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Millennials, Money, and Chasing the Middle-Class Dream

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Nov 09, 2021

When it comes to Millennials and their finances, a lot of media coverage would have you believe that frivolous spending is all you need to know about. One less avocado toast or hipster coffee here and there and all that student debt would be gone. Or, for a lucky few, perhaps your inheritance will bail you out down the road (if it isn’t bailing you out already)—because there is going to be a massive wave of inheritance. The biggest wealth transfer in history is already underway, with Canadian Millennials expected to inherit about $1T in wealth from their parents, the Boomers, in the next 5 years. In the US, estimates range from $30T to over $60T over the coming decade. In the UK, it’s about £1T by 2027.

What gets lost when we get caught up in the memes of frivolous spending is that Millennials are living a very different financial reality than the Gen Xers and Boomers that preceded them. Millennials have different financial priorities, different needs, and different expectations. That’s true of Millennials who are struggling to afford the cost of living anywhere but their parents’ basement, and it’s true of the Millennials who are earning seven (or more) figures annually.

Caught between the far-too-reductive view of impoverished Millennials as they are now, and the not-yet-visible contour of rich Millennials as they later will be, the financial sector is struggling to find an effective way to serve this cohort. That’s why TDL undertook a research project to map out the values and priorities of Millennials. You can read the report here, and TDL would like to acknowledge the generous support of the FP Canada Research Foundation. Assembling a more nuanced portrait of this generation, and developing some practical recommendations for financial institutions and fintechs to provide better service to Millennials, contributes to TDL’s mandate of promoting better outcomes for all members of society.

Want to learn more? Hear Dr. Brooke Struck discuss the research live with practicing financial planners at Financial Planning Week 2021.

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The “Good Life”

Millennials are those folks born between 1980 and 1995, making them in their late twenties to early forties now. The oldest remember the Wall coming down; the youngest probably remember the Twin Towers coming down. From the research we’ve conducted, the financial goals of Millennials still show a strong influence of middle-class living circa 1950–1970:

  • Get a good education
  • Get a stable job
  • Get married
  • Buy a house
  • Save (for kids’ education and for retirement)
  • Retire

However, the economic reality that they’re living in has really struggled to provide a solid foundation for Millennials to achieve these things.

  • College and university tuition continue to soar, leaving Millennials with enormous debt coming out of school
  • The economy continues to tilt towards more and more precarious labour, with contract work the norm and gig work constituting a major source of income for more and more people
  • Many Millennials are delaying getting married because of their financial situation
  • In Canada, where house prices didn’t crater following the 2008 financial crisis and low interest continues to inflate the overheated housing market, finding a home to live in is becoming more and more challenging—even just to rent
  • Already saddled with so much debt, and having so little predictability in their income, Millennials find it hard to save and cannot take on high levels of risk (and higher long-term yields they command) lest they need to withdraw funds early

In brief, economic conditions are no longer amenable to most people in society achieving what was considered quite normal in the two previous generations. But expectations have been slower to adapt, which is what’s driving a lot of the tension.

What Millennials want

First and foremost, what Millennials are seeking is financial stability and predictability. They want to feel independent. Perhaps no meme depicts this better than the 30-something Millennial (with more degrees than a thermometer) still living in her parents’ basement.

In this situation, a lot of Millennials are seeking new directions. With the material trappings of middle-class life seeming out of reach, many Millennials are prioritizing self-actualization. A Millennial is more likely than members of previous generations to prioritize action on issues like climate change or social inequality, even if that means that they need to sacrifice a few points of annual growth in their portfolio.

In terms of how Millennials want to interact with financial institutions and fintechs, they expect a more personalized approach. They are seeking a more technologically enhanced offering, but they still see a place for human interaction. That puts pressure on financial planners, investment advisors, and other professionals to evolve their service offerings. A professional can’t survive long in the Millennial world claiming that they’re better with Excel than an AI-powered robo–advisor. People just don’t crunch numbers as well as machines do, so professionals need to pivot their offering into the space where the human touch actually adds more value than an app possibly could.

