Perspectives: The ‘Broke Millennial’ on Investing and Financial Conversations

Forging a Financial Path Forward

Perspectives: Erin Lowry "Broke Millennial"

Design: Julie Bang / The Balance, Photo: CreativeLive / Casey Cosley

With over 100 million people in the U.S. having been vaccinated and the job market slowly rebounding, there are glimmers of hope amid the ongoing public health and economic crisis. Still, the pandemic has had (and continues to have) an unprecedented impact on many lives. Factors like unemployment, reduced wages, and business closures, for instance, have reshaped people’s financial priorities and spending habits. 

At a time when many Americans may be reassessing their financial behaviors and futures, The Balance asked several renowned personal finance experts and influencers to share their own narratives from the past year and how they’ve informed their perspectives in areas like budgeting, investing, and achieving financial independence. Today, we speak with Erin the “Broke Millennial” Lowry. 

Under her moniker the “Broke Millennial,” Erin Lowry has carved out a successful career providing practical financial advice to fellow millennials through multiple books, presentations, worksheets, and courses. Unfortunately, quarantines and lockdowns in the first few months of the pandemic diminished her opportunities to take the stage for speaking engagements and in-person events, which she told The Balance account for a good portion of her income. 

However, after enduring what she calls the initial “scariness” of the ongoing health and economic crisis, Lowry has found some stability through digital speaking engagements, and has seen a renewed interest in her books, including “The Broke Millennial Takes on Investing.” 

According to the New York City-based author and influencer, this increase in interest may be a reflection of people getting through the “shock and awe” of the initial months, and now figuring out the next steps of their financial lives. As her professional mantra, “get your financial life together,” takes on more importance, Lowry spoke with The Balance about investing early, the need for financial conversations, and the pros and cons of personal finance advice on social media. 

This Q&A has been edited for length and clarity. 

For those who haven't read your books, what would you recommend right now for beginning investors?

Broadly speaking, figure out first where you are—I call it putting on your financial oxygen mask. There's a checklist that you have to fulfill before you have put yourself in a position to invest in taxable (non-retirement) accounts. That being said, if possible, please take advantage of your employer-matched 401(k). And if you're self-employed, please have either a simple IRA, a traditional IRA, or Roth IRA, depending on your situation and what your accountant says is best for you.

Learn what the difference is between a traditional and Roth IRA

The biggest soapbox I have around investing is that we use the wrong language when we talk about retirement, because we just say, “save for retirement.” You are not saving for retirement. You are investing for retirement, and you need to think about it as such. One, because you need to make sure that money is actually invested and not sitting in a cash management account inside of your 401(k), or similar retirement account. And two, I do think it just helps people reposition themselves as investors in their own mind. It’s important to start early. 

Please do not wait until you have paid off every last bit of debt, especially student loan debt, auto loans, or heaven forbid, waiting to pay off a mortgage before you start actually investing, even into your 401(k). Because for many of us, especially millennials and certainly Gen Z, you could be well into your 40s before you're “debt-free.”

Is that a common mistake you’re seeing?

Well, it's also a common mistake because there are personal finance “gurus” who give that advice to wait until you're debt-free before you start investing. And for some people, that gets interpreted as also meaning in your retirement account. So if you're waiting on a 401(k) until you're in your 40s, you've lost a lot of potential. I don't say that to freak anybody out who has, for a variety of circumstances, waited until their 40s. But it's so much easier to get much further with less effort if you start investing in your 20s or 30s than if you wait until your 40s—especially if you want to retire in your 60s. I just feel that investing is such a critical way that the average person can build wealth.

How should millennials, and maybe even Gen Z, address financial priorities in light of economic uncertainty? 

I think a hugely critical part is that we have to engage in awkward financial conversations, because we need to be getting information from the people that impact us directly. It’s like, “So Mom and Dad, are you going to have enough money to retire? Am I going to be your retirement plan? I need to know that now—not at 50—because I need to start making decisions about my financial life based on the future situation.” 

Our interactive MoneyTalks tool can provide you with advice for how to have a conversation with someone about saving for retirement. 

If you have a partner, have conversations early about both of you having debt, and if so, how do you plan to handle it? Do you have different assets? How are you planning to merge your money? How are you making decisions? If one person wants to start their own business, what is that going to look like? How are we paying for health insurance? 

Being an adult is exhausting. I think that is truly what the pandemic has taught all of us. It is the sobering reality that everybody's been punched in the mouth. Perhaps a beautiful consequence of the pandemic will be that some of us have more clarity on what we actually want, and are going to be better at prioritizing our wants compared to what the society tells us, what culture tells us, what our parents, friends, and siblings tell us. And there's nothing wrong with that as long as we can have healthy conversations about it.

Why is it awkward to have financial conversations?

It's hard talking about money. What's awkward is no one likes getting judged. And that's what we're afraid of in a lot of these money conversations. We all have our own inner critic that's going to be serving us all these scripts about if you do this, this is what they're going to think, this is what they're going to say.

One of the things we need to remember, though, is that morality and money get intertwined so often when we talk about finances. It’s like the “you're to blame, you did this to yourself,” shame-based behavior that's way too common. [The pandemic] is such an outlier event where truly people had no culpability for what happened. If you worked on Broadway and it's been shuttered since last March, you could have had a six-month emergency savings fund that was gone six months ago. Like, you could have done everything right, and still...

There's just going to be a collective trauma coming out of this experience that is going to be really important for us to acknowledge and figure out how to incorporate into our work. And part of this, for me, is knowing that I'm not going to have the answer for everybody that follows me. So I’m pointing to resources or other people who might have a more similar lived experience to someone else who was following me.

That’s probably why social media has been a go-to for personal finance advice, especially now. 

The really great thing is there are so many different voices within the personal finance space on social media and podcasts, YouTube, and you have TikTok now.  However, some of them are giving advice that's not the best and you should fact-check. But on the other hand, a lot of people are giving advice now that's even more curated, customized, and nuanced to a specific experience, which is really important and is going to be so critical on the back end of this pandemic.

Do you worry about, as you alluded to, the potential for misinformation? 

Listen, as they say, free advice is usually worth exactly what you paid for it, which makes me giggle because I give away a lot of free advice on the internet. But you can always fact-check somebody. Even for my advice, check me against other people and what they are saying. When it comes to your money, you should always get a second opinion. It's just like a medical professional. Go get a second opinion.

And that is particularly true of anybody who is prescriptively telling you what to invest in, who doesn't actually know you, who's just talking to the internet. Please be careful. Definitely go check and do some due diligence because with investing especially, [those giving advice] don't know you, your financial situation, or your risk tolerance. They don't know anything that's important to know about you, to then tell you whether something is a good investment.

Learn how to grow and protect your investments with these tips

But there are folks who are more focused on the basics of personal finance who aren't pushing  a product or an investment and are just giving advice. And that’s OK, especially if it's tied to a particular lived experience that's more akin to your own. I cannot provide a nuanced answer for every single person’s situation. There's going to be some level of what I do that has to be generalizations, and the same is true for most people. But that is why a certain proliferation of voices in social media has been incredibly helpful. Because then you can find people who speak to your experience in many different forms. 

It could be as simple as somebody who is on the same type of debt journey that you're on, or somebody who also was raised by a single mother in a similar part of the country that you are in and has a similar emotional reaction to money that you do. 

At the end of the day, we just need to have more empathy in personal finance.