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  • Nick Burgess

6 Steps For Surviving A Recession

How Millennials and Gen-Z Can Weather a Recession

Millennials, financially, are fucked. I'm not just talking about being raised on Lunchables and Ren and Stimpy so we spend all of our money on charcuterie boards and drugs. I mean we are inherently disadvantaged in the financial world.

We are earning less than previous generations in our jobs, we're saving less, investing less and everything is more expensive. A 2021 tweet from infamous NSA whistle blower Edward Snowden highlighted the massive disparity between what millennials are paying to just be alive vs the generations that came before us, and that's even before 2022's record inflation:

Millennials are staring down the financial barrel in 2023. We're seeing record inflation levels, crushing student loan debt to the tune of nearly $40,000 per borrower and unaffordable home prices, delaying our entry into the start of "The American Dream."

As a result, we're delaying getting married, having kids much later in life and upgrading our homes. We also just lived through our second "once in a generation" financial crisis, with the 2020 COVID pandemic serving as history's most morbid encore to the 2008 housing crash. We've seen loved ones go with the pandemic, we've seen people, including ourselves, lose jobs in record time and now we're crippled under the ever-increasing weight of credit card debt.

A natural question to ask after reading all of that might be: "Why in the living hell did you bring all of that up?" It's simple: because much of the traditional financial advice doesn't really apply to us anymore. Our parents saw record stock market returns, cheap homes and relatively stable economies for extended periods of time. So today, I'm going to take you through some of the advice that helped me dig out of $9,000 of credit card debt and renting an apartment to being credit card debt free and saving enough for a down-payment on my first home. This is just advice, and everyone's situation is different. If you need help with taxes, investing or estate planning, please contact a professional. Let's get into it.

1. Get a budget. Now.

Our parents used to call this "balancing the checkbook." Analyze your incoming, your outgoing, and pray like hell that you have the money to cover everything at the end of the week/month. Now, we call it "budgeting" and there are an increasing number of ways to do it. You could do it in an Excel spreadsheet if you're the kind of person that enjoys microwaved dinners and the missionary position.

You could also get with the times and use any number of automated budgeting tools out there. As we become an increasingly-digital world, many banks and fintech companies now offer apps or built-in services that analyze your income, along with you expenses, giving you tips on how to save money. They analyze your subscriptions every month to figure out why you're paying for Paramount Plus because that's obviously a mistake.

They also alert you when you don't have enough cash in the bank. I personally like "Albert," and wrote a review of the app early on because they have a very clever "Smart Save" feature that analyzes your income and bills schedules to save you money to where you won't notice it's gone (not sponsored). Other apps like True Bill also have similar features, and now banks like PNC and Marcus by Goldman Sachs have similar features built into your checking account, no third party required.

Another popular way to save money easily? The 50/30/20 Method. This is a budgeting method that easily separates your expenses into needs, wants and debt payments/savings, and is pretty much fool-proof. For a deeper dive, check out my article on the method.

2. Save $500. That's it. That's all.

If you Google "financial advice," the first thing you'll typically see is labeled "The Emergency Fund." This is a fund that is separate from your main bank account and has money in reserve for, well, emergencies! However, here's where I deviate from the typical advice. Most articles will tell you the very first step in making better financial decisions is to save between 3-6 months of expenses in an emergency fund, prior to doing anything else.

That's fucking insane. Think about it. If you have $4,000 worth of expenses each month (rent/mortgage, food, electricity, car payment, etc), then you have to save $12,000-$24,000 in cash before you can do literally anything else? That's going to take way too long.

I suggest (and did myself) saving $500 first. That's it. This is for a few reasons:

  1. Short-term gratification. You did it. You took your very first step to improving your financial life, and you have something you can look at with pride, right off the bat.

  2. You will sleep 100% better with $500 in a savings account. Trust me. I slept...very poorly when I didn't have a savings account. The stress is intense. The insomnia is very real. The difference $500 makes will honestly surprise you.

Don't just save $500 and close that account, though. That is for emergencies only. 2 Chainz coming to town does not constitute an emergency. Neither does the Nordstrom sale where they discount that Gucci bag you've been looking at. This is for medical bills, car emergencies or house issues. Believe me, I would know. Keep it locked up, but don't forget about it. We'll come back to it later.

3. Start Paying Down That Debt

Millennials have fallen into the credit trap. You go out to lunch, swipe the American Express. You grab a PSL, swipe the card again. You head out for a bar night with the girls and leave the tab open. At the end of the month, you see the huge number on the bill and pass out. If you're a responsible spender, you'll pick yourself up off the floor, pay the bill in full and move to the next month of swipes. If not, and statistically you are not, then welcome to the wonderful world of debt repayment.