A couple of proposed solutions

Here are a couple of ways that financial planners in particular can offer higher-value service to Millennial clients. The key here is to recognize that the highest priorities for Millennials are often financial stability and financial confidence. For a more in-depth discussion of these, and for additional strategies, you can check out the full report here.


For young adults who have grown accustomed to unpredictable wages and slim margins of error, the prospect of financial stability can feel like a distant pipe dream. One solution planners can offer to help them get there is to set them up with a buffer fund. 

The concept of a rainy day fund is well known. But we usually conceive of a rainy day fund as something we hope to never have to draw on: it’s for emergencies, the unexpected. A buffer fund is a slightly different concept. In this case, it’s about evening out much smaller (but more frequent) peaks and valleys in cash flow. For example, you could set up a dedicated bank account to receive various payments from gigs, contracts, gifts, etc., which then pays out a stable amount each month to a more standard checking account, which the client interacts with in ways they’re probably already used to.

In brief, a buffer fund is something that we use to stabilize cash flow on a constant basis because we know that it’s too erratic otherwise (whereas a rainy day fund is used to cover major unexpected gaps). Designing a buffer fund with a client, helping them to set it up and fund it, and coaching them to adapt their behaviors so that the system keeps working in the long term: these are all high-value services that planners can offer, focused on the human and behavioral elements that algorithms, at this stage, are not as well set up to offer.


Turning to financial mindsets, even as the dollars-and-cents reality of the client begins to improve, there’s valuable work to be done in helping the client to feel better about their money. Our research revealed that Millennials tend to have a low sense of control over their finances—or, to put it another way (as it is formulated in a handful of studies), Millennials often feel that their finances control them rather than the other way around.

Much of the way that financial planning is incentivized in the current ecosystem is around selling investment or insurance products. This may be a contributor to the lower level of focus that’s placed on the implementation of financial plans. Good practice around implementation—check-ins, structuring complex tasks into bite-sized chunks, providing clarity around next steps, and (especially) showing progress back to the client—can all be very powerful tools for also helping the client to improve their money mindsets, providing some easy wins to demonstrate to clients that they do have control over their money. Once again, we see that a principal avenue for delivering value to clients is to focus on the human and behavioral aspects of financial engagement.

Where to from here: a cheat sheet

If you skipped to the end and read nothing else of this piece, here are a few takeaways that you can start applying starting tomorrow morning in working with Millennials.

  • Don’t make assumptions. Just because a given Millennial is carrying a lot of debt and/or has little savings does not mean that they lack financial education or self-control. Many just ended up in an economy that wasn’t ready to support their success.
  • Don’t be judgy. Millennials tend to care quite deeply about the causes that speak to them. Accepting lower returns or prioritizing career impact over earnings may seem like “irrational” financial behaviour, but money isn’t everything. After all, we can’t have an economy if we don’t have a livable planet.
  • Don’t wait. Many financial professionals are used to working with clients who tend towards the affluent end of the spectrum. A Millennial who may be struggling financially right now may have a very different situation in a few years, as the great wealth transfer really picks up steam. When that happens, there will be enormous competition for their attention. If you build a strong relationship with clients now, you’ll have the inside track when their financial situation improves. Worried that that future payday might never come? Welcome to Millennial existence.

About the Author

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Dr. Brooke Struck

Dr. Brooke Struck is the Research Director at The Decision Lab. He is an internationally recognized voice in applied behavioural science, representing TDL’s work in outlets such as Forbes, Vox, Huffington Post and Bloomberg, as well as Canadian venues such as the Globe & Mail, CBC and Global Media. Dr. Struck hosts TDL’s podcast “The Decision Corner” and speaks regularly to practicing professionals in industries from finance to health & wellbeing to tech & AI.

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