5 Mistakes Millennials Are Making With Their Money in the Trump Economy

Many millennials came of age and entered the workforce during the Great Recession of 2007-2008, which significantly impacted their financial challenges due to student loan debt, housing affordability and job prospects.

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However, millennials are also a tech-savvy generation that relies more on apps for savings and investments. While many are doing their best with limited tools, some popular financial habits are setting them back. From pausing retirement contributions to chasing convenience over strategy, small missteps can compound over time.

Here are five mistakes millennials are making with their money in the Trump economy.

Sara Levy-Lambert, head of operations at Red Awning, said after years of COVID-19 pandemic restrictions and economic stress, many millennials are overcompensating by traveling too much or overleveraging Buy Now, Pay Later (BNPL) platforms.

“Anecdotally, a friend working in fintech confided that default rates on BNPL among millennials are significantly higher than anticipated,” Levy-Lambert said. “It’s become a canary in the coal mine.”

She explained, “The current environment — defined by inflation, interest rate uncertainty and geopolitical unpredictability — has amplified financial anxiety. When people are unsure about the future, they tend to behave in two seemingly contradictory ways: freeze or overspend. In my experience, millennials are doing both.”

From rounding-up savings apps to default employer retirement plans, many millennials rely on passive tools to manage their finances. While convenient, these set-it-and-forget-it approaches can create a false sense of security and fall short in a policy environment that demands more active planning.

“Apps make investing easy, but ease of access often leads to overexposure in correlated assets like tech-heavy ETFs or crypto, [with] little regard for true diversification or downside protection,” said Andrew Constantinides, investment advisor and RSU strategist at Neil Jesani Wealth Management, LLC.

He explained, “Today’s inflationary pressures and rate volatility are compounding those risks. Millennials need to shift from chasing returns to building resilient portfolios. Think structured notes with downside buffers, private credit for steady yield, access to the private equity markets and tax-advantaged real estate.”

In times of uncertainty, many millennials stop contributing to their 401(k) plans or IRAs, hoping to wait out market volatility.

“I see a lot of millennials pausing or full-out stopping their 401(k) or IRA contributions ‘until things settle,’” said Ryan Canfield, president and founder of Victus Wealth Management. “I know it can be tempting to do, especially with the older generation telling us to do it.”

He pointed out that pausing these contributions means missing out on potential gains through employer matches, lower-priced shares and compound interest.

“Don’t assume today’s high prices, interest rates or market swings are temporary blips. Assume this is the new normal, and build habits and plans around it,” he said. “Ask yourself, ‘If this is permanent, then what needs to change?’”

Many millennials don’t have a solid emergency fund, which could help prevent financial distress. According to an Empower survey, millennials were among those who saved the least, with a median savings of $500.

With fewer public safety nets and rising inflation, relying on credit cards or early retirement withdrawals during crises can cause lasting damage.

“Typically, I recommend working clients have no more than three to six months’ of living expenses in their emergency fund in cash and to invest the excess for the long term,” said Emily DeBlase, owner and lead financial planner at Organic Wealth, LLC.

She explained, “Having too much cash sitting in bank accounts for too long exposes clients to inflation risk, which may reduce the purchasing power of the cash.”

Millennials are often told to skip lattes and other daily indulgences to secure their financial future. However, the real financial drag comes from avoiding bigger moves — like negotiating salaries or delaying investments.

“They should be playing offense, not just defense,” Lambert-Levy said. “That means thinking about how to increase income and not just how to reduce spending. In practice, this might mean upskilling into higher-paying roles, negotiating remote work to lower living costs or building alternative income streams — Airbnb, fractional investing, part-time consulting.”

Lambert-Levy said millennials should also get more comfortable with moderate-risk, long-term investments. “Index funds remain a solid foundation, and for those priced out of homeownership, real estate investment platforms — many of which now allow fractional ownership — can serve as a bridge.”

Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.

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