The Wall Street Journal - 16.03.2020

R2| Monday, March 16, 2020 THE WALL STREET JOURNAL. THE WALL STREET JOURNAL. Monday, March 16, 2020 |R3

an oil-price crash, could add to mil-

lennials’ hesitation in entrusting

their money to the market and

taking on risk. After a couple of

weeks of gyrations, the Dow Jones

Industrial Average, the S&P 500

and the Nasdaq Composite all fell

more than 7% on March 9, with

heaving selling across markets and

geographies, sending investors

rushing into government bonds.

A volatile market like this can

take a toll on young people’s emo-

tions,saysStoyanPanayotov,se-

nior adviser and founder at Baby-

lon Wealth Management. “Seeing

your investments going down can

be nerve-racking for both experi-

enced and novice investors.”

Growing up during the recession

years from 2007-09, when about

one in six U.S. workers lost their

jobs, reshaped the way many mil-

lennials think about money and in-

vesting—but in some contradictory

ways. Some, like Ms. McGaughey,

became very focused on building up

their rainy-day funds, while others

adopted a, “You only live once” atti-

tude about spending while you can.

Pinching pennies is a common

practice, with 70% of those born

between 1981 and 1996 trying to

find ways to save a little money

every day, either for long-term sav-

ings or big expenses like travel, the

survey found. However, 27% of mil-

lennials at least somewhat agree

that their motto is to live in the

present rather than plan for the

future, reflecting a conflict be-

tween a YOLO mentality and a

fear of the future.

Emily Anderson, a 31-year-old

from Memphis, Tenn., who de-

fines herself as a “free spirit,”

spent her 20s traveling, working

multiple jobs and studying for a

master’s in journalism in Europe.

Her temporary jobs as a free-

lancer or waitress never put her

in a position to have savings, so

she never thought about buying

a house or saving for her retire-

ment. She chose to put her

money in a smaller bank, wary of

the mistakes big banks made in

the past.

“I don’t trust bigger institu-

tions and things that surround

capitalism,” says Ms. Anderson.

Dashed expectations

Raised with the expectation that

they could do anything they

wanted if they worked hard

enough, millennials instead en-

tered a job market that offered

fewer raises and opportunities

than their parents had.

Those who started their ca-

reers around the recession expe-

rienced less economic growth in

their first decade of work than

recent generations, according to

research by Deloitte. They have

lower real incomes and fewer as-

sets than previous generations at

comparable ages, as well as higher

levels of debt, Deloitte found.

Between 2010 and 2016, Gen

Xers, baby boomers and the older

silent generation all recouped

some of their recession losses,

while the average family headed

by someone born in the 1980s fell

further behind the older groups,

in relative terms, according to

data by the St. Louis Fed, which

concluded that millennials are at

risk of becoming a “lost” genera-

tion financially.

In addition to being more finan-

cially squeezed, they are more anx-

ious than previous generations in

part because the rise of social me-

dia put their lives on public display.

“We had millennials who were go-

ing through financial trauma and

processing that during the reces-

sion, but at the same time every-

body else was putting their best

foot forward on social media,” says

Erika Rasure, assistant professor

of business and financial services

at Maryville University.

Ms. McGaughey, now 34, is in a

better financial situation 12 years

after losing her legal-research job

in Santa Fe, but her financial deci-

sions are still haunted by the hard

times she lived through.

“I’ve become a little bit more lib-

eral with my spending habits, but

the recession has left me with a

residual pinching where I tend to

buy organic only when I can stack

a coupon on top of the sale price,”

she says.

Even if millennials have found

some stability now, they are still

haunted by how they started out.

Despite having a stable job as a

Many of them are

financially burdened,

distrustful of institutions,

and worry that the

American dream is

beyond their reach

ComingofAge

Formanymillennials,theearlyexperiencesthatshapedtheirattitudestowardmoneyweregenerallyrockierthanforpreviousgenerations.Here'salookathousingprices,thestock

marketandothereconomicindicatorsstartingwhentheoldestcohortofeachgeneration—babyboomers,GenerationXandmillennials—turned23.

