Business

Book Summary: Broke Millennial Takes on Investing By Erin Lowry

Finology

Created on 10 Oct 2025

Wraps up in 14 Min

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Most millennials are broke because they’re lazy and prioritise the wrong things. But what if I told you there’s more to it than just blame? That behind the habits, the distractions, and the paycheck-to-paycheck grind, there’s a system and a mindset that’s quietly holding them back from financial growth?

Let’s dig into this idea through the lens of Erin Lowry’s book, Broke Millennial Takes on Investing. We’ll be breaking it down into five key sections to stop being a broke millennial, straight from the book. They are:

Laying a financial foundation,
Figuring out what to do before you start investing,
Handling market ups and downs without panic,
Tools and strategies to grow wealth efficiently, and lastly
Protecting your money from mistakes and scams.

So, let’s start at the beginning!

(BTW, we've recorded this entire article as a podcast too! You can listen to it on Spotify and Apple Podcasts!)

Section 1: Laying a Financial Foundation

Most people ignore the fact that before you even think about stocks, mutual funds, or crypto, your financial system needs to be in order. Otherwise, any investment is just a roll of the dice. Erin Lowry uses a great analogy in the book: it’s like an oxygen mask on a plane. You’ve got to put your own mask on first before helping anyone else. Meaning, you must have clarity on your goals, your cash flow, your debts, and your safety nets, so that when you do invest, you’re doing it from a place of strength.

Once you’ve got your own financial mask on, you’re ready to earn what Lowry calls your ‘right to invest.’ And the book even gives a clear 7-step checklist to show exactly how to claim it. Here it goes:

Step 1: Set Your Financial Goals

You need clear targets. Short-term, medium-term, long-term; know exactly how much money you’ll need and when. Quick tip: Anything you need in four years or less should not be invested. Keep that money safe.

Step 2: Manage Your Cash Flow

This is just knowing what’s coming in and what’s going out. It sounds simple, but if you’re still scraping by, investing isn’t going to help. Control your cash flow first, and the rest will follow.

Step 3: Build Your Cash Reserves

An emergency fund isn’t optional; it’s critical. Save 3-6 months of basic living expenses, plus any money you’ll need for planned purchases in the next six months. Keep it safe, liquid, and ready to use.

Step 4: Kill High-Interest Debt

Credit cards, payday loans, and title loans, pay these off before investing. The interest on these debts often outpaces market returns. You’d be literally throwing money away if you invest first with this kind of debt.

Step 5: Handle Student Loans Wisely

Student loans are a bit different. You can sometimes invest and pay them off at the same time, but it depends on the interest rate:

If it’s below 5%, investing might actually outperform your loan cost.
And if it’s above 7%, then focus on repayment first.

And no matter what, never skip your employer-matched retirement plan. That’s free money, guaranteed growth, and a perk you can’t afford to miss.

Step 6: Learn About Investing

Before putting any money in the market, take some time to understand how it works. The more you know, the less you’re flying blind.

Step 7: Start Saving for Retirement

Begin with employer-matched retirement plans. Even if you haven’t nailed every other step yet, this is a safe, high-return step you shouldn’t skip.

Now, apart from these 7 steps, Lowry emphasises emotional readiness as part of the foundation. Money is deeply tied to how you feel about it. If debt, expenses, or financial uncertainty keep you up at night, it’s okay to pause and focus on getting emotionally comfortable with your finances first. The goal is to step into investing without stress or fear clouding your decisions.

Alright, now that we’ve got your financial foundation sorted, it’s time to get comfortable with the world of investing itself. This part is all about learning the language and mechanics that make the market less intimidating.

Section 2. Figuring out what to do before you start investing

Imagine stepping into a brand-new city. You can’t just wander around; you need to know the streets, the signs, the rules, and the shortcuts before you can get anywhere with confidence.

That’s exactly how Erin describes investing. She brings up her high school math teacher, Mr Fugami, who made algebra feel like a maze at first, but once you understood the language and the patterns, everything started making sense. Investing works the same way: learn the vocabulary, understand the mechanics, and only then does the whole market feel navigable instead of intimidating.

So, start with the basics. The book calls it Establishing a Common Language. This is about getting familiar with the ideas and concepts. Think about things like how money grows over time, what different types of investments do, and the idea of balancing risk with your goals. The rule is, if you can explain an investing concept to a 10-year-old, you’re sorted.

