E72: Beware of the Looming Millennial Financial Crisis

In this episode, we discuss the millennial financial crisis at hand. Millennials are in worse financial shape than every living generation before of them. To address this, we offer advice and strategies to lift millennials out of the trap that society has put them in. If you are a millennial or a parent of a millennial, you’ll really want to pay attention to this.

Avoiding the Millennial Financial Crisis Topics Discussed:

  • Why millennials are in such poor financial shape
  • The biggest debt trap and when conventional investments don’t yield the desired results
  • The shift in focus from living to work to working to live
  • Understanding the basics of budgets and what they really do for you
  • When not having something to believe in trips people up
  • Using private family financing to circumvent the system and live the lifestyle they want without jeopardy

Episode Takeaways:

  • Most millennials are in at least twice as much in debt out of schoo as anybody in generation X.
  • When you don’t create a budget, you never know how much you’re allowed to spend. There’s no such thing as a too expensive sweater. It’s too expensive because you don’t want to end up paying that much for it.
  • One of the reasons millennials are not as financially successful is because they don’t have anything to believe in. As far as money and institutions.

Episode Resources:

E72 Transcript

Podcast transcript for episode 72: Beware of Financial Crisis

Nate: In this episode we will discuss the millennial crisis at hand. Millennials are in worse financial shape in every living generation ahead of them. And we’re here to offer advice and strategies to lift them out of the trap that society has put them in. If you are a millennial or a parent of a millennial, you’ll really want to pay attention to this. She’s Holly, and she helps people find financial freedom.

Holly: He’s Nate, he makes sense out of money. This is Dollars and Nonsense. If you follow the herd, you will be slaughtered.

Nate: Hi everyone. Welcome back to the show today we actually got an article we saw from the Wall Street Journal, that talked about how millennials are in worse financial shape than every generation ahead of them.

At least, it’s the living generation. We’re here to try to figure out why that is, and because I think we can learn a lesson about that no matter who you are, and then how we can get you out of that trap. Holly, What are some of the reasons why millennials are in such a rough shape right now?

Holly: Well, according to the article, one of the reasons is bad luck. But I wouldn’t so much say it’s bad luck as much as it is the fact, that basically they are a generation that have spent more money going to school, but by doing that, then they’ve increased their debt without ever producing any income yet.

I say hundreds of thousands of dollars of debt. According to the article, most millennials are at least twice as much in debt out of school, as anybody in like generation X. My generation. They’re going to school, but they’re not getting a job that’s yielding that money to pay that student debt.

Nate: The amount of income they’re making from this job is not twice as much. You’ve already got a headwind from students then. I feel like the goal is no longer to build wealth in the first place, no matter what the headwinds are from student loans, or they were talking about millennials getting jobs in the financial crisis time.

They’re graduating high school, they’re graduating college at that time frame and it’s hard to find work there, and that’s true. They started in this rough spot. The joke is that we still live in our parents’ basements, which is not really true, but we do love to… like to be free. I feel like.

Holly: I think one of the things, even the article though it even points out to an extent is, there’s not an urge to save. There’s not an urge to buy property, to put roots down to establish yourself somewhere. Even in the job market, they say millennials are more likely to leave a job within five years. If you’ve got a millennial that stayed five years, you’re doing really well, versus somebody that’s, “Hey, I’ve been there a couple of years.” I was talking to a client the other day who left his job in February. He’s already had two jobs since then and he was calling to talk to me about the fact that he knows the job he’s in right is not long-term.

He wanted to know what he could do to maybe figure out a long-term career or path. That this job is just a passover. In fact, that’s when he called. “This is just a holding place until I find something else I want to do or where I want to go.”

I talk to a lot of young people that are 30s or right after college, and they’re just, “Hey, I want to go explore the world.” Like he said, “I want to travel. I don’t really care where I want to live. I just want to work for a period of time.”

Then they don’t save any of that money. And then, “I want to go spend like six months in Thailand”. Or, “I’m in southern California.” They like to surf a lot. I have a lot of millennials that I know, that it’s all about, “What job can I do while I can still surf every day, and kind of make a decent living. I don’t really care if I’m living in a trailer home or renting a place as long as I’ve got my board, and I’ve got a good surf.”

Nate: Yes, exactly right. I think part of the issue is it’s just not a priority. I feel sometimes these articles are annoying because they kind of want to preach at you to some degree. They want to say that it’s everyone else’s fault that millennials don’t have as much money.

There could be some headwinds out there. They’re creating that and I think there it is. But I think a lot of it is just a choice too. Some of it is, “I’d rather travel, I’d rather surf. I’d rather do this.” And I’m not even saying those things are the bad things.

