COVID-19 & the State of Millennial Money

Published on
September 24, 2020

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There’s been a lot of talk recently about the economic turmoil that millennials find themselves in today. Having weathered two significant economic downturns in just over a decade as they accumulate mountains of student loan debt and deal with multiple dismal job markets, many have been quick to write off this cohorts’ ability to achieve long term financial freedom, or even stability.

And while millennials have indeed found themselves in the eye of the economic storm on more than one occasion, our recent COVID-19 and the State of Millennial Money study, commissioned to over 1,000 millennials in the U.S. -- suggests that their current and future situation may not be as bleak as some think.

50% of Millennials Say Their Finances Are “Good” or “Excellent” as Preparation Pays Off

While no one could have predicted Covid-19 and the catalytic acceleration it would have on sending the economy into a downturn, millennials were already starting to prepare for a recession well before the pandemic hit -- especially those who lived through the Great Recession of 2008.

Last fall, plenty of economic signals and pundits were forecasting a dip in 2020. Millennials took note, and a Concreit study conducted last October found that more than half of millennials were already starting to cut back on spending and increasing their emergency savings in order to prepare for the next potential recession. With wisdom gained from the Great Recession and an active preparation mindset, the majority of millennials we surveyed last fall said that they felt more prepared for the next recession having weathered the events of ‘08. Of course, no one could have been prepared for this.

However, fast forward nearly a year and months after the pandemic has landed blow after devastating blow to the global economy and it seems that most millennials are doing OK -- or better than OK. In fact 1-in-3 describe their current financial situation as “OK: I’m making my key payments and not accumulating new debt,” while close to another third (30%) of this cohort say their financial situation is “Good: I’m making my payments, not accumulating new debt and saving for retirement.” An additional 20% of millennials describe their situation as “Excellent: I’m making my payments, not accruing new debt, saving for retirement and investing for the future.”

Millennials have been pejoratively pegged as the “buy now, pay later” generation. However, 50% of millennials say they currently have $1,000 or less in credit card debt, and an additional 20% report having $1,000-$5,000 in debt. When you compare that to a 2019 study that found that the average American reports having $6,194 in credit card debt, and a recent study that found that the average credit card debt per household as of Q2 2020 was $7,938, it appears that millennials are more debt conscious than many believe.

Millennials Redefining What It Means to Be Wealthy & Holding Practical Expectations

Another contributor to the perhaps better than expected financial status of millennials might be this generation's proclivity for redefining societal norms and standards; everything from how we consume to how we work. Now it looks like millennials are also redefining what it means to be wealthy.

When asked “Which of the following most accurately represents your current definition of wealth?” the number one response was “Being able to pay off my debt (credit card, student loans, etc.)” (33%). “Having $1,000,000 or more in investable assets” was a far off second place with only 1-in-5 millennials saying that having a million dollars is the line that determines whether or not someone is wealthy.

Millennials may hold a much smaller percentage of total U.S. wealth compared to what baby boomers had at their age, but with the Average American saying you need $2.27 million dollars to be “wealthy” it’s clear that millennials are thinking about wealth differently than previous generations. To be fair, this redefinition may be part idealism and part pessimism, with 44% of Millennials also reporting that they don’t expect to ever accumulate $1 Million, including in investment and retirement accounts. Either way, their current attitudes towards wealth go against what many have been saying for years -- that this age group’s stance on money is ‘delusional’ and overly optimistic.

For example, while past studies have found a significant and possibly unrealistic desire for millennials to retire early, it appears that millennials today have a more practical view on when they’ll be able to say goodbye to work -- if at all. 38% of millennials expect that they will retire after the age of 65, with an additional 17% saying they expect to always be working in some capacity out of necessity. However, having disrupted the future of work with the gig economy, making income and the comfort of retirement aren’t mutually exclusive for this generation. And when it comes to a cornerstone of build towards retirement -- investing -- there’s some equally interesting trends taking shape amongst millennials.

Millennials Seeing Opportunity Where Others See Risk

If weathering two recessions has taught this generation anything it’s to not be surprised by market swings. In fact, when asked, “How has your view of investing changed since the onset of Covid-19?,” 40% of respondents said “My view has stayed the same.” An additional 21% said “It’s riskier, but that only means more opportunity.” And only 1-in-10 millennials report having taken out some of their investments because of increased risk perceptions. This coincides with E-Trade finding that more than half of investors younger than 34 said their risk tolerance increased throughout the pandemic, compared to only 28% of the general population who said the same.