Debt repayment is tough, because everyone approaches it a little differently. If you have multiple credit cards, do you try to pay both off at the same time? Do you pay one, then the other? Do you make the minimum payments and hope to marry rich, or that the bank will just forget to collect? Here's what I did:

I had two credit cards in 2019, both with the same bank. I had a "travel rewards" card that gave me points on gas, groceries and travel. I had another "premium" card that gave me things like travel perks and dining credits. Was I using them for those? Nope! I used them for medical bills. I was dealing with a spinal issue at the time, so I was doing twice weekly chiropractic care. I also needed two epidurals and a major surgery that year, eventually resulting in a maxed out insurance and $9,000 in credit card debt. I managed to remove the debt by getting disciplined.

I cut the fat in my monthly budget. This included meals out, luxury items and even shopping at grocery stores specifically on sale days. I was very up front with my loved ones about what I was doing, and they understood. They didn't invite me to things for awhile because they knew I couldn't afford it, and I appreciated them for it. Then, with this extra money each month, I implemented the "Snowball Method." Popularized by Dave Ramsey, this method instructs you to pay down smaller debts first, while making the minimum payments on the larger debt loads.

This gives you that psychological win of killing once source of debt, then moving to the next one, knocking them down one by one. It took time, it took patience and it took willpower, but over the course of 9 months, I was able to pay the amount down while accounting for all of my other expenses. Let me tell you, this was one of the greatest accomplishments in my life to date, and I still think about the weight that was lifted from my shoulders.

4. Give your emergency fund some reinforcements

Remember our buddy The Emergency Fund? It's about to get some reinforcements. Now that you've saved a little cash cushion for some peace of mind and you've conquered your debt (or are at least well on your way), it's now time to save some more. The 3-6 months of expenses in your emergency fund I highlighted above is not bad advice, it's just generally unattainable for someone with debt and $0 in the bank. Now that you no longer fall into those categories, it's time to work towards that 3-6 month number. The most important thing to keep in mind here: this is going to take time. It isn't instant gratification. Saving this number is important, but it'll take awhile. Take a deep breath and be patient. You're well on your way.

5. Let's Get Invested

The other side of this coin is to invest. As the saying goes: the best time to invest was yesterday. The second best time? Right now. That's due to the power of "compounding interest." Compounding interest, as reportedly quipped by Albert Einstein, is the 8th wonder of the world. Essentially, compounding interest means "growth on growth." Theoretically, your invested money grows each year, growing on top of the growth it has already experienced, giving you that compounding effect. To most, this concept sounds dumb. How can growth grow differently than normal growth? Let me explain:

Let's say you're 20 years old, and you want to retire at 65. The S&P 500 index grows at an average of 10% every year, inclusive of dividends. So, using the power of math and a public school education, we see that every $1 you invest at 20 years old will theoretically be worth $72 at age 65. This is because you are giving your money 45 years to grow, taking advantage of the power of compounding interest.

Compounding Interest Chart via
Compounding Interest Chart via

Let's now say that you wait until you're 30 to begin investing. You're now giving your money 10 less years to compound, dramatically decreasing your earning power. That same dollar invested 10 years later? It's now worth $28, down from the nearly $73 had you invested at 20.

So now that you're fully convinced and the term "compounding" is starting to get sexual in nature to you, how do you actually invest? If you're early in your career, you want to look at two different vehicles:

  1. 401k - this is offered through your employer and takes money out of your paycheck automatically. It's also pre-tax contributions, meaning you're getting taxed less just for doing this. Many employers also offer a match, basically giving you free money. Contact your HR department for more information.

  2. A Roth IRA - this is so good it should be illegal. It can be opened through any popular brokerage not named Robinhood, and it is money you contribute post-tax. However, it comes out tax free, meaning when you retire, you don't have to pay taxes on all of that sweet compounding interest.

It doesn't matter how old you are. What matters is that you get invested.

6. Invest In Yourself

This one sounds like hokey bullshit, but it's worth mentioning. This is a key component of being a financially competent person, and it's improving yourself. Never stop learning, improving and making yourself more valuable. You could get certifications in your chosen field, or in a new field to branch into a new career. You could start a side hustle out of your passion (like a blog maybe?) or commit yourself to a post-graduate degree. Too many people get weighed down in the minutiae of everyday life to realize that they can do pretty much anything they want. Apply yourself to learning, reading and growing and your finances are likely to grow right along with you

That's pretty much it! This is really the playbook for getting on the right financial track as a millennial in 2021. Don't forget to have some fun, too. Go on that trip. Start that family. Ask that person out. Finances are not the end all be all of life. Finances are a tool in order to do what you want to do. So follow these steps, get your financial life in order and get out there and enjoy it.


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