Averaging

Regular automatic savings strategies enables millennials to automatically buy more shares when markets are down and fewer when markets are up. This process, known as dollar cost averaging, helps reduce the average costs over time and increases return potential.

4. Don’t Panic When the Market Fluctuates

With retirement still decades away, you have a luxury that older investors like me don’t have: the time to ride out volatile periods and allow investments to recover. Moving out of the markets every time it takes a dip into the lows will drive someone crazy, cost a fortune in fees, and increase the risk of missing the highs and not achieving your goals.

5. Invest Most Aggressively While You are Young

Despite a long investment timeline, millennials are way more likely to buy low-yield CD’s than they are to invest in the stock market. They are risk afraid and while it’s true that stocks carry higher risks (in exchange for higher return potential), those risks tend to decline over a long period of investment time.

In any one-year period, for example, market returns have ranged widely from a high of 47% to a low of -39% since 1950. But over a 5-year time frame, returns become way less volatile and more positive. This may shock you, but according to JP Morgan, there have been no negative results in the stock markets over 5-year rolling periods in the last 67 years.

6. Diversify Your Portfolio

A great way to manage risk is to diversify across asset classes that typically rise and fall at different times under different economic conditions. An investment near the top of the list of outstanding performers one year is often near the bottom the next—and vice versa. Asset allocation* may make performance more of a mid-ground money maker with a more consistent, less volatile return.

* Asset allocation is an investment strategy that aims to balance risk and reward by apportioning a portfolio’s assets according to an individual’s goals, risk tolerance and investment horizon. The three main asset classes – equities, fixed-income, and cash and equivalents – have different levels of risk and return, so each will behave differently over time. – Investopedia

7. Max Out Your Employer 401(k) Match

If you don’t max out employer matching funds, you are leaving free money on the table. Ideally, you can invest more—up to the current maximum of $18,000 per year, but that probably isn’t reasonable. When you have money and it’s not covered by a company plan, you need to open an Individual Retirement Account (IRA). Either way, investing in a retirement plan is a must.

8. Home Ownership is Still the American Dream

Believe it or not, facts show that over 20% of millennials already own a home and another 40% expect to buy one within the next five years. All the hype about a declining desire to own a home, the reversing of the “American dream” seems to be a bit premature. Real estate offers another way to diversify sources of your money return potential while also creating equity to tap into if the need ever arises. Despite the flexibility and not having to worry about repairs and upkeep associated with renting, it appears that the owning of a home is still in the future of Americans these days.

9. Deal with College Debt

Easing the burden of student debt (or any loans) frees up more money for investing. Strategies include paying off high-interest loans first and going down that list saving your cost on interest. You can consolidate multiple loans at lower rates and have one payment. You can refinance your loan(s) and reduce monthly payments. That’s why I so often stress having a responsible “good” or “excellent” credit rating because that will save you an awful lot of interest and headaches.

Bottom Line

Because they recognize that there are real obstacles in their way, millennials want to invest in their futures. The image of some young person that buys lattes at Starbucks and spends $200 on concert tickets doesn’t sound like anyone who is interested in retirement strategies. But that just isn’t true. According to Chase Bank, the average millennial starts to save for retirement at age of 23, 17 years earlier than their parents did. Research says that’s not the exception but the rule these days.

Millennials are motivated, highly educated, and financially savvy, and that means that there is good reason to be optimistic when you look at their future. You can help by giving them these tips and your own personal advice to help them on their way.

Are you a millennial who is using an investment strategy to gain financial success and independence? Are you the parent or friend of a millennial and trying to guide them in the direction of financial security? What problems are you facing that might impede the way? What are you doing and can you do to make a success of the financial future?


  1. Eric Van Haaften

    Everything you have pointed out in your article is true. I have two millennial sons. One is conservative, the other not so much.

    As a baby boomer, I can see both of my son’s perspectives. Time flies…
    You have to find middle ground. To invest and to enjoy.

  2. Great strategies Gary! I’d add educate yourself on the topic. No one will care more about your money than you. My kids are technically part the Generation Z, but I’m just glad to know they will have a better financial head start that I did at their age.

    1. Hi Poor Swiss, I’m curious why you don’t like DCA investing. It seems fairly well proven as the best way to invest over an extended period of time.

      Now, if we’re talking about lump-sum at once (assuming you had it) vs spreading that out, then I agree – lump-sum generally works out better.

  3. Troy Bombardia @ Bull Market

    People forget that housing is cyclical too. Real estate prices don’t always go up. Although you will still be earnings rental income in a down market, you will probably lose money in terms of capital gains. Also rental income goes down during a recession.

    1. Good points, Troy. I would just add that equity value in your home is only one factor in home ownership. Over the years, it has provided for many tax deductions, it stabilizes your housing costs (as opposed to increased rents), and allows you to make modifications in your living space. So even in a down market, there may still be good reasons for owning a home. Thanks for your comments.

    1. FF, I would never want to talk down to someone when it comes to things like money and financial planning. We all start at square one with very little understanding of how to become financially independent and successful. Sharing advice should be the rule, not the exception. I sincerely hope that others in your life do that as well. We can all learn from each other. Thanks for your comment.

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