Historically, millennials have avoided equities, with past studies finding that the percentage of people under 35-years-old with money in the stock market is on a steady slide. One might expect that the market turmoil resulting from COVID-19 would keep this cohort running from stocks, but that isn’t the case. In fact, more than one third of millennials (36%) say they have invested in equities or mutual funds since the onset of Covid-19. Outside of equities, millennials have been ratcheting up their investments all around with 47% of all millennials saying that they have invested their money in one of the following -- Stocks - Mutual funds / ETFs (36%); Real Estate (13%); Cryptocurrency: 11%; Alternative investments (11%) -- since the onset of the crisis.

As next generation platforms like RobinHood and WealthFront have spurred an unprecedented surge in retail investing and trading, millennials appear to be using their newfound access to the markets to take advantage of the opportunity that exists -- even if it means taking on more risk. And this isn’t just gambling either, it’s based on experience. When we asked millennials who lived through the Great Recession of 2008 what their top regret was, the second biggest regret was “Not taking advantage of investing opportunities.”

Also interesting is the fact that recent data from Robinhood suggests that many of these first time millennial investors were drawn to major tech companies such as Amazon, Apple, and Microsoft. Although this cohort traditionally invests in companies that have a strong ESG agenda, their tech savviness would suggest millennial investors see higher ROI and comfortability with companies they use everyday, rather than just companies they trust. But make no mistake, this generation isn't abandoning their penchant for using their voice -- or wallet -- toward social good. When asked, “If given the choice to put $1,000 in a savings account or invest it in a company that is committed to making positive change in society (racial equality, environmental issues, etc.), which would you choose?”, interestingly, 34% said they’d invest it in a company committed to making a positive change.

Weeks from Election, Millennials Say a Vaccine Would Have Greater Financial Impact

While millennials may be faring better than some think, there’s no denying the fact that the unforeseen events of the last several months have ratched up the pressure on this cohort. And as we head towards two momentous milestones -- a COVID-19 vaccine and the potential for a new Administration-- we wanted to see what millennials think would provide the economy and themselves with the greatest relief.

46% of respondents said they believe that a COVID-19 vaccine/treatment would have more of a positive impact, while 37% said a new administration would. With a quarter of younger workers being laid off during Covid, and the economy grinding to a halt due to social distancing it’s not surprising that millennials see a vaccine or treatment as having the most potential to positively impact the economy and their own bottom line. This also coincides with research that found that Americans are split on which political ticket would be better for their finances.

And in terms of government impact on their finances, it’s good to see that millennials are planning to put their next potential stimulus checks towards building a solid financial foundation. When asked, “How do you think you’d use most of your next stimulus check from the government?” the number one response was “Mostly Put it into an emergency fund/savings” (28%), followed by “Mostly Pay down debt (credit cards, student loans, etc.)” (25%).

We often hear about how the Great Recession of 2008 has derailed millennials from their long term financial goals and that the current economic situation we find ourselves in only solidifies their inevitable shortcomings. However, as the findings from this report show, there's another angle that must be considered. With the tough lessons learned over the last decade plus, millennials are setting practical expectations, seeking out wealth building opportunities and redefining what wealth means to them. While those definitions must of course be weighed with the reality of what's needed to retire and attain other important milestones, the overwhelmingly positive views of their current financial situation reinforces this generations' ability to make sound decisions and overcome obstacles on the way to a healthy financial future.


This information is educational, and is not an offer to sell or a solicitation of an offer to buy any security which can only be made through official documents such as a private placement memorandum or a prospectus. This information is not a recommendation to buy, hold, or sell an investment or financial product, or take any action. This information is neither individualized nor a research report, and must not serve as the basis for any investment decision. All investments involve risk, including the possible loss of capital. Past performance does not guarantee future results or returns. Neither Concreit nor any of its affiliates provides tax advice or investment recommendations and do not represent in any manner that the outcomes described herein or on the Site will result in any particular investment or tax consequence.Before making decisions with legal, tax, or accounting effects, you should consult appropriate professionals. Information is from sources deemed reliable on the date of publication, but Concreit does not guarantee its accuracy.

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