Once you’ve got the language down, the next step is knowing how to actually start investing. The book walks us through what you need before opening a brokerage account and putting money to work. First, you need some personal info ready: ID, tax details, bank info, and a sense of your financial picture: income, net worth, and what you’re aiming for.

Then come the choices:

First, decide the type of account you need. Are you saving for retirement, a short-term goal, or something else? Your choice will shape how you invest and what rules apply.
Next, figure out how much to put in initially. Check the minimum requirements for the account and pick an amount you feel comfortable with. Don’t overcommit; start where you are and build from there.
Then, choose between a cash account and a margin account. Beginners should stick with cash accounts; they’re simple, straightforward, and you avoid borrowing money to invest, which can get risky fast.
After that, think about dividends. You can either take them as cash or automatically reinvest them. Not to mention, reinvesting can help your portfolio grow faster over time, thanks to compounding.
Next, pick your beneficiaries, the person who gets your investments if something unexpected happens. It’s a small step that saves a lot of headaches later.

Now comes the part most people overlook: selecting a brokerage. Erin recommends treating it like choosing a partner; you want reliability, transparency, and someone who works in your best interest. Look at service type, minimum balances, reputation, and ease of use for apps or websites. Make sure they follow the fiduciary standard, meaning they’re legally obligated to put your interests first.

Finally, think about fees. Every fund has an expense ratio. This is the annual cost to you as an investor. Lower is better. Also check for other fees, like transaction costs, commissions, or account service fees. These little costs can add up and quietly shrink your returns over time.

By the time you’ve ticked off these steps, you’ve earned the right to invest. You’ve learned the language, figured out the rules, and set up a system where your money actually has a chance to grow.

And then, it’s time to move from knowing the concepts to knowing what to do with your money.

Section 3. Master Risk, Emotions, and Strategy

The third part of Broke Millennial is all about the emotional side of investing. Erin Lowry points out that your feelings can be your biggest risk. The goal here is to understand risk, stick to a strategy, and know when to act or when to stay put.

Let’s break that down, strategy-wise:

Strategy 1. Facing Risk Without Panicking

Markets go up and down. That’s just how it works. The tricky part? Your brain hates losses more than it enjoys gains. That’s why even small drops can make you feel like the sky is falling.

Think about this: you’re staring at your portfolio during a market dip, and your stomach knots. That panic? That’s your biggest enemy. Erin explains that many investors, especially those naturally risk-averse, freeze up or sell when prices drop. But the key is realising that you don’t actually lose money until you sell. Holding on through the rough patches can turn temporary fear into long-term gains.

Here’s a practical way to handle it. The book calls this “grabbing the bull by the horns”. First, focus on asset allocation and diversification. Imagine your portfolio as a basket of eggs. You don’t want all of them in one basket or even in one type of basket. Split your money across stocks, bonds, and cash. Within stocks, spread it across companies and sectors. That way, if one investment falls, your whole portfolio isn’t tanking. Fund houses do this for a reason; it works.

Strategy 2. Protect yourself from yourself.

This is where most rookie mistakes happen. Don’t check your portfolio daily; it’s like staring at a rollercoaster and thinking you can control it. Keep your investment accounts separate from your everyday bank account. Build a cash emergency fund so you never have to raid your investments when life throws curveballs. Give accounts goal-oriented names, like “Retirement 2050” or “Dream Trip 2026,” so the money feels purpose-driven and less like cash you can touch. Automate contributions; it forces discipline and takes advantage of dollar-cost averaging, smoothing out highs and lows in the market without you thinking about it.

Strategy 3. Beware while stock picking.

It’s tempting. You see headlines about the “next big thing” and want a piece of the action. But this is high-risk territory. Erin shares that this money, which you want to use on stocks, should be a “play money” bucket. Meaning, you can afford to lose it. Do your homework: study the company, understand its business, and avoid hype or social media tips. Fractional shares make it easier to start small, investing in companies you know without risking a fortune. And if you want practice, there are virtual accounts where you can experiment with fake money before committing real cash.

Strategy 4. Think long term

Market crashes are another stress test. They’re unavoidable. But if you have a plan, you can ride them out. Long-term investors, especially those with decades until retirement, can even see downturns as opportunities to buy more at lower prices. Ignore dramatic headlines. If panic sets in, talk to a mentor or advisor before acting.

