Millennials and the One-Pocket Mindset

Millennials don’t always get a fair shake. From being dubbed the “everyone gets a trophy” generation to entering the job market during The Great Recession, the so-called “Boomerang Generation” is constantly misunderstood.

From a financial perspective, let’s first think about when this group entered “financial adulthood.” Gen Y held relatively new positions in the labor market as hopeful individuals with a college education and a lot of student debt. Then came 2008. This economic crisis was met with static wages and staggering unemployment – a hurdle that baby boomers, for the most part, didn’t experience during such a formative time in their lives. These millennials also watched their parents lose savings and retirement plans seemingly overnight. Because they were catapulted into this ongoing financial crisis, many millennials developed a rational skepticism (even fear) of investing and the stock market. According to an Ally Financial survey, almost 70 percent of millennials say they’re fearful of, and intimidated by, the stock market.

So, this group is made to question the traditional knowledge that served as a compass for decisions around how, when and where we spend our money. As a result, they look for a new compass: their value system.

Embracing a values-driven life

As millennials navigated the wild world of investing, they began shifting the conversation by actively seeking an alternative approach to financial returns – viewing money as more than simply just a resource. Bringing back into the conversation terms like ‘impact investing’ and ‘socially responsible investing,’ this generation re-ignited a values-driven approach to money.

Socially responsible investing may not be new, but it typically gets pushed to the back burner as a “nice to have” not a “must-have.” But now, with 69 percent of millennials caring more about the impact and value of their investments than their financial returns, it’s time we stop seeing this as a hot trend, but more as a paradigm shift.

For several decades, investors have been primarily focused on capital that drives the global economy and keeps assets and philanthropic efforts separate. But from this paradigm shift has emerged a one-pocket mindset, combining philanthropic and investment decisions with a need to avoid compromises on one’s core values. Millennials are among those leading this evolution adopting this mindset and pushing their values into their investment strategies.

Gen Y investors seek to engage with companies who promote social, environmental, and economic sustainability while expanding equal access and opportunity. They pursue investments that allow them the ability to derive acceptable financial returns alongside social returns.

Susan Jensch, a Minneapolis-based wealth management advisor that also happens to be a millennial, highlighted this values-driven, impact-minded viewpoint in an interview with Marketwatch.com. “Millennials feel like this is a tangible thing they can do to create change because money speaks volumes,” said Jensch.

Keep both eyes and one pocket open

Information is everywhere. We spend more than two hours a day on social media and are inundated with constant updates from a fast moving 24-hour news cycle. We have more visibility than ever into the effects, both positive and negative, of corporate and governmental policies and actions. And millennials are asking more questions, demanding more accountability.

This visibility into the fuller picture is empowering the one-pocket mindset. We are able to find important information that previously was either hard to come by, or obscured entirely. We’re able to analyze information about our investments against our value system to smoke out incongruence.

Gone are the days of turning a blind eye to shady corporate activities. But going even further, here are the days of seeking out the good actors. The opportunity is enormous for entrepreneurs, startups and corporations that understand how values influence today’s millennial investors. And it’s just the beginning. As more and more individuals adopt a one-pocket mindset, a systemic change will spread throughout our communities and financial infrastructure.

Remember – capital is, and has always been, a tool. The question that millennial investors are passionately bringing to the conversation is, “How can capital be a tool for good?”