Millennial Money

By Quinn Larson

We all need money. Whether it’s filling up the car, paying for a wedding expense, or taking a vacation to the Bahamas, money is how we get there. At its core, money represents time spent. Without an investment of time or effort, it becomes difficult to acquire wealth. As Generations X and Y, we have had the least amount of time in the workforce compared to previous generations. But that disparity has brought a great opportunity to build wealth. If our generation can learn financial discipline and use available tools, we can build a booming economy, find personal financial peace, and attain a bright financial future.

The Current Situation

Before we understand our financial potential, we must first understand the current issues in millennial finances. As a generation, we have displayed compulsive spending behaviors. In fact, a study done by the United Nations states that “over half of consumer spending in the USA is attributed to one group of young consumers collectively known as ‘The Millennials’ or ‘Gen Y.’”[1]


We have entered into a headspace of “buy now and make the required minimum payment later.”[2] This thinking can be harmful for a number of reasons, but one of the most detrimental is due to the concept of the time value of money (TVM). The TVM is a fancy way of saying that over time, the opportunity cost of money grows; that is, money is worth more today than it is in the future.[3]

Let’s say, for example, someone’s old car breaks down and they desperately need a new one. They end up taking out a loan to buy a new car for $200 a month. By owning and paying this $200 a month to the bank or credit union, their opportunity cost could be the interest that they would receive by investing my money in a certificate of deposit or a high-yield savings account. Their opportunity cost could also be much more if they decided to start a successful business and invested the same $200 a month into that project instead. In short, by owing money to others and paying down loans, we miss out on the benefits that our money could have supplied elsewhere. However, we are not destined to lose these benefits. To understand how to build and sustain wealth, all we must do is understand and properly utilize the TVM.


No matter how much money our generation is making, we are spending far too much and saving far too little. According to a survey of 2,700 people, over 32% of Americans run out of money between paychecks (see Figure 1).[4]

Fig. 1: Data based on a survey fielded by Salary Finance of over

2,700 U.S. adults working at companies with over 500 employees.

Even more worrisome is that these statistics remain true regardless of how much income someone is bringing in. Figure 1 shows that whether you are making $50,000 a year or $200,000, you could still find yourself out of money before your next paycheck. This phenomenon is primarily due to lifestyle inflation.


“As Millennials’ financial position has deteriorated, so has their confidence in their mental capacity to manage it.”


Lifestyle inflation indicates that as people make more money, they to spend more money. They may be spending on things that improve the quality of life; but, often, the extra income is spent on luxury items that may not have a lasting effect on individual happiness. Even so, we are fighting an uphill battle in expenditures. According to the Bureau of Labor Statistics, the basic costs of living have increased by 2.3% and education expenses have risen 2.1%.[5] With such rising costs, we need to learn how to handle our money and make it work for us, now more than ever.

The effect of saving a higher percentage of income over 10 years
Income Save 15% Save 25% Save 35%
50k $108,178.00 $180,296.67 $252,415.34
80k $173,084.81 $288,474.68 $403,864.55
120k $259,627.21 $432,712.02 $605,796.83

Tools of Success

With the downward trajectory of millennial finances, it is important to remember that financial peace is in direct correlation with the time and effort we put into improving our situation. Just as in the TVM example, the effort that we put in today is worth far more than future, last-ditch efforts to improve our finances. This is evident in Table 1, which shows how money saved quickly increases. However, the data is reliant upon the practice of making your money work for you, whether it be in the stock market or some other capacity, to make at least a 7.0% return.


The first tool to improve your finances is using software to track your finances. This has become exponentially more convenient in the recent decade. Apps such as Mint by Intuit, among others, will connect to your card and track your finances. This makes checking your credit score, anticipating upcoming bills, and learning your net worth simple—they’re only a button click away.


Another world-changing tool is the internet. If you have the drive to make money, anything is possible. From drop shipping to selling courses to making YouTube videos, a large number of Gen X and Y are making either all or part of their income online. The internet can be used to connect with millions around the world in a matter of seconds by using various websites and shop outlets. These opportunities are in reach. With a bit of research and an assessment of your talents and interests, it’s a guarantee that you too can make money using the internet.


The final tool is to use well-designed apps to take advantage of the availability of the stock market. Through apps such as Robinhood and Webull, anyone can set up an account and begin investing in the stock market. This is an attractive option due to the minimal effort required. In fact, if you invest only $200 a month at a 10% interest rate (there are stocks that have continually shown a 10% return for the last 70 years) you could have over a million dollars in 40 years. If you are willing to invest more and take higher risks, you can potentially gain even more. All the information and the ability to invest are at your fingertips. You can make your money work for you the way millions of people have already.



It’s Up to You

The old philosophy of working hard for 40 years and then retiring is fading away. The new generations have embraced a new vision: F.I.R.E. (Financial Independence, Retire Early). According to Kiplinger publication, “FIRE followers track their money, invest in low-cost funds, avoid high-interest debt and focus their spending on what’s important to them, rather than buying things because they can afford them.”7  Living this way has given younger generations an incentive to delay gratification and prepare their lives’ finances in a different way.


Despite all these tools and tricks, your financial future is entirely up to you. You are in control of what you buy and don’t buy, what you save and don’t save, what you invest and what you don’t invest. You may talk to various financial professionals: your banker, your tax accountant, your friend in the finance program. But you are the one with money on the line to lose or to grow.


Go and make a difference for our generation. One or two of us may not make the biggest difference in the overall direction that our peers are heading, but with this knowledge we can prepare ourselves and have the means to help others do the same. When you arrive at the ripe age of 65, you will not have to worry about having to work another day because you sacrificed a little today to receive huge dividends in the years to come.



[1] Bamforth, Jill and Gus Geursen. Categorising the Money Management Behaviour of Young Consumers. Vol. 18 2017. doi:10.1108/YC-01-2017-00658.

[2] Bamforth and Geursen, Categorising the Money.

[3] Chen, James. “Time Value of Money (TVM) Definition.” Investopedia. Investopedia, January 29, 2020.

[4] Leonhardt, Megan. “Nearly 1 in 3 American Workers Run out of Money before Payday-Even Those Earning over $100,000.” CNBC. CNBC, February 12, 2020.

[5] “Consumer Price Index: 2019 in Review.” U.S. Bureau of Labor Statistics. U.S. Bureau of Labor Statistics, January 16, 2020.

6 Ambrose, Eileen. “The Benefits of being FIRE-Ish.” Kiplinger’s Personal Finance 73, no. 11 (2019): 58.

7 Ambrose, “The Benefits of being FIRE-Ish.”


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