Have you ever wondered, how some people save up a crapload of money, while others can’t seem to? We’ll be taking a look at the millennial wealth secrets in this article to figure it out!
Part of the reason Millennials get confused about investing is they don’t read or study the subject.
It is never too early to begin learning and taking steps toward securing your financial future.
Things that you do in your younger years can help set the stage for financial success years down the road. In other words, the sooner you start, the better off you’ll be when the seeds that you plant grow.
Here are some millennial wealth secrets financial advisors think you can use in your younger years to set you up for future financial stability.
Millennial Wealth Secrets #1: Start Saving Your Butt Off
Your nest egg will help you both in the present and in the future. Get in the habit of living slightly beneath your means.
This entails keeping your expenses at least 10 percent below your income so that you can put away money.
You should be funding both a savings account and the beginning of your retirement account.
According to East West Bank, you should make sure that you put money aside every single month that you are able to do so—ideally 15 percent of your income.
While your savings are always available if you have a financial emergency, they should largely be used as a vehicle to start building a cushion as opposed to funding future purchases.
Millennial Wealth Secrets #2: Keep Some Liquid Money Around
Bad investments can put you in the hole by wiping out the money that you have been saving.
It is better to be a little more conservative even if it means that you are leaving some money on the table.
One thing you can do is to keep some of your money in a liquid position. In other words, keep your money where you can get your hands on some of it immediately.
Liquid money is money you can pull out of your bank account, safe, or from under your bed mattress if you have to.
The purpose of investing is to build wealth as opposed to getting rich. It is when you are chasing the outsize returns that you make unwise decisions that shrink your assets instead of building them.
So yeah, put your money into different investment vehicles, but always have some on hand.
Millennial Wealth Secrets #3: Plan for the Worst
When you are young, you sometimes have the feeling that times may be good forever.
Things happen in life, and sometimes, people face the worst circumstances.
Make sure that you have plans to take care of your loved ones. According to Darras Law, you should buy a permanent life insurance policy and a second term life insurance policy to cover dependents.
It is bad enough to face the loss of a loved one without having to worry about making up for the income that they provided.
While some may view insurance as a cost, it is necessary to spend that money even if you never use it.
Millennial Wealth Secrets #4: Debt Free is a Sexy Thought, but…
There are some financial gurus that preach debt-free is the way to be.
However, that is merely a myth.
Even if you pay your home and cars off, you’re still gonna have bills. Cars and homes all have taxes and insurance on them and as far as I can tell, that involves money going out.
So does health care and upkeep on where you’re living.
Having said that, you should still get your bills down as low as you can.
Although it may be unavoidable to go into debt sometimes, this should only occur as a last resort. Granted, as a millennial, you may already be starting off with student loan debt.
Thus, there is no reason to add to what may already be a heavy debt burden.
To the extent that you have debt, Nitro suggests that you try to pay off a little extra every month to cut down on the interest costs that you face. If you can trim an expense to pay off debt, it will help you in the future.
Conclusion
If you follow these 4 millennial wealth secrets, you’ll be well on your way to a brighter financial future.
Being smart with money at a young age not only instills sound habits, but it will also help your financial situation for years to come. Start saving now so you can make sure that your needs are taken care of in the future.
If you have any wealth secrets of your own, we’d