DowJonesIndustrialAverage

Babyboomersexperiencedsomemarketupsanddownsintheirearlyadultyears,while

GenerationXersexperiencedthestockcrashof1987andthesubsequentclimbfueledbythe

dot-comera.Millennials,meanwhile,cameintoadulthoodduringaprolongedmarketdrop.Ina

WSJsurveyconductedlastyearacrossthethreegenerations,50%ofmillennialssaidtheyfeared

anothermarketcrash,comparedwith47%ofGenXersand46%ofboomers.

UnemploymentRate

Whileallthreegenerationshaveexperiencedemploymentfluctuations,babyboomersand

millennialshaveseenunemploymentratesof10%orhigherintheiryoung-adultyears.

Millennialscontinuetoworryabout earningenoughtogettheirstudentdebtundercontrol.Ina

recentsurvey,28%ofmillennialscitedemployeetrainingandopportunityasanimportantcause,

asdid 26%ofbabyboomersand24%ofGenXers.

BabyBoomers GenerationX Millennials BabyBoomers GenerationX Millennials

Jan.2020

3.6%

Jan.1969

3.4%

Jan.1988

5.7%

Jan.2004

5.7%

Peak

11/1/1982

10.8%

Peak

6/1/1992

7.8%

Peak

10/1/2009

10.0%

Note: Age based on generation breakdown from the Pew Research Center (Baby boomers, born 1946-64; Generation X, 1965-80; Millennials, 1981-96)

12/31/1987

1938.83

+105%

01/02/1969

947.73

01/04/1988

2015.25 12/31/2003

10453.92

+419%

01/02/2004

10409.85

3/11/2020

23553.22

+126%

For Gina

Gauthier and her

partner, investing

has taken a back

seat to providing

for their 1-year-old

son, Charlie,

repaying their

combined $200,000

in student debt, a

mortgage and

saving for health-

care expenses.

Austin Ritzel says most

of his decisions are

influenced by environmental

and social concerns.

Attitudes About Investing

I invest to better provide for myself/family

I invest so I can reach my financial goals quicker

I don’t have enough money start investing

I am so lost when it comes to investing

I don’t know anyone my age who invests

Investing money hasn’t even crossed my mind

I invest because my peers also are investing

55%

51

49

47

40

33

27

 Kate

McGaughey came

of age as the U.S.

was confronting

the worst

joblessness since

the Great

Depression,

and millions of

Americans were

losing their homes

to foreclosure.

AMatterofTime

Whenyoungadultsseethemselves...

1year 5years 10years Notsure/never

Source: Survey for The Wall Street Journal conducted by MarketCast

44%

33%

10%

Making

more

money

13%

28%

16%

Takingon

anew

mortgage

11%

17%

17%

Payingoff

student

loans

Values in Action

While few millennials

support a company with

shared values by investing

in it, they support it in

these ways instead

55%

Purchase products/services

35

Stay current on news

happenings

23

Write reviews on

social media

22

Donate to the

company’s causes

16

Participate in/donate

to charity runs

16

Volunteer for

company’s causes

storm-water sampler for a com-

pany in Los Alamos, N.M., Ms. Mc-

Gaughey says she continues to be

concerned about her basic welfare

and security, and is focused on

paying down her student loans and

building a fund to protect herself

in case she loses her job again.

Ms. McGaughey and 45% of her

generation expect there to be a re-

cession in the next year, compared

with 37% of baby boomers, accord-

ing to a survey conducted by data-

and-consulting company Kantar.

This fear, coupled with student

debt estimated at $1.6 trillion,

stagnant wages and rising hous-

ing costs is keeping younger in-

vestors like Gina Gauthier out of

the markets.

“That whole picture of having

this enormous amount of debt

but also wanting to pursue the

American dream of owning a

home and having a family has

been a difficult balance to try to

find,” says Ms. Gauthier, a 33-

year-old from Chicago.

