The Conservative Generation? Recession Creates New Type of Millennial


The “Me” Generation. We’ve all heard this less than savory nickname for Millennials. Illustrating the disdain some feel for current new grads and young professionals, they’ve been pegged to be lazy and whiny over extended stays in their parents’ homes and their vocal frustration with student loan debt. But there’s more to the story than meets the eye. In fact, recent data would make it seem that a more accurate representation of this generation is The Conservative Generation.

Millennials Appear to Have Lost Trust in the Financial System

Although the Great Depression happened nearly 100 years ago, its effects were longstanding for those who went through it. I saw it with my grandmother. Although she and my grandfather retired into a comfortable life, she never forgot what she went through as a child. Well into her 80s she still refused to waste anything, always stocked up on groceries (just in case), and wouldn’t let even one morsel remain on anyone’s plate at the dinner table. Fifty years of a secure marriage and career and a comfortable retirement couldn’t erase in her the fear of the possibility that the next meal might not come.

While the Millennials didn’t have to go through quite as much as their elders did in the Great Depression, they too face lasting effects of graduating from college into an economy that was hemorrhaging money and jobs. Before the crash, they trustingly took on student loan debt because they were told college was the thing they had to do and felt confident that the jobs would be there for them at the end of the road. For many, this wasn’t the case. And now this has led to what appears to be a mistrust for the financial system in general.

According to a Bankrate survey reported by Money Talks News, millennials trust cash far more than the stock market – a mistrust that could cost them dearly in retirement:

“When it comes to long-term investments, nearly 40 percent of millennials (ages 18 to 29) would prefer to stash their cash in a checking or savings account, or maybe even under a mattress. That’s three times the measly 13 percent of millennials who said they’d put their money into the stock market…

It’s hardly surprising that millennials are wary of the stock market, considering they came of age during the Great Recession. But millennials’ risk-averse mentality could end up hurting them. Bankrate chief financial analyst Greg McBride said in a press release:

‘The preference for cash and aversion to the stock market among young adults is very troubling considering this age group has the biggest retirement savings burden. They won’t get there without being willing to assume a little short-term price risk in their long-term money.’”

While Millennials are shown to start saving younger due to this risk-aversion, foregoing investments could hurt them greatly in the end. Even worse when you consider the fact that they won’t have the same type of pension and retirement system their parents and grandparents may have had.

It’s up to Millennials to provide their own retirement and, without the benefit of compound interest through investments, it’s going to be a long road ahead.

Millennials Are Thinking Twice About Their Futures

This risk-aversion in Millennials doesn’t just prevent them from growing their money – it’s also preventing them from moving forward with their personal lives. CNN Money recently reported some alarming statistics about Millennials and marriage:

“Today’s young adults are on track [to] have the lowest rates of marriage by age 40 compared to any previous generation. If the current pace continues, more than 30% of Millennial women will remain unmarried by age 40, nearly twice the share of their Gen X counterparts, according to a recent Urban Institute report.”

CNN goes on to say that, while marriage used to be a starting point for young adults, it has become more of a cap on success. Couples aren’t quickly getting married after high school or college and then finding homes and work anymore. They’re building their careers and striving to achieve some level of financial stability before taking the plunge. However, just like with their risk-aversion in investments, this fear could be costing them (and the economy):

“…the explosion in singles has its downsides. Married couples are often better off financially, which means they can spend more.

‘The evidence shows that getting married increases wealth and income,’ said Pamela Smock, a sociology professor at the University of Michigan.

Single Americans may be less likely to buy homes or trade up to accommodate growing families, while single parents may be more likely to qualify for government safety net programs.

And the growing schism in marriage rates could exacerbate income inequality in this country, dividing society into still mostly married ‘haves’ and increasingly single ‘have nots.’”

Erasing the Fear from The Past

Risk aversion could be a good thing. It could lead to more personal savings, less usage of credit, and thoughts of making money last long into the future rather than giving in to all current desires. However, fear-based decisions can lead to stunted growth.

The best way to mitigate the fear that results from coming of age in a brutally tough economy through financial education. To develop a strong understanding of how investing works is what separates thoughtful investing from needlessly risky investing. There are indeed ways for Millennials who are concerned about risk to invest cautiously while still getting the benefits of growth and compound interest. By talking keeping the conversation going, we can all continue to learn and strive toward a financially stable future.

Image Credit: Amir Kuckovic

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