Millennials have had varied financial experiences, with some facing severe challenges as young workers during the 2008-09 Great Recession and others struggling during the COVID-19 pandemic. However, many have managed to recover, securing stable jobs, planning for retirement, and locking in favorable mortgage rates on homes.
The financial journey of each millennial is unique. Ruth (a pseudonym), a 33-year-old freelance marketing writer from Connecticut, feels fortunate that she and her husband, also 33, are in good financial standing. They own a home, have substantial retirement savings, carry no credit card debt, are close to paying off a second car, and Ruth earns about $120,000 a year as a freelancer. Her husband brings in around $150,000 annually from his full-time job and an additional $15,000 from a pre-tax side job.
Lived Below Their Means
Earning a high income doesn’t guarantee financial health. Even those with substantial earnings can experience lifestyle inflation. Ruth has faced the temptation to spend more freely once she stopped living paycheck to paycheck, but she has consistently made an effort to stick to a more modest budget.
“This meant buying a home for much less than what I was approved for,” she explained. “I chose to save money instead of splurging, even when it was tempting, and kept our living expenses lower than necessary.”
Minimized Debt
Ruth has always prioritized paying off debt, especially credit card debt. “If I don’t have the money to pay off a purchase by the end of the month, I don’t make it,” she said, except in emergencies.
She described accumulating credit card interest as “a vicious cycle.”
Set Specific Goals
Ruth and her husband carefully plan their financial goals, setting targets for one year, five years, and ten years, focusing on liquid savings and significant purchases. They continuously evaluate and adjust their spending to stay aligned with their goals.
Prioritized Savings and Loan Payoff
Building a large emergency fund has always been a priority for Ruth and her husband, particularly because they saw her husband’s parents struggle financially, and Ruth had to pay off medical debt she accumulated in her 20s.
They made sacrifices to meet their strict savings goals. This included postponing vacations, avoiding social outings, and skipping expensive purchases like a fancy lunch or new shoes. Ruth would then allocate what she would have spent towards paying off loans or adding to their savings.
“At the end of the month, it’s eye-opening to see how much we’ve saved, and we never regret skipping takeout lunches,” Ruth said.
Took Opportunities as They Came
Ruth acknowledges that luck played a role in the opportunities that came their way.
For instance, her husband took advantage of his company’s tuition reimbursement program and is now close to completing his second master’s degree. He also fully leverages his employer’s 401(k) match. He started a side business in addition to his full-time job when a former employer requested extra work.
“I’ve taken on extra work whenever possible, which has allowed us to earn more and save more,” she said. “These are opportunities not everyone gets, but they also require extra time commitments on our part.”
Got Smart About Finance Structuring
To maintain a sizable emergency fund, Ruth and her husband have been able to take advantage of it multiple times.
“Anything we don’t need for a large emergency goes into high-yield savings accounts like CDs to maximize interest.”
Accounted for Price Hikes
While they didn’t anticipate the high inflation of recent years, they always planned their budget assuming that the cost of everything from groceries to property taxes would increase over time.
“We pad our budget so that we don’t go from comfortable to struggling quickly, which has been a huge help given the recent inflation,” Ruth said. “For example, our dogs’ prescription food went from about $180 a month to $340 a month in two years.”
Developed Skills
Ruth noted that some factors were out of their control, such as the success of her business when it took off.
“I connected with the right clients at the right time,” she said, “but those opportunities were available because I had worked hard to develop my skills and network, despite struggling with a chronic illness.”
Strategically Built Stability
Even though luck and timing were factors, neither Ruth nor her husband received financial support from their families. Once they had the resources through their own work, Ruth said, “We made a lot of strategic decisions to build stability.”
She added, “We were fortunate that hardships didn’t set us back permanently, and we were lucky with the opportunities we pursued. Not everyone has those chances, even when they work hard, and that’s where luck is crucial.”
Talked to a Financial Advisor
Despite being more financially knowledgeable than most, partly due to her work in personal finance, Ruth consulted a financial advisor a few years ago to ensure she was on track for retirement — guidance that helped her stay focused.
Utilized Momentum
Ruth said that although she and her husband started earning decent incomes later than some, it was still possible to get ahead. They didn’t reach their full earning potential until around age 26, after Ruth had paid off significant medical debt.
“So even if you’re starting late, it’s okay; there’s still time to catch up,” she said. “Momentum can work in your favor, especially if you’re fortunate enough to leverage your experience into higher earnings and catch up on retirement.”
Ruth’s advice to others is to stay focused on their goals. If work-life balance is more important to you than building a large emergency fund, prioritize that. “Decide what your goals are, what steps you need to take to achieve them, and when you want to reach them.”
