Millennials and Financial Matters


Many people think of Millennials as children or young adults. But the often criticized generation is most often defined as people born after 1980 up until around 1998, and that means the oldest Millennials are now 40 to 41 years old.

Many Millennials have adult portfolios to go with their other adult holdings such as homes and cars and the adjacent mortgages and loans. They have important decisions to make regarding what they are going to buy and what they are going to invest in, and it is invaluable for investors to know what other investors are thinking in order to make wise choices and avoid mistakes.

Spectrem has researched Millennials to understand how they approach their financial decision-making and compare them to the Gen X generation, those individuals born in between the Baby Boomers and the Millennials.  

The study shows that among Millennials who are married or living with a partner, 71 percent make financial decisions jointly. That’s a huge percentage compared to Gen Xers (63 percent), and Baby Boomers (54 percent). Millennials truly work as part of a team with their spouse or significant other.  Millennials are not just talking to their spouse or partner. They are more likely to talk to their parents, friends, siblings and co-workers than are older investors. Obviously, older investors are less likely to talk to their parents about financial decisions, but the difference in conversations with friends and siblings is stark.

Asked to place their helpfulness in making financial decisions on a 0-to-100 scale, Millennials rated their friends at 48.03, while Gen Xers had friends at 37.30 and Baby Boomers had friends at just 25.05. Likewise with siblings, Millennials rated them at 41.78 while Gen Xers rated their siblings at 31.50 and Baby Boomers had their siblings at 22.31.

Millennials need to give some thought to who they use as their “experts” in financial matters, and whether there are other choices for getting wise and helpful advice.  They do give more weight to their financial advisor than Gen Xers though, however. Seventy percent of Millennials use financial advisors but do so sparingly. Only 19 percent of Millennials consider themselves to be Advisor-Assisted (discuss almost all decisions with an advisor) or Advisor-Dependent (allowing the advisor to make a majority of investment decisions), as opposed to 27 percent of Gen Xers and 38 percent of Baby Boomers. 

Millennials are a key part of the economy, investing, and job market, and as such need to be taken seriously along with Gen Xers.  Millennial and Gen X investors are the current drivers of our economy and will be for the near future, making understanding their motives and financial decisions critical for all investors, regardless of age.  Spectrem will soon be releasing a new study examining how Millennials and Gen Xers are making their financial decisions and working with advisors in the current economy.