Save and Invest

These older millennials made it through the Great Recession—here's what they wish they'd known

Twenty/20

You can't time the market, and you can't control the time you enter the job market. Those are just a few of the hard lessons Nick Walstra learned nearly 10 years ago as he looked for work in the aftermath of the Great Recession.

The 37-year-old is currently an attorney for the state of Ohio, and feels stable in his career. Working for the government, however, was not what he had in mind when he entered law school in 2007. Previously a social worker, Walstra hoped a JD would secure him a "recession proof" law job in the private sector.

It wasn't until he graduated in 2010, when the unemployment rate sat at 9.6%, that he realized no field was immune from the financial crisis' devastation. If he wanted a job at all — never mind in law — he was going to have to make some concessions. Firms were laying off thousands of lawyers at the worst points of the recession: Over 40,000 legal profession jobs were lost between December 2007 and October 2009, according to the UCLA Law Review, and over 14,000 people were laid off between January 1, 2008, and January 31, 2010 by the major law firms alone, according to a report from the Fordham Law Review.

"I was looking for anything," Walstra tells CNBC Make It. "I was doing temp work at first, and not as an attorney. Then I worked for a nonprofit. Finally, I cold-called an ex's father who worked in the industry and eventually got a job with the government."

In the eight months between graduation and finally landing a full-time gig, Walstra says he fought back fears that he'd never work in law at all. But the big firms were not hiring like they had pre-recession, fueling "scary" thoughts of long-term unemployment for someone who would soon have to start making payments on $80,000 in law school student loan debt.

I was unemployed for a month and took whatever job I was offered. I don’t think I thought about it before taking it.
Emily Ku

Emily Ku graduated from college in 2007, and echoes Walstra's feelings of uncertainty and stress in the wake of the financial crisis. Though she studied public relations, she took a job at a consumer goods company in West Los Angeles making $35,000. It was her first offer, and she, too, was so spooked by the daily headlines spelling "gloom and doom" for the economy that she was happy to have a job at all, even if it was an hour-and-a-half drive on a good day from the house she co-owned with her brother in Pasadena, California.

"I was unemployed for a month and took whatever job I was offered," Ku tells CNBC Make It. "I don't think I thought about it before taking it."

On top of the stressful commute, Ku says she was given tasks well outside of the scope of her job, like making lunch for her boss's child. But with most of her friends facing prolonged periods of unemployment, she felt that she had no right to hope for a more fulfilling 9-to-5.

"It's hard to complain about my coworkers and boss when friends were like, 'I would love to have a job that I hate,'" she says.

At least she was working.

Lagging behind

Ku and Walstra are part of a group of older millennials who left school and entered a perfect storm. Sky-high unemployment, stagnant wages and steadily increasing student loan debt all combined with feelings of fear and uncertainty to create what the Federal Reserve of St. Louis deemed a "Lost Generation" of Americans, born during the 1980s. These millennials have accumulated less wealth than previous generations at their age, thanks, in part, to the recession and increased indebtedness, and are rebuilding more slowly, per the Fed's report.

That isn't necessarily true for younger millennials, currently in their mid to late 20s, who might have been in middle school or high school when the recession hit and entered the job market when the economy was on the upswing.

While Lowell R. Ricketts, the lead analyst for the St. Louis Fed's Center for Household Financial Stability, tells CNBC Make It that it's too early to draw generalized conclusions on the younger group, people born in the 1980s were dealt a particularly difficult hand.

"They do stand out as having the weakest wealth accumulation relative to expectations," says Ricketts, compared to people born in earlier decades.

Walstra, for one, is still feeling the effects of the recession on his career and finances, 10 years later.

"I think it stunted what I wanted to do," he says. "I was hoping to pay off law school debts right away and get into investing. Instead, I was just treading water."

The constant influx of bad economic news put him off of investing, which seemed too risky then. The median household's net worth dropped by 40% between 2007 and 2013, according to the Fed, thanks in large part to the drop in the stock market. Instead, Walstra focused on shoring up his emergency savings so that he'd have cash on hand for anything that cropped up. It seemed like the safer bet at the time, though in retrospect he's not sure it was the smarter move.

"I wish I started investing earlier, had I known everything was going to be alright," he says.

I was hoping to pay off law school debts right away and get into investing. Instead, I was just treading water.
Nick Walstra

Walstra wasn't alone. Millennials in general have taken a more conservative approach to their finances than their parents' or grandparents' generations, according to a 2017 report from Merrill Edge, partly because of their experience in the recession and its aftermath.

But sitting on the sidelines of the stock market meant missing out on one of the strongest bull markets on record. The S&P 500 has more than quadrupled in value since March 2009, when it bottomed out, delivering a 10-year annualized total return of 17.8%, according to CNBC. A $1,000 investment in the S&P 10 years ago would be worth over $4,300 now.

Walstra encourages young people now to embrace investing so that they don't miss out on compounding returns, even if they're worried another recession is imminent. This is in line with what financial experts advise for young people who likely have decades before retirement to build wealth. "I would be investing for the long term, and hopefully my investments would be outlasting any temporary drops," he says.

Ricketts also says there is hope in the data. "There are many more years ahead of millennials to accumulate wealth, and compound interest is a powerful force indeed," he says, if they take advantage of it.

Ku, too, says entering the workforce during the Great Recession, when jobs were scarce, made her more practical, because the "cash flow might go at any time."

"If I had gotten my first job when there wasn't a recession, and I didn't have to worry about whether I would get another job, maybe I would have been more wasteful," she says.

She adds that looking back, she also wishes she had negotiated her starting salary, regardless of what was going on with the economy. At the time she landed the job, though, she was just happy to receive an offer. She encourages young people entering the workforce to research their field and position before accepting any offer, and ask a trusted source for negotiation tips.

"Going forward, I would ask for more, especially if I knew a recession was coming so that I could lock it in," she says.

The path ahead

Walstra says he's stuck in "an in-between place." He likes his job but feels locked in. The big firms weren't hiring when he graduated, so he doesn't have the corporate experience expected of someone his age now. Transitioning from the public to private sector, which typically offers higher salaries, is no easy feat.

At the same time, he's hoping to qualify for the Public Service Loan Forgiveness program to knock out the remainder of his student loans in a few years. That will keep him working for the government for the foreseeable future, at a lower salary level than younger people who entered the job market at a more favorable time. "If I graduated now, I would have ended up on a different track," he says.

Still, it's not a sad story. He owns his home, is more "investment literate" and enjoys his work. Now that he's making a bit more money, he's content. "I'm pretty satisfied with the way things ended up, now that I am practicing law," he says.

There are things she would have done differently, but Ku is in a good place, now, too. Though she was eventually laid off from her first job after three and a half years and given two months severance — her one-time worst-case scenario — she now says it was a blessing.

Spurred by her unhappy job situation and the general economic uncertainty, she decided to pursue a Master's Degree in Education, spacing the classes out while working full time so as not to accrue any debt during the recession, and she says that enabled her to find a new job quickly. Now 34, she's a project manager for the California Society of CPAs, a role she enjoys.

She encourages young people to be thoughtful about their money and salaries regardless of what's going on with the economy. And to save, save, save.

"Save as much as you can," she says. "I don't think you'll ever regret saving, because you never know what's going to happen."

Don't miss: How to recession-proof your life, according to the author of 'I Will Teach You to be Rich'

Like this story? Subscribe to CNBC Make It on YouTube!

VIDEO1:0701:07
A 36-year-old who learned to invest like Warren Buffett explains how saving can actually cost you money
Twenty/20
make it

Stay in the loop

Sign Up

About Us

Learn More

Follow Us

CNBC.COM