I guess one thing that we like to do today is just share some advice on how you can continue to live a lifestyle that you really want to live, but still build wealth and have some sort of structure too. And have some systems to it. Instead of just going, and doing whenever you want, wherever you want type of thing, and hoping that it works out.

There’s definitely some issues with the headwinds. We talked about student loans, everything. Which makes it, one of the first advice I could give is, don’t go to college and get a degree where the job market sucks. If you go get e-course in pottery, historical.

Maybe there’s a job at some museum there, but at least if you want to get that, don’t go to Harvard to get it, or something. If you want to go to a smaller state school or something like that, we can, but I guess that’s the first time as you’re getting started with millennial. If you’re a parent or if you’re millennial right now and you’re listening to this, I would suggest if you’re going to college, get a degree in something that actually is a valuable to society. That people were willing to trade you money because of how much value you can give them. Because I learned how to do this, or maybe do that.

Holly: Yes. Even, and I will say this. Working with a family like just starting out and they that recognizing that she is a millennial and they know exactly how much it’s going to cost her to go to school roughly. Now, I wouldn’t say she’s doing the degree cause she loves it, as much as she knows she can get a job.

She’s good at numbers, but she likes the flexibility of when she’d be busy or when she wouldn’t be and when she could have time off. But for them it was, oh, start saving this much money. And as a millennial, still living at home and she travels a lot, right?

It was, “Oh, I’ve got to start saving some money. New Concept. Mom and dad can’t just keep affording to keep paying for everything.” What we did is, and this was the beauty of it, was I said, “If you do nothing else, at least have her sort of saving that money into a policy.” A life insurance policy so that she can use that for living expenses to help pay for the education when she gets through school.

The way we designed it, she actually has some money to start paying off that student debt and paying herself back, which we talked about. But you’ve got to start talking to your kids. Or in reality start thinking about this money that’s going to be spent. How am I going to pay it back?

Versus, if I get a job, and this is the reality. If I get a job and I’m a teller at the local bank with a college degree and I’m in debt $170,000, is that job going to pay for that student loan debt? And are you going to get anywhere? The reality is, no.

Nate: You got to take ownership too. Yes, exactly right. You got to take ownership of your life. I feel like as I was mentoring these articles, they tried to take the accountability away. These are the reasons why they are in worse shape, because of all these external things. As I was saying, I think there is some issues with that, but I do think that there’s things you can do to help you get out of that.

One of those things as we’ve been talking about with you here is talking about a lot, is I think starting your first infinite banking policy as soon as possible instead of waiting. If you’re a parent starting one on your children, if you are a millennial yourself getting started.

Because I like to see if we could paint a picture for just what they can do with them to make goals that can help solve some these issues. The fact that they don’t own homes, the fact that they like to travel. But right now the way you’re traveling, you’re probably not making a dime from it. If we can show you how to use a policy to do that, we can change the game to where you can build wealth and travel.

Holly: If you’re not going to own a home because you either can’t afford it or maybe you don’t want to own a home. There’s ways to use an infinite banking policy, and pay for your rent and make some money. We can show you how to do that. But it starts strategically. Like, Nate said, the one thing you guys cannot do is put your head in the sand, and just let life keep passing you by.

Nate: Wow, it’s me.

Holly: And think that it’s going to get better. Because the reality is, unless some things start changing, it’s not going to get better. It’s only going to get worse. I always say the buck stops with you. You’re responsible for your life and accountable for your life, so start saving.

If you want to travel and you know you want to travel, don’t just get the credit card with zero balance and go charge it and then come back and be like, “Great, how am I going to pay for this?” If you want to sail the world, that’s great, but there’s a way to do it and be responsible even in doing that. Instead of expecting everybody else to make a way for you, or an excuse for why you have no money.

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Nate: I love the millennial mindset as far as being free, being flexible. There’s a lot of good things that go with it. Financially that’s not always the best decision, but socially, relationally, experientially it’s great.

But what I’m trying to get at here is, one of the things I love about infinite banking and using a whole life insurance policy and the cash sitting there in to pay for your lifestyle of what you’re doing. It adds an element of structure. And actually I feel like it also adds and confidence that you know what you can do.

We’re not just saying, “Hey, you guys need to scrimp and save every dime, put it together and save it for the future or retirement,” or something like that. We also don’t believe that. But how can you build wealth while doing this, and other things go up? Whenever we put money into the policy, we know that we can use it. And we know how we can pay ourselves back and reuse it again, and reuse it again and continue to flow. We can still build wealth the whole time because when we take the money out of the policy in alone, it doesn’t actually affect the cash.

What I’m saying when it adds structure and confidence is that “Hey, I know I can afford to go on a trip, and I know how I can get the money back after going on that trip by paying myself back over the next 12 months. Then I know I can go again. I know that in 10 years from now this is what my cash value is going to be, while I’ve been using it to go on these trips every year. As a millennial, we encourage you to live life the way you want to live life. But if you add an element of structure, you know how much you can spend.