And here’s where Erin’s story of Jake and Stacey drives the point home. Jake starts investing right out of college, just a few hundred bucks every month. Stacey waits a full decade before she starts, but then she doubles Jake’s monthly contribution. You’d think Stacey would catch up quickly, right? Not even close. By the time they both hit retirement age, Jake, who started earlier with smaller amounts, has a significantly larger portfolio than Stacey. The difference isn’t luck or picking better stocks. It’s just time. Compounding rewards those who start sooner, even if they start small.

That’s the emotional payoff of all this: once you understand how time and discipline work in your favour, you don’t feel the urge to panic-sell, or chase fads, or constantly second-guess yourself. You realise the real game is staying invested, not beating the market on a day-to-day basis.

Strategy 5. Sell strategically

Selling isn’t just about reacting to fear. You might sell because your goals have changed, your risk tolerance has shifted, or to rebalance your portfolio. Taxes and fees matter too. Knowing how and when to sell is just as important as knowing how to buy, and planning this ahead prevents emotional mistakes.

So that’s the groundwork Erin sets: learning how your emotions play into risk, building steady habits, and letting time quietly do its magic. But more often than not, when people feel ready to actually start investing, many of them jump straight to what feels most exciting, picking individual stocks. It’s like skipping the driving lessons and heading straight for the highway. In the next section, Erin talks about why that can be tricky for beginners, and what approach might actually set you up for a steadier start.

Section 4. Tools and Strategies to Grow Wealth Efficiently

Erin calls this part making your money work for you. In other words, once you’ve set the foundation, what tools and strategies can you actually use to grow wealth in a way that’s practical and efficient?

Let’s start with what’s most relatable for beginners:

Investing with Apps

Technology has made investing more accessible than ever. You don’t need a huge sum or a broker on speed dial. Today, many apps let you start small, sometimes with just a few hundred bucks. The key isn’t the app itself, but what it helps you do.

Erin emphasises that a good investing app should:

Make it simple to start: You should be able to set up an account quickly and understand how to invest your first amount.
It should encourage consistency: Look for features that automate contributions, like setting up a recurring investment each month. This helps you stay disciplined and leverage dollar-cost averaging.
It must offer diversification options: Even if you’re starting small, your money should be spread across different investment types: stocks, bonds, or funds, so you’re not putting all your eggs in one basket.
It has to be transparent with fees: Even tiny monthly fees can eat into your returns if your investments are small. So, make sure the app clearly shows its charges and any underlying fund costs.
And it should provide educational support: The app should help you understand what you’re investing in, so you don’t blindly follow recommendations.

Now let’s move up a level.

Robo-Advisors vs Human Advisors

Once you’re putting in a little more, the question becomes: who should manage your money?

That’s where robo-advisors come in. They’re like digital money managers. They use algorithms to do the work: balancing your portfolio, making sure you’re not taking on too much risk, and even handling things like tax-loss harvesting.

The upside is obvious: it’s cheaper, automatic, and it removes the emotional temptation to sell when the market dips. The downside? You’re still paying a management fee, and your customisation options are limited unless you have serious money in the account.

So, when do you go for a human advisor? Erin suggests it’s when life gets complicated, maybe you’re running a side business, dealing with messy taxes, or thinking about buying a home. But the key is to make sure they’re a fiduciary, meaning they’re legally obligated to act in your best interest.

Now, another big theme the book touches on is:

Impact Investing and Ethics

This bit is about making money in a way that aligns with what you believe in. This is where impact investing and socially responsible investing come in. You might put your money in companies that focus on clean water, climate change solutions, or fair labour practices. Some people follow religious screens, like halal investing, which avoids companies tied to alcohol, gambling, or pork products.

Now, some people worry that this limits their returns. But the data actually shows that many socially responsible funds perform just as well, and sometimes even better, than traditional ones. The catch? The fees are often a little higher, and since you’re limiting where you invest, you might not be as diversified. Still, for a lot of investors, knowing their money is aligned with their values makes that trade-off worth it.

Finally, Erin gives us a peek into how wealthy people think about money. And honestly, it’s less about flashy moves and more about discipline.