Ms. Gauthier says she would

love to buy stocks or funds, but for

the past few years, she and her

partner have focused on providing

for their 1-year-old son, Charlie,

while trying to repay their com-

bined $200,000 in student debt,

retire their mortgage and build an

emergency fund for health-care ex-

penses. This leaves them with no

extra cash.

“I would love to invest, but if I

have $400 available to me, does it

need to go toward getting rid of

this student debt that is carrying

7% interest or is it going to go to-

ward investing in something—even

if it is something I really care

about—but that has no guaranteed

returns?” she asks.

28%

Prefer to

invest in

companies

that strive

to have a

positive

environmental

impact

Money views are

mostly shaped by...

60%

Parents/family

31

Spouse/partner

29

Friends

14

Social media

10

Financial

adviser/planner

52%

Would spend

more money

on a product

or experience

to support a

company that

shares their

values, even

if the other

options are

cheaper

The process of investing is a way for me to somewhat control my

destiny. That notion is especially comforting to me, remembering

the struggles of my parents during the financial crisis, when they

were unsure whether or not we would be able to stay in America,

or move back to their home country.”

—Mack Linsangan,24, engineer

roads,” says 26-year-old Austin

Ritzel from Charlotte, N.C. “I truly

believe that our actions will de-

termine the future, and I think if

we don’t make choices that value

the environment and if we don’t

address social issueslike sexism,

racism or xenophobia, we’re going

to live in a progressively unhap-

pier place.”

Mr. Ritzel says most of his deci-

sions are influenced by those envi-

ronmental and social concerns. He

tries to consume less and takes

animal welfare into account when

buying food. He also scrutinizes his

investment choices so the compa-

nies in his Vanguard and Robin-

hood portfolios are aligned with

his values.

This value-driven mind-set per-

meates every money-related deci-

sion millennials make: from the

food they eat and the clothes they

PleaseturntopageR4

according to a survey for The

Wall Street Journal conducted by

MarketCast in September 2019.

Burdened and distrustful

The nationwide survey of 1,440

Americans across the millennial,

Generation X and baby boomer

generations offered surprising

insights into how the millenni-

als view money and investing,

and how those views often dif-

fer markedly from previous gen-

erations.

For instance, those born be-

tween 1981 and 1996 feel more

financially burdened and are

more focused on the here and

now than their parents and

grandparents. They also are

more distrustful of financial in-

stitutions and less financially lit-

erate than prior generations. In

part because of financial uncer-

tainty, many are putting off big

milestones like buying homes—

even while being committed to

putting social values before

monetary rewards when choos-

ing investments or jobs.

More specifically, more than

half of millennials surveyed feel

overwhelmed by financial obliga-

tions, compared with 39% of Gen

Xers and 31% of boomers. Build-

ing up an emergency fund is a

focus for 60% of those between

the ages of 23 and 38, compared

with a little over half of both

prior generations.

What’s more, half of millenni-

als say they want to invest but

have no idea where to begin,

compared with 32% of Genera-

tion X and less than 20% of baby

boomers. Mistrust of financial in-

stitutions runs through 37% of

millennials surveyed, compared

with 29% of Generation X and

22% of baby boomers.

“I know several people who

lost their homes during

2008 and 2009 and oth-

ers who went bankrupt,”

says Timothy Hooker, a

29-year-old financial ad-

viser from Detroit. “My

mother was laid off from

a big bank, and that hit

home for me. Financial se-

curity is never guaranteed.

It’s a continuous and

evolving process.”

Mr. Hooker, who serves

many clients from his gen-

eration, says millennials

view investment risk very

differently than their par-

ents, wary about putting

too much of their money

into stocks out of concern

about the next crash.

And recent turmoil in

the stock market, driven

by coronavirus fears and

T

hree monthsafter

Lehman Brothers

shut its doors in Sep-

tember 2008, Kate

McGaughey got a call

from the company

she worked at doing

legal research on oil-

and-gas leases. She

was being laid off.

