The Millennial Mindset That Could Lead to Financial Ruin

I read a report a few days ago that, to be honest, scared me to death financially. I have to address it because if its true, Millennials are setting themselves up for financial ruin later in life—and by later in life I mean during retirement but potentially pre-retirement as well.

The Report

Enough of the journalistic tease, right? This Bankrate report found that 30% of Millennials believe cash is the best long-term investment. With all the love and respect I can muster, I say…WHAT?

First, let’s be fair to Millennials. It was only 10 years ago that the United States faced the worst recession since 1945 but even the 1945 recession only lasted 8 months. Not since the Great Depression has there been such a huge market downturn that lasted as long as the Great Recession of 2008. And this was at a time when many Millennials were forming their opinions of how to manage money.

They basically learned that banks were corrupt, anybody in the financial business was either really bad at their job or was good enough to con their clients out of their gains. They also learned that there was no such thing as a safe investment. The only thing safe was what they physically held in their hands. From 2009-2011, over 600 banks failed! Who in their right mind would trust a bank with their money or anybody in the financial services industry?


Time to Rethink

But here’s the thing. As we get older we learn that holding onto past hurts often results in destructive consequences. Although the hurts sting badly, they’re often short-lived. If you live in fear of the next economic fallout, you’re quest to find safety will lead to the same result you’re trying to avoid…financial ruin.

ALSO READ: The $100,000 Mistake You’re Probably Making With Your Money

There’s a secret in the investing world that isn’t talked about enough: Being too cautious is the same as losing money. Unless you’re the tiny fraction of the population that makes so much money that they don’t need a retirement plan, there’s no way to retire comfortably without investing. Cash ain’t going to do it for you. By keeping your money sitting in a bank savings account, it’s:

  • Not working for you (failing to multiply itself)
  • Losing value (The effects of inflation)

Back to the Report

Let’s add a dose of positivity. Millennials actually do a much better job saving for retirement than the generations before them. About 20% invest at least 15% of their paycheck in a 401(k). My generation didn’t reach that number and my father’s generation did an even worse job. About 70% of all Millennials are investing something. Although Millennials prefer cash, they’re actually investing because they see the necessity of it.

So hats off to you, Millennials!

However, the mindset of preferring cash is dangerous. As we age, embracing the investment markets becomes increasingly more important and along with embracing it comes learning about it. You might set up a 529 for your children’s college education or an IRA to supplement your retirement savings. How about a health savings account to pay for medical bills or a regular investment account to save for a long term goal like a boat or your dream home. Speaking of homes, the value of your home is tied to the investment markets!


If you believe that cash is the best investment, where’s the motivation to learn about the financial markets? You’ll spend your life trying to work your way to financial security but fail because most of us cannot earn enough to get there.

Why Bother?

The other completely understandable Millennial mindset around the investment markets is, “What little money I have goes to bills and student loan payments. Why should I bother with investing?”

Because when you’re young, a little investment grows into something HUGE later in life. Don’t believe me? Check out this compound interest calculator that I built. Let’s say you invest $20 per month for 1 year and never invested again. Over 40 years that $240 would be nearly $2,500! If you did that every year for 40 years you would have $41,840! You could come up with $20 per month, right? That’s no more than 2 restaurant meals or 5 trendy coffees!


You HAVE to invest if you want to build wealth. Simply working isn’t going to build wealth for the vast majority of the population.


Of course, you’re going to invest a whole lot more than $20 per month. With a relatively small investment, you can easily become a millionaire by the time you retire if you start when you start your first job.

That’s why you should care.

Use this tool from the SEC to see how much money is waiting for you if you start early.

How to Save

I get it—I’m over 40 now. My financial situation is much better than it was when I was the age of a millennial so it’s easy for me to tell people half my age to invest more. Easier said than done…I really do understand. So let’s lay out a few ways you could earn a little extra money with only a modest amount of time and effort:

Online Freelancing

I’m starting with this one because it’s personal to me. Back in the 2008 the blogging scene was starting to take off. I wanted to learn more about finance so I started a financial blog. It started gaining traction and readership, I started interviewing some really smart people, and I was learning a ton and having a great time. Seeing that the blog needed money to grow, and me not wanting to spend any family money, I went to Elance offering my services as a financial writer.

ALSO READ: Stop Chasing Perfection!

Doing something I enjoyed, I made enough money to funnel into my blog to keep it growing. From there, other financial outlets picked up my work and got me the gigs at many of the best-known financial media outlets. What started as a fun hobby turned into a business. 10 years ago I had no problem making a couple hundred per week for a modest amount of work.

Today, I now hire freelancers for my business from sites like Upwork and Fiverr. Some people make a living on these sites but at the very least you can make some extra money you can use to invest or pay down debt. Just like I did, it’s easy to add a few hundred dollars or more to your monthly budget doing something you enjoy.

Sell Some Stuff

As I write this, I have in my closet one of those giant-sized coolers filled with baseball cards from my childhood. This cooler is full to the top with baseball cards that are more than 20 years old! All I have to do is go through them and find the gems.

Maybe you don’t have a cooler but you have things of value that you aren’t using any more. Sell that stuff! How about an old cell phone? Cell (see what I did there?) it!


Can you speak English? If so, you could be an online English teacher. DISCLAIMER: I’ve never done this but I know people who have. This article says you could make $22 per hour doing it.


Again, I’ve never done it but I know people who do. There are a ton of different online surveys that offer cash incentives. Survey Junkie and Catch are a couple you might check out. Apparently Neilsen will pay you $50 per year if you install their app that monitors your media viewing habits. (Can anybody verify this?)


I don’t want you to use time you would normally spend building your career making $20 here and there but cutting out an hour of social media to make a few bucks IS time well spent. Remember, when you’re young, investing something is better than investing nothing. $20 will get you started.

Where Should You Invest?

The first place you should invest is your company 401(k) if you have one, especially if your employer is matching a portion of your contributions. If you don’t receive a company match, there might be better ways for you to invest. Send me a note and we can talk. (I’m not a financial adviser but I can point you in the right direction)

After that, investing sites like Betterment are a good choice if you’re starting with no balance. I’ll publish something about robo advisers in the near future weighing the pros and cons and my review of some of the most popular companies.

To Wrap Up

Remember when I talked about the banks earlier? 650 closed in the just 3 years during the recession but you know how many closed in the past 3 years? (2015-2017) Only 21. The U.S. market, as measured by the S&P 500, is up 315% since the recession low. Even if you invested your $20 per month starting 5 years ago, your first $240 would be up more than 66% without the compounding effects.

Yes, the investment markets are going to tank from time to time but more than a century of statistics show that your long term money is safe in the stock market. Statistics also show that holding cash will not build wealth.

Please, don’t be one of those people that doesn’t invest. I’ll help you. Ask me a question below.


Disclaimer: All financial advice in this article is for educational purposes. Not all financial advice is appropriate for everybody so don’t make decisions until you talk to somebody who can look at your personal financial picture. Need help finding a financial adviser you can trust? I can help!