Tactics of the Wealthy

Most of the self-made wealthy didn’t get rich overnight. They saved early and consistently. They treated money with patience, choosing industries and careers with growth potential instead of chasing the quick win. And when it came to investing, they leaned on the same strategies you and I can: diversification, rebalancing, and letting compounding do its thing.

But there are some advanced moves too. For example, the ultra-wealthy focus a lot on taxes, using structures like trusts to pass on money tax-free. They also define enough. That means they calculate the exact number they need to be financially independent, instead of endlessly chasing more. It’s a surprisingly grounding approach.

At this point, Erin reminds us that investing isn’t magic; it’s consistent, informed action, and getting this part forms the base of your financial growth.

Moving on… the next step is to think like an investor when approaching your decisions.

Section 5. Protecting Your Money from Mistakes and Scams

Erin emphasises that investing is a lifelong learning process. You need to stay sharp to spot scams, avoid costly mistakes, and stay disciplined even when the market tries to rattle you.
Let’s start with the basics: spotting scams and sketchy advice.

If something feels off, it probably is. If you can’t clearly explain what you’re buying, or if your gut tells you “something’s weird”, walk away. Fast money schemes, flashy tips promising huge returns, and products you don’t understand are usually traps. Even well-regulated institutions offer investments that aren’t right for everyone, from risky emerging markets to cryptocurrencies. The key is knowing your financial and emotional comfort zone.

Another rule Erin highlights is: buy what you know. Stick to companies and products you understand. And never ignore unanswered questions; if the answers you get are fuzzy, that’s a red flag.

Next, vetting financial advisors and products is crucial. Some professionals might push investments that are profitable for them but not in your best interest. Watch out for products that often cause trouble: actively managed funds that rarely beat the market, whole-life insurance for most investors, and costly annuities with hidden fees.

Now, even with the right precautions, investing requires ongoing learning. The internet is full of advice, but not all of it is trustworthy. Erin suggests building a mix of reliable resources.

Technical sites like Morningstar and Investopedia are great for getting accurate, detailed information. Media outlets such as Bloomberg, The Wall Street Journal, and MarketWatch help you stay informed and understand market trends. Podcasts can be a convenient way to learn on the go; some notable options include Afford Anything, Better Off, The Investor's Podcast, and Unchained.

Books are also essential. Classics like The Intelligent Investor offer timeless lessons, while beginner-friendly guides like The Simple Path to Wealth make investing concepts easy to grasp. Many brokerage portals and apps include educational guides, calculators, and checklists to help you make informed decisions. You can also explore crowdsourced platforms like Reddit or personal finance blogs for ideas, but always double-check what you find against credible sources.

Now, remember, investing isn’t a “set it and forget it” system. Risk is always part of the game. For someone who is entirely risk-averse, the only alternative is saving far more money to reach the same goals, because investing allows your money to do some growing on its own.

So, start early, set goals, stay consistent, and adjust your investments as life changes. Over time, this disciplined approach can help you achieve financial independence and potentially build a net worth of a million, or even several million dollars. The key is action: break down your investing goals into small, manageable, consistent steps and keep learning along the way.

Conclusion:

Alright, let’s bring it together. Here are the top 10 things to remember from Erin Lowry’s “Broke Millennial: Takes on Investing”:

Learn the basics first: Get comfortable with investing terms and ideas. If you can explain them to a 10-year-old, you’ve got it.
Start as early as possible: Time is your ally. Even small, consistent investments grow significantly thanks to compound interest.
Set clear goals: Know why you’re investing: retirement, buying a home, or building a safety net. Goals guide your strategy.
Understand your risk tolerance: Figure out how much loss you can handle without panicking, and match it to your investments.
Build a balanced portfolio: Use asset allocation and diversification to spread risk and reduce the impact of market swings.
Stick to your strategy: Markets go up and down. Avoid impulsive decisions and trust the plan you set for yourself.
Use the right tools: Choose apps, robo-advisors, or human advisors that fit your goals, automate where possible, and support disciplined investing.
Watch out for scams: Always question investments that seem too good to be true, and verify financial advisors before trusting them with your money.
Keep learning: Follow credible resources, podcasts, books, and websites to continuously grow your understanding. Investing is a lifelong journey.
Act consistently: Make contributions regularly, review when necessary, rebalance your portfolio, and take small steps that move you toward financial independence.