Inflation has driven the cost of U.S. goods and services up 23% since early 2020, according to the Bureau of Labor Statistics.
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Millennials have felt that pinch all too much. In their prime family-rearing years, millennials have struggled to balance their careers with finding a mate, buying a first home, raising young children and often caring for aging parents.
So how have they shielded their finances from inflation, in the midst of all that?
Better Budgeting Fundamentals
A decade ago, many felt that millennials came off as petulant children, insulted by the notion that they should budget and invest rather than indulging in every avocado toast or pumpkin spice latte that struck their fancy.
Whether or not that was true, they’ve grown up quite a bit since then. They’ve had to.
“Millennials have become more intentional about their budgets,” said Jordan Mangaliman, owner of Goldline Financial Services. “They’ve learned how to cut discretionary expenses when necessary.”
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More Caution With Credit Card Debt
Credit cards can mask the effects of inflation — until the bill comes due.
Emilia White of financial planning service Armstrong, Fleming & Moore pointed out that millennials have learned that lesson, often the hard way. “Loose spending habits on the back of hot inflation and high-interest credit creates an ever-deepening hole that some borrowers will struggle to escape even after inflation has calmed.”
While millennials still carry a high average credit card balance of $6,642, they owe lower balances than Gen Xers and baby boomers, according to a study by Experian.
Homeownership and House Hacking
Millennials have seen firsthand how owning a home helps hedge against inflation, as rents and home prices alike soared after the COVID-19 pandemic.
Indeed, millennials make up the largest portion of homebuyers in the market, according to National Association of Realtors.
“Sure, taxes and insurance will still go up,” said Kevin Leibowitz of Grayton Mortgage. “But the largest portion of your housing costs stay locked despite inflation, if you borrow a fixed-rate mortgage.”
In fact, financial expert Lucas Barcelo has seen many millennials get scrappy to buy homes even in an expensive housing market. “They make it work, even if it means getting creative with house hacking or renting out rooms or units on Airbnb.”
Investing in Real Estate
Seeing just how inflation-resilient real estate is, some millennials have gone beyond their own homes and added it to their investment portfolios.
“Many millennials have turned to real estate investments that pay them cash flow,” said Mangaliman. “Real estate appreciation, paired with the rising cost of rent, has proven itself as a way to outpace inflation.”
Sometimes that means buying rental properties directly. Other millennials have discovered passive real estate investments, such as REITs and real estate syndications — which don’t come with all the headaches of landlording.
Investing in Stocks
Erika Kullberg, the personal finance expert behind Erika.com, picked up that thread: “Millennials are leaning into assets that typically outpace inflation, such as stocks and real estate. In particular, they like index funds and dividend stocks for long-term planning.”
Sure enough, millennials have outpaced other generations in buying up index funds. A survey by FTSE Russell found that 45% of millennials own these passive stock funds, compared with 42% of Gen Xers and 34% of baby boomers.
Multiple Income Streams
Budgeting helps, but you can also approach the problem from the other direction: by earning more money.
“We have seen the biggest rise in side hustles among millennials,” said Barcelo. “They’re less about grinding 24/7 and more about finding fun ways to make extra money without burning out.”
That helps when prices rise faster than your W-2 paycheck.
Ultimately, millennials have simply found ways to make it all work. They combine these strategies to stay afloat, even when the floodwaters of inflation and economic uncertainty rise.
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This article originally appeared on GOBankingRates.com: 6 Strategies Millennials Are Using in 2025 To Shield Their Wallets From Inflation
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
