How More Young People Are Taking Steps Towards Financial Independence


Oct 25, 2020

Financial independence should equip the students of today with tools to deal with life’s challenges without having to make sacrifices or go into huge amounts of debt. Without financial assets to generate cash flow, it can be difficult to achieve the independence young people are seeking.

So, what does the economic picture look like for millennials? Worryingly for many, it has been said that Generation Y (those born between 1981-1996), could encounter the most uncertain future of any generation in the U.S. since the catastrophe of the Great Depression in the 20th Century. Not only do millennials have the aftermath of Covid-19 to face, but prior to the pandemic, they were already up against the pressures of society and becoming an adult.

Financial independence is often used to bridge the gap between childhood and adulthood, and according to a study completed last year by Pew Research Center, 64% of Americans believe young people should reach this milestone by the time they are 22 years old. This belief has also been supported by a U.S. General Social Survey completed in 2002, where the majority of people (97%) said that financial independence is at least somewhat important to being considered an adult.

In addition to the force of society, millennials also look to provide for their families, particularly those that carry financial burdens. Research has shown Generation Y to be the most racially and ethnically diverse group in U.S. history, and often hold strong political views, leading them to recognise the importance of helping others beyond their family. One of the benefits of being financially independent is that you are free to address other intricate problems within society, and focus more time and attention on political change, while still being able to provide for less financially secure relatives.

The effects of Covid-19 weigh heavy on the world and those seeking ways to secure their financial future. In a recent letter written by Stanford’s President Marc Tessier-Lavigne, he addressed the university’s problems as a result of the virus and the $267 million negative impact the last six months have had on the remainder of the Fiscal Year 2020, which will lead to workforce reductions that will take place next year.

With the university forecasting staggering financial losses, furloughs, and permanent layoffs, it is no wonder students, and graduates are concerned and looking for ways to achieve financial independence during these uncertain times. As unemployment rates continue to rise, economic vulnerability is at an all-time high, which has led to more young people striving to set up their own businesses and enter the world of the entrepreneur. Now more than ever, students are coming to terms with the harsh reality that education and experience may not guarantee even the most talented and resourceful people the chance for employment, which is why more and more individuals are looking to become entrepreneurs and secure investments.

Investment has long been considered one of the top ways to make money and reach financial independence, and with millennials being deemed the ‘digital natives’, investing opportunities have never been more accessible for this generation. The availability of social media platforms and smartphone apps make investing in stocks and shares more interesting, and millennials under the age of 35 are more likely to use these tools to monitor their investments as reported by E*TRADE.

Cryptocurrency is becoming increasingly popular with more and more young people making the seamless switch, as it is as simple as hitting accept on an app. Building a portfolio of dividend-paying stocks is now favoured among many, but it isn’t the only market millennials are looking at to create wealth. Real estate can also provide impressive amounts of cash flow and capital appreciation, and this has not gone unnoticed by young adults under 30. RWinvest, a property company based in the U.K., noted a significant increase of 166% this month compared to the previous nine months, in the number of 18-24-year-olds searching the web for potential property investments.

Some students have gone on to become successful real estate investors, and others are running valuable startup companies now worth billions of dollars. Stanford GSB Alums created São Paulo-based Nubank, valued at $10 billion, which is one of the most valuable businesses in Latin America. David Vélez, Founder and CEO at Nubank, began his journey to financial independence when searching for a startup idea after graduating from Stanford Graduate School of Business in 2005. Vélez has two key lessons to share with future entrepreneurs. Firstly, think about operating in a market where you have a competitive advantage, and secondly, always do your due diligence. Vélez is a prime example that young people are willing to educate themselves, invest, and take smart risks in the hope of seeking financial independence.