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Why Millennials’ DIY Approach to Finances Has so Much Upside

Millennials and Gen X are “worlds apart” when it comes to how they manage their finances.

While Gen Xers own more assets despite having more debt, they also save for the future. Millennials, on the other hand, spend most of the money they make. For all their flaws, however, millennials have come to understand that creativity plays an important role in one’s financial life—especially in such a volatile and uncertain world as our own—while Gen Xers might be a bit slow to catch up to the idea.

In the long term, it might be said, millennials have a great advantage. Not only are they more flexible, making their approach to money a bit more anti-fragile than their older counterparts, they are also beginning to notice their approach will pay off in the end.

Forced to Innovate

As we witnessed governments embrace policies that wreaked havoc on world economies through most of 2020, it was precisely millennials’ creative force that helped to keep markets rolling.

In a recent report for Yahoo News, Facet Wealth co-founder and CFP Brent Weiss said that young adults today are having to “DIY their way back to a feeling of control over their finances.”

Backed by a lack of faith in established financial institutions, millennials crafted some unique techniques to go about saving, paying off debt, investing, and even getting work done. From unearthing the working-from-home practice to coming up with the framework behind some of the many services that fared well during the pandemic, millennials rely on their own sense of urgency to make ends meet. Their older counterparts, however, have a much more conservative approach to their cash.

Gen Xers enjoyed an easier ride and didn’t have to come of age in the middle of a worldwide recession. For that reason, Weiss told Yahoo News, Gen Xers are the “middle child of America.”

“Gen X was able to find their feet financially before recessions and skyrocketing college costs could knock them down. They carry the most debt of any generation but have assets to back it up. They are more conservative in nature, as a group, and tend to feel more secure about their financial futures”

So while Gen Xers have an easier time riding through instability because of their assets and work stability, millennials have an easier time coming up with solutions as they go—and they have been pretty much like that from the get-go.

Prior to COVID, millennials were already making history.

With about half of Americans born between 1980 to 1996 holding some kind of side gig, they were thought to be a naturally entrepreneurial bunch. But more than a natural skill, millennials simply respond to the environment they were brought up into.

While millennials were taught to put a great deal of stock in higher education, they quickly learned that facing the real world armed with nothing but a diploma was a bad idea.

Faced with financial troubles from the start, millennials had to improvise. It was thanks to this need that the gig economy flourished. With millennials both in charge of firms such as Uber, Airbnb, and Doordash, and making up the bulk of these companies’ consumers, they finally found their place in the world.

So long before stay-at-home orders, millennials had figured out how to adapt quite easily to disaster and they changed global markets forever as a result.

When COVID hit, restrictions launched to combat the virus prompted a historic economic collapse. But it was millennials and their younger counterparts, Gen Z, who found themselves landing on their own two feet.

Gen Xers, on the other hand, started to feel the pressure, even if they managed to hang on to their job.

Creative Destruction

After decades of work and setting aside some savings for their old age, Gen Xers have yet to tackle their debt.

Prior to the pandemic, 60 percent of Gen Xers had credit card debt and at least 40 percent had a hard time making the minimum monthly payment. With about 25 percent of them carrying a balance of $10,000 or more, 65 percent reported they were stressed about their financial situation. This stress was evident in their day-to-day life, with 31 percent of them saying their money troubles were distracting them from focusing on work.

Perhaps because opportunities for advancement are scarce, Gen Xers remain overworked and underappreciated. With the pandemic, this situation only worsened.

But despite the debt-related hardships, Gen Xers were less likely to lose their jobs once the lockdowns caused mass business closures. In an attempt to keep only the most seasoned personnel, businesses spared Gen Xers while kicking millennials and Gen Zers to the curb.

During the pandemic, it was their experience that helped them hang on to their job.

Despite being more likely to find themselves, once again, unemployed, millennials did not have to despair, however. In the end, the pandemic helped them to finally leave big cities, a move that gave them an extra incentive to go after the meaningful business and career changes they had long dreamed of.

To millennials, difficulties translate into opportunities to better their lives. Despite the hardship and pain the lockdowns promoted, millennials managed to come out much stronger.

Conclusion: Antifragility Is Key

In his bestselling book Antifragile: Things That Gain from Disorder, Nassim Nicholas Taleb explains that “abundance is harder for us to handle than scarcity.” Somehow, millennials discovered that reality simply by being forced to live in a difficult world. Gen Xers, on the other hand, grew up in abundance. When faced with difficulties, they are more likely to rely on credit instead of finding creative ways to see their way through.

If anything, millennials are helping us all learn an important lesson: exposure to disorder isn’t what’s tragic about modern life; the fact many do not realize they can thrive in a difficult environment is.

With a much uncertain future ahead of us, we will all be better off by embracing the millennial spirit.

This article was originally published on FEE.org

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