I remember one time, this was my mom. She was saying how she she bought a sweater. And it was at a price that she felt guilty about. Said I’m going to return. I know them and I know they don’t really have a budget. They haven’t created a… here’s how much I’m allowed to spend. When you don’t create a budget, you never know how much you’re allowed to spend. There’s no such thing as a too expensive sweater. It’s too expensive because you don’t want to end up paying that much for it.

I guess what I’m trying to say is that too expensive vacation. We know that it’s only two expensive, if you don’t have a systematic way of recapturing it. I guess that’s what I would say, is that one thing that I think they can do, is they can actually free to do the things you want and be confident about your future. Because we know how to pay for things and how to get the money back. We know where we’re going to be when we do that. 10 years down the road, 20 years down the road, and we’re not locked in with a retirement program, or where we’re having to flush money out and walking up.

Holly: As much as he’s saying it’s structure, it brings such an out of box thinking. You’re not actually in this structured arena of I can only live here. I can only do this with my policy. With a retirement program, typically all you can do is this, save it and you can take a little bit out, but you got to pay it back before you take any more out.

If you don’t want to pay a penalty, you’ve got to wait to take it out or you can take a loan out. But the reality of the policy is, you have the ability to put your money in and use it for how you want to. Whether it be, like Nate said, traveling. I was talking to a millennial the other day. I know Joe, he loves Clemson football, and I was telling him what he could do with this policy he’s starting, for these tickets that he wants to buy. And he was so excited to be able to actually use the money for something he loves to do, go to a football game, but how he can pay for those tickets and pay himself back for what it would cost to do that.

I think what I want you to hear here is that we really have an opportunity to teach you how money works, but how you can use your money for what you want to without freedom. That means it’s still going to be there in the future.

Nate: That’s the beauty of it. That’s why we love it. Honestly, I’ve had a lot of success with millennials. I think they love infinite banking. I really do. To me, I think one of the reasons that they’re not as financially successful is because they don’t have anything to believe in. As far as money.

I don’t think they believe in the stock market. I talk to someone in their twenties, they don’t like the stock market. They don’t trust it. They don’t trust the big banks, they don’t trust Wall Street. If you don’t trust those types of the 401(K) retirement program, they don’t trust in government. They don’t trust the system. Probably more so than any generation before them. At least while they’re building the wealth.

Because of that, they’re looking for a way, they’re not putting a whole bunch of money away. I just think because they don’t believe it. If you can find some who believe it, I feel like you’re going to be way more successful. Which why we talked about or I’ve said before, invest in something that you like. That you want to learn about, that you’re excited about, instead of just going with that because you’re always going to do better when it’s something you can believe in regardless of the numbers behind it.

Holly: For those of you out there that have millennials or that you are a millennial, statistically you don’t trust banks. You don’t want to put your money in a bank. What we’re really offering you is the opportunity to actually still keep control of your money. Instead of hiding it under the mattress or keeping your rainy day fund in a tin can in the freezer, or wherever it is that you keep it.

But the reality is, I’ve worked with numerous millennials, I actually like them because of their excitement for what they’re going to do, whether it be one that teaches music, and has her own business as a young millennial. To someone who’s just starting out, who knew college wasn’t for them, but has this money that they’re earning on a skill that is needed.

A much-needed skillset, on a crafts trade that they’re learning how to do. And they just didn’t know what they could do with the money. He knew he just didn’t want to put it in a bank. That was his biggest concern, “I don’t want to take this money and put it in a bank.” This allowed him the freedom to use his money and not actually have to just keep dumping money in the bank.

Nate: Exactly. I think one of the things too is as the item talks about, is that millennials are actually the highest-educated generation we’ve seen yet. Four out of 10 have a college degree.

Holly: Yes.

Nate: I guess just a little side note, maybe consider the value of a college degree nowadays. As you said, you need it. You actually need a college degree to be a piano teacher. No, you have no skill yet. You have go to college. You need to have that skill to understand music. Understand piano to understand how to teach.

That’s where I feel the economy is actually moving and this new age is less from the big company, climb the ladder, get the pension, which we all know that it’s dying to some degree, especially the pension side. The desire for the millennials that they have to have a lifestyle business, or that financial freedom, or to not have to clock in, clock out. It’s going to deflate really the necessity of the college degree. It’s getting too expensive for what it’s worth, when you can go become a small business owner and entrepreneur doing things you love without having one.

