3 min read

Millennials Money Management

Millennials Money Management

Wealth is a notion that is often associated with money and ownership of assets. As a guy in his early twenties, chasing financial success is a common thread that I share with my peers and is usually at the top of our priority. Nothing wrong with that. After all, financial success has proven to open various opportunities and being financially independent post-college is perhaps the most important goal that one needs to achieve.

Have You Looked At $TSLA?

Due to my line of work, I often get questions from my peers about investing; “How do I manage my money as a young professional?” — no matter how many times I received this question, I still find it very tricky to answer. Other than the fact that I’m only a year into my post-college professional career, money is also an extremely sensitive topic to discuss even amongst one’s closest friends. I’ve witnessed and heard multiple stories on the downfall of good relationships purely because of money-related events. Moreover, the emergence of popular mobile apps which significantly reduced frictions to start investing such as Robinhood also enhanced the number of young adults (my peers) that are trying to participate in the investment world.

At first, I tend to answer it in the most generic way. Buy indexes, diversify, etc.

However, since my work is also related to Bitcoin, which is one of Millenials’ favorite assets, I always got a follow-up question pertaining to it. It usually took me more than 10 minutes to explain all the fundamentals, boring them to death. Don’t get me wrong, I’m more than happy to share my knowledge and view with my friends, but I always made sure that they really want to know my opinion and it was not just an effort to start a conversation.

What I found fascinating after conversing with some friends about this topic is how little they know and how disconnected the majority of them are with money management. Personally, one of the reasons that inspired me to pursue a career in the asset management is the fact that it encapsulates every single sectors and professions. An entry level software engineer that works at FAANG and makes $150,000 annually needs to know how to manage his/her money, so does a multinational company with billions in annual revenue.

These brilliant and intelligent people with great careers often baffled me when they didn’t put in any effort to understand the economy or the broader financial market at all — thinking that everything is going to be perfectly fine as long as they have a great career with a high-paying job, pouring their savings into any tech stocks that’s currently popular.

OK Boomer?

What they often overlook, is the generational wealth gap that has been forming in the last couple of decades. I don’t want to get into details because this topic deserves an article of its own (quantitative easing, indexation, salary stagnate compared to GDP, etc.).

The bottom line is; the majority of Millennials won’t be making as much money as previous generations if we only go through the conventional 9-5 path.

Currently, Millennials and Gen X, respectively owns 3% and 16% of the nation’s wealth compared to Boomers cohort at 56%, which is entering retirement. Study also shows that only half of Millennials are making more than their parents at the same age, which is another reason why we should be more aware of the economy and overall money management even if our professions aren’t directly related with finance/investment.

So when a friend asked where should they put their money in; I told them that in 2020, the equity market is at an all-time high, real estate market prices outpace incomes, and US National debt has passed $23 trillion — please try to infer what those imply first, and then we can chat further :)