Rich Gen Y-ers see money as path to career freedom

When Josh McFarland graduated from Stanford he owed $40,000 in student loans and couldn't fathom a way he'd ever pay it off and have a future for himself -- not unusual for the typical young adult these days.

Then he went to work for Google.

As a product manager, he got stock options and cashed them in over the five years he worked there. He married a fellow Google employee, so she had stock too. Then she moved on to Yelp, and he quit to launch TellApart, which provides technology solutions for e-commerce sites.

Now 33, McFarland has a 3-year-old and a newborn and no longer has to think about his student loan: His company has $17.75 million in venture-capital investment. While he doesn't consider himself retire-now rich, his piece of the company affords him what he calls "breathing room" and what other people might call wealth.

McFarland is on the starting end of Generation Y, the cohort born in the United States after 1980 that is typically portrayed as saddled with massive student debt, underemployed and underpaid. More than a third of the 80 million so-called millennials live with their parents, according to the Pew Research Group.

But McFarland is part of the sizable minority doing quite well: Nearly 12 million Gen Y-ers live in households that make more than $100,000, according to the Ipsos MediaCT's Mendelsohn Affluent Survey. Many of them, in technology fields, live frugal work-based lifestyles and are not saddled with the six-digit student debt held by doctors and lawyers.

Raised on the Internet and disheartened by having watched the older generations suffer through the tech bubble of 2000 and the recession of 2008, these young adults are viewing their quickly accumulating wealth differently.

They do not seem as interested in the trappings of wealth. "Where I grew up, if you had money, you spent it on toys -- all-terrain vehicles, McMansion, and all this stuff," says McFarland. He doesn't think his peers have the same appetite, and says his biggest splurge currently is a night nanny to help with the new baby.

Where the wealthy young are spending their cash is on experiences: food, wine, travel.

Nor are they concerned about stuffing traditional retirement accounts. They see money as a path to career freedom, where they can pick up and start again at will as soon as a more interesting offer comes along. Increasingly they turn to Web-based wealth management firms or choose do-it-yourself brokerage accounts. "The whole idea from the '80s -- that you'd make some money and use that money to make more money -- this current generation isn't looking at money that way," says Adam Nash, chief operating officer at Wealthfront, an online investing broker that has amassed $300 million in assets under management by catering to a demographic that is comfortable doing most of their business online.

"The typical software engineer isn't dreaming of the day he can quit the rat race," Nash said. "They use their money instead to gain a little bit of control over what they work on and what they do."