Millennials Are Smarter About Money Than Previous Generations — 3 Things They Learned From Their Parents
Written by
Josephine Nesbit
Edited by
Cory Dudak
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If there’s one thing that sets millennials apart from older generations, it’s that money was a topic of conversation at the dinner table.
Unlike older generations, millennials born between 1981 and 1996 grew up in homes where discussions about personal finance weren’t taboo. According to a recent survey from Forbes Advisor, nearly three-quarters of millennials grew up in families that talked about money. Conversely, only 41% of boomers spoke with their parents about finance, USA Today reported.
The survey found that boomers were the least likely to come from families that discussed money (41%), followed by Gen Z (55%), Gen X (57%) and millennials (73%). A survey by Northwestern Mutual also found that Americans are learning about finance at a younger age. Boomers reported having their first talk about money at the age of 22, Gen X at the age of 20, millennials at 18 and Gen Z at 15.
Millennials frequently get flack about money, but they’ve learned some smart money habits, too. Here’s what they’ve learned from their parents.
Pay Off Your Credit Cards Every Month
Chad Lewis, a 36-year-old millennial and Northwestern Mutual private wealth adviser based outside Chicago, started talking with his parents about money in middle school. “We talked about things like credit cards, your credit score, making sure that you’re paying off cards on a monthly basis,” he told USA Today in an interview.
Lewis’s parents opened a credit card in their son’s name, used it to buy groceries and paid it off every month.
“When I got out of school,” he said, “I had phenomenal credit.”
Credit cards can help you build credit, but carrying a monthly balance can cost you interest and increase your credit utilization rate. The average credit card balance among U.S. consumers is $6,320.98, according to the New York Life’s Wealth Watch survey, and consumers are paying an average of $430 a month.
Live Inside Your Means
Trent Long, a 34-year-old millennial, told USA Today that he remembers some high school friends with credit cards tied to their parents’ accounts. He did not, which he said was a way “to make sure I was understanding how to live inside of my means.”
When you live within your means, you have enough money to cover all of your expenses. You’re earning more money than you’re spending, which allows you to save for bigger financial goals and gives you some cushion in case there’s an emergency.
Set Aside Savings
Millennials were also told to save, save, save.
“I remember my parents telling me, ‘All along the way, you’re going to see people going into debt, and it may be from student loans, and it may be from credit cards,'” Long said. “They were telling me very early on, ‘You need to set aside savings, every single paycheck.'”
The standard rule of thumb is to save 20% from each paycheck, and it’s one that personal finance expert Dave Ramsey suggests people follow. This is used in the popular 50-30-20 budgeting rule, which states that 50% of your paycheck goes toward needs, 30% toward wants and 20% toward savings.
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