3 Habits Keeping Millennial Middle-Class Families From Growing Wealth
Written by
Kerra Bolton
Edited by
Jenna Klaverweiden
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Millennials are entering their prime earning years, yet many struggle to build lasting wealth for their families. From student debt to soaring housing costs and a shifting job market, the odds can feel stacked against them. However, some obstacles are behavioral.
Financial experts who work closely with millennial clients revealed three habits that are keeping millennial middle-class families from growing their wealth.
Lifestyle Creep
One of the most common challenges financial advisors see among millennial families is lifestyle creep, when spending rises alongside income. Instead of using salary increases to strengthen their financial foundation, many fall into the trap of upgrading their lifestyle too quickly.
“What I see most often isn’t a lack of discipline or ambition, it’s a mindset shaped by scarcity, fear and comparison that keeps them stuck in habits that don’t serve long-term wealth,” said Melissa Murphy Pavone, founder of Mindful Financial Partners. “After years of hustle, many clients feel they’ve earned a certain lifestyle, but when income increases, spending rises just as fast (or faster). It’s often framed as ‘self-care’ but it often delays real wealth-building.”
A scarcity mindset often drives lifestyle creep, Pavone said. Many people operate from a constant sense of “never enough,” whether it’s money, time, knowledge or opportunity. That mentality often drives reactive decisions instead of thoughtful, intentional financial choices.
“My advice… pay yourself first,” Pavone said. “Start small, Start now, Stay Consistent.”
Not Understanding Your Budget
Many millennial families underestimate the importance of truly understanding their household budget. Without clarity on where their money goes, especially regarding the distinction between fixed and variable expenses, financial decisions often feel reactive rather than intentional.
“A surprising number of families don’t truly know what it costs to run their household,” said Sean Babin, CEO at Babin Wealth Management. “Without a clear grasp of fixed vs. variable expenses, it’s nearly impossible to make confident financial decisions. If your money disappears every month and you’re not sure where it’s going, wealth-building becomes guesswork.”
Babin shared the story of a millennial couple earning $250,000 who still felt like they were living paycheck to paycheck. The problem wasn’t income; it was a lack of clarity.
By setting simple weekly spending goals and prioritizing savings upfront, they dramatically turned things around. In two years, their emergency savings grew from $1,000 to $25,000, their retirement contributions more than doubled and their odds of retiring at 65 jumped from 14% to 65%.
“They’re not ‘done,’ but they’re no longer stuck,” Babin said. “This kind of progress shows why working with a financial advisor early, even when you think you can’t afford it, is such a game-changer. Sometimes all it takes is a fresh set of eyes, a clear plan, and someone to hold you accountable.”
Overlooking Tax-Advantaged Accounts
Many families stop at a 401(k) and overlook other wealth-building tools. Accounts like Roth IRAs, health savings accounts (HSAs) and brokerage accounts offer tax advantages and flexibility that can accelerate long-term growth.
“Use accounts that give you options,” said Brennan Thiergartner, a certified financial planner at Fidato Wealth. “Employer plans are great but can be limited. Having additional accounts like Roth IRAs, HSAs and brokerage accounts offer flexibility and additional planning opportunities that you would otherwise not have with just the employer plans.”
Thiergartner gave an example of one millennial couple in their early 30s who earned strong incomes but only contributed to their 401(k)s while spending the rest.
After reviewing their cash flow, they started putting $500 a month into a brokerage account and maxed out their HSA. Within three years, they grew their liquid investments by over $50,000 while continuing to travel and plan for their family.
“What changed?” Thiergartner said. “They stopped thinking of saving as ‘what’s left over’ and instead made it a fixed monthly habit. They still enjoy their life, but with a stronger financial foundation and greater peace of mind.”
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