When 25-year-old Grace Woodward has friends over to her apartment for the first time, they often react to her striking navy-blue walls by asking, “Did your landlord let you paint?”
Ms. Woodward, a graduate student at Yale Divinity School, says she doesn’t hesitate to tell them that the landlord is her mother. “I’m pretty open with people that my mom owns this and that I don’t pay rent,” says Ms. Woodward, who often goes on to explain that her mother had extra money after the sale of her house in Arlington, Va., in 2017, and was able to pay for the apartment in New Haven, Conn., in cash.
Like many people her age, Ms. Woodward is at ease discussing money with her peers. It’s a generation that some surveys have found is more candid and open about their finances—both the good and the bad—than their parents. For instance, a 2019 survey by CreditCards.com found that 61% of millennials were comfortable discussing credit-card debt with their friends, compared with 43% of baby boomers. And a March report from Swedish fintech company Klarna said a recent global survey found that 50% of millennials believe it is important to talk openly about finances, compared with 41% of older generations.
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The inclination to be financially transparent is an extension of the way young adults conduct the rest of their lives, says David Axelrod, a behavioral economist at Montclair State University in New Jersey. millennials’ comfort with social media means that they are “used to a much faster pace of information moving around,” he says. “They’re going to not filter as much” when talking about money either in person or on social platforms.
That transparency is helping some millennials deal with feelings that they are lagging behind their peers and previous generations financially. It also is providing many of them an education, courtesy of their peers, in how to manage financial situations—from salary negotiations to budgeting, borrowing and saving.
Knowledge is power
Ms. Woodward, who will be starting a stint as a hospital chaplain with a salary of $30,000 later this year, says she tells friends, ‘The only reason I can afford this [job] along with a master’s degree is because I’m not paying rent.” She believes that speaking frankly about her financial situation reduces feelings of competitiveness among her friends.
That kind of less competitive, more collaborative, approach to finances may be an outgrowth of millennials’ shared sense of financial stress, says Elizabeth Schwab, a behavioral economist at the Chicago School of Professional Psychology. “It’s like they’re all in it together,” says Dr. Schwab, who studies the psychology of financial decision-making.
“Having a fairly frank conversation not just about salary but also how you’re making financial choices helps you from feeling like you’re keeping up with the Joneses,” says Sara Swenson, a 39-year-old vice president of product development who lives in San Diego.
Ms. Swenson says that asking co-workers about their compensation packages helped her get a 50% raise after two years in her first salaried job, because she knew the right time to ask for it and how much to ask for. She adds that she often initiates these conversations with female colleagues first, framing her question as “Do you think we’re getting paid fairly?” Broad knowledge of the gender pay gap smooths the way for that question, she adds, along with her willingness to reveal her own salary first.
Bailey Koch, 25, recently left her job at the Minnesota State Senate after having a conversation with her co-workers about their respective salaries. She was part of a three-person team where each person had the same job title when she learned that the most recent hire was making more money than she did.
Ms. Koch initiated the conversation, but says it felt “natural” and that the main point was “we should all make more given how much we are working.” She adds that it gave her “the confidence to go and ask for a raise that I think was well-deserved after two years, and then when it was denied, I ultimately decided to leave because I wasn’t being paid my worth.” She’s now a digital-communications strategist at Service Employees International Union Local 1, based in Chicago.
For 32-year-old Nick Cannariato, a developer and technical support engineer in Fort Worth, Texas, “salary transparency, in particular, is a bit of a moral thing for me.”
Mr. Cannariato says that by letting colleagues know what he makes and what parts of his compensation package he had to negotiate for, he gives them information they can use as leverage in their own negotiations. “I know especially in tech there’s a huge racial and gender pay disparity, and the only way I know to get around that is to just be honest about what I’m making, especially as a white guy.”
Information and perspective
Dr. Axelrod says that watching the effects of the 2008-09 financial crisis, plus being saddled with heavy debt from school, has made millennials particularly keen on educating themselves financially, including learning from their peers.
A friend introduced Mr. Cannariato to the online tool You Need a Budget and walked him through creating his own budget on that platform. And he has open conversations with his friends about his 401(k) contributions and credit-card debt. “Most of my friends right now know that I have a pretty meager savings account,” he says, because he is paying off debt.
Being open about money also has allowed Ms. Swenson to put her friends’ financial lifestyles into context. Some of her friends were buying larger houses and nicer cars before she could afford those things, but by asking them how they could afford their lifestyles, she learned they were living in debt. She’s found that friends are comfortable sharing this information when the conversation is framed around budgeting for shared experiences, like going out to dinner or on vacation together.
Being transparent about finances helps “avoid awkward situations where your friends think you’re richer than you are,” she says, “or you think they are.”
Ms. Narula is a writer in New Hampshire. She can be reached at firstname.lastname@example.org.
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