But that being said as well, one of the things that I mentioned there that was also scary and almost a side note, was that as a generation, millennials are the only generation so far in America, that have over 50%, they’re more lenient. They like socialism more than capitalism. That terrifies me. That’s the future. Oh, my gosh. We talk about how infinite banking policies grow tax free. We can utilize them. Limited government involvement, and how a lot of people may be getting themselves in over their head where they’re doing 401(k)s and IRAs they’re tax in the future.

Re-enter the lines here. If the younger generation, which is going to become the majority before too long, actually prefers socialism to capitalism, what is going to happen to tax rates? We’ve got to prepare for this. If you are someone who has a lot of money in tax deferred programs and you’re listening to the podcast, now might be a good time to take a look. You can’t wait too long, because who knows what the future is going to hold? You never know what’s these polls anyway. But as of right now, I say millennials are more favorable towards socialism than they are capitalism. Which if that doesn’t freak you out and want to get rid of the government programs that you’ve already gotten. I don’t know what would, because that certainly terrifies me and I don’t even have any government qualified programs.

Holly: The other point that goes along with that that freaked me out is that the millennials are approaching middle age. They’re asking for help from their employers.

Nate: Someone else is going to help me.

Holly: You help me do this. You help me do that. I think that as soon as you put your financial wellbeing into somebody else’s hands, other than your own, that you take on a sense of being very naive. I’m saying, well, as long as they take care of it for me, I’m good to go.

Really, I’m just going to be honest and say employers typically don’t have your best interest at hand. They’re in the business of making and generating money. It’s for their company. Yes, they’d love to help you, but they’re going to do anything that helps them as well. Not so much just helping you on your goals of retirement planning, or this or that.

I’m just going to say, look at the history of retirement planning and what’s happening currently today. That’s generations that have put their hope, mostly majority in employer’s hands, believing that their best interest was saving. Not only the socialism, but the capitalism. If you want to go somewhere in this world, you guys have to know how to capitalize your own talents and gifts and what are you going to do with your money? Don’t let somebody else control your money hoping that they’re going to give it back to you. Because it just means more taxes for you or anybody else.

Nate: Yes. Just keep that in mind you’re a millennial, you’re part of the series, whether you’re a conservative, whether you’re liberal, whether you’re socialist, whether your capital, I don’t care. But you at least have to be wise. Understand that in certain scenarios assets grow and sometimes they don’t as much.

Whether you want to be in the stock market as the baby boomers are retiring, as we’re leaving more socialists, as the younger generations come up. What are we going do with money? That’s why we love infinite banking. How that it’s free contract with free people. They get limited government involvement, very secure, usable, and we can use it to help you do the things that the article talks about the millennials are missing out on.

Whether you want to or not, but things like buying a house, getting onto the real estate ladder, and owning a home can be something to win by paying a student debt. It’s hard to pay a student debt if you’re just funding 401(K)s the whole time. That’s because all the money is locked up. If we use a policy, we can take it over it and pay you back for the student loans and get all the money back. Let me just show you how to do that. Many things can happen that are ancillary benefits to infinite banking that we just don’t even have time to talk about. But that we can do with the structure and the confidence it can provide. With that, anything else, Holly?

Holly: No, I just really want to encourage you to hear Nate’s heart here and my heart. Nate is a millennial, and so as a millennial he understands exactly where you’re at. With that being, if you have millennials, please, please, please give them the opportunity to give them something else other than what’s worked in the past.

I think we’ve shown that traditional banking doesn’t necessarily work or traditional retirement programs or things like that. But as your millennial might be going off to school or graduating, give them the opportunity to be able to not send their money to somebody else.

Nate: I think millennial ends in early twenties now.

Holly: Twenties.

Nate: Yes-

Holly: Graduating.

Nate: They’re pretty much graduating now. Yes, if you’re listening to this, you probably already have a job if you’re a millennial and doing things. But I guess if I had one last word and we can be done is, as I mentioned before. Find something you can believe in. Financially, you’re going to be more successful if you like and you believe what you’re doing.

If you don’t believe the stock market is going up. If you don’t like the government qualified programs and the regulations they have there. If you don’t trust it, then don’t do it. Because if that’s all you know, then you’re not going to do as well as if you actually got to control the money and do the things that you enjoy. Infinite banking, we’ve got lot of people enjoy it because of the freedom and the flexibility it can give, it can totally can give. We encourage you to do that. I think it can help you get off the millennial pit. Then everyone tries to paint us in and move you up the ladder to where you can build wealth and still live the lifestyle you want.

There’s nothing else like it. If there was, we would tell you about it, but so far it remains the only thing we know of that allows us to use the money while it’s growing, and can do things with it that otherwise we wouldn’t be able to. With that, we’ve run out of time. This has been Dollars and Nonsense. If you follow the herd, you will be slaughtered.

Holly: For free transcripts and resources, please visit livingwealth.com/e72.