With no savings after only five

months in her first job after college,

she had to take on four part-time po-

sitions and sell her bicycle, laptop and

musical instruments to keep a roof

over her head. She used to joke that

her liberal-arts education had gotten

her a bachelor’s in unemployment.

“I was sad and angry—angry be-

cause it wasn’t just me,” says Ms.

McGaughey, who lives in Los Alamos,

N.M. “I had seen so many other

friends move back in with their par-

ents or selling Cutco knives or just

doing work that was beneath [their]

potential. I felt like the classes of

2008 and 2009 were an entire lost

generation.”

Like many in her generation, Ms.

McGaughey had started her working

life as venerable financial institutions

were failing and bringing the stock

markets down with them. She came

of age as the U.S. was confronting

the worst joblessness since the Great

Depression, and millions of Americans

were losing their homes to foreclo-

sure. As a result, more than half of

millennials think their generation’s

American dream has been upended,

BYMAITANESARDON

A lot of people used to use money as a

tool to save for the life they wanted to

have in the future. Most young people I

know use the money they have to live for

the life they want now instead.”

—Jamie Hinz,25, technical operations

JOURNAL REPORT |MILLENNIALS & MONEY JOURNAL REPORT|MILLENNIALS & MONEY

HousingPrices

HomeownershiphasbeenpartoftheAmericandreamforgenerations.Butmillennialscomingof

ageduringthe2007-09recessionsawthevalueoftheirparents'homescrater.Formanyyoung

adultsnowsaddledwithstudentdebt,buyingahomeisnolongeragoaltheyaspiretoorcan

afford.Infact,43%ofmillennialsrecentlysurveyedbytheWSJsaidtheyweren'tsureifthey

wouldevertakeonamortgage.(Housingpricesareaveragesaleprices.)

BabyBoomers GenerationX Millennials

PersonalIncome

Therateofincomegrowthandincomeinequalityisanissuethatcrossesgenerations.Among

recentlysurveyedmillennials,46%feltconfidenttheywouldhaveenoughmoneytoretire,

comparedwith45%ofbothboomersandGenXers.(Incomesaremedianinflation-adjusted.)

BabyBoomers GenerationX Millennials

Sources: Wall Street Journal survey conducted by MarketCast; Dow Jones Market Group (DJIA); U.S. Bureau of Labor Statistics (unemployment); Federal Reserve Bank of St. Louis (housing prices); Census Bureau (income)

Jan.2004

$262,900

Jan.1988

$137,900 Oct.2019

$382,300 1969

$50,940

1988

$55,716

2004

$59,080

Jan.1969

$27,600

2018

$63,179

Making a difference

That sense of meaning is central

to millennials. Ms. Gauthier works

as chief of staff for a venture-capi-

tal fund that invests in early-stage

science and technology companies.

She says the culture and purpose

of a company is really important to

her and is a big part of why she

works in this field.

Despite not being in a position

to invest, she says choosing to

back a company that does good is

her way of supporting impact in-

vesting, which means investing in

companies that intend to contrib-

ute to measurable positive social

or environmental footprints.

On an individual level, almost

70% of millennials would choose to

invest in companies with positive

sustainability elements even if that

meant a 5% lower return on in-

vestment, the WSJ survey found.

“I think the world is at a cross-

Because I’ve grown up with the rise of

social media, I find myself more cognizant

of a company’s image or mission

statement. I follow some of my favorite

brands and companies on Instagram and

YouTube. I’m much more likely to invest

my money in, or purchase a product from,

companies that share my values. This

type of emotional or social element to

investing and spending money is

something my parents didn’t experience

when they were my age.”

—Adam Neuhouser, 24, medical student

1in2

Millennials want to invest but don’t know where to begin

CLOCKWISE: RAMSAY DE GIVE FOR THE WALL STREET JOURNAL; TAYLOR GLASCOCK FOR THE WALL STREET JOURNAL; ADAM GLANZMAN FOR THE WALL STREET JOURNAL +

How Millennials Feel

About Spending,

Investing and the Future