Past financial crises have affected how millennials manage their money

Trade FG | E+ | Getty Images

Experiencing multiple financial crises and recessions has impacted how millennials now manage their money.

The experience has given members of this generation some confidence that they will be able to ride out another recession if the United States falls into a recession amid high inflation and global uncertainty.

Fifty-six percent of millennials feel confident in their ability to protect their finances in the event of another downturn, according to the Nationwide Retirement Institute’s May Advisor Authority survey. The survey of 839 adults with more than $100,000 in investable assets was conducted online from July 22 through August 22. 17, 2021.

Other generations weren’t so sure they could weather another financial storm – only 43% of Gen Xers and 33% of Baby Boomers said the same.

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“I want to use the word resilient when it comes to these millennials because these previous financial crises have really made them more cautious, more proactive and confident in how they change their saving and investing habits,” Kristi said. Martin Rodríguez, leader. of the National Pension Institute.

Millennials, who are currently between the ages of 26 and 41, were teenagers or young adults during the Great Financial Crisis in 2007-2008, and were hit again by the pandemic recession in 2020.

“They’re applying what they’ve really learned from those two financial crises and really adopting those healthy habits,” Rodriguez added.

Develop good habits to protect yourself

According to the survey, some of the best habits millennials have taken relate to planning for retirement and being extremely prepared for the future.

Most millennials surveyed feel good about their retirement savings and are even prepared for a market crash as seen recently – 83% have a strategy in place to protect against market risk, an increase by 11 points compared to 2020.

Additionally, 85% of millennials expressed interest in annuities for retirement planning, which would also protect them from market volatility later in life. This is an increase of 13 percentage points over the previous year.

“You can really see them wanting to have some type of guaranteed income and protecting themselves,” Rodriguez said.

Millennials prepare for the next recession

Granted, millennials are the most confident, but are also more worried about a recession than their older counterparts. Nearly 80% of millennials are worried about an upcoming economic recession in the United States, compared to 71% of Gen X respondents and 63% of baby boomers, according to the survey.

And the last recession was tough on some millennials – around a third had to liquidate pension plan assets to make ends meet, the survey found.

Yet this concern is channeled into action. Millennials are working on budgeting, building emergency savings, and working with a financial advisor to shore up their finances in today’s uncertain times, according to the report.

Additionally, millennials feel more optimistic about financial prospects over the next 12 months. More than half feel good about the future, compared to 38% in the last survey.

“There are certainly concerns about an impending recession, but they also feel very confident in their ability to weather it,” Rodriguez said.

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Disclosure: NBCUniversal and Comcast Ventures are investors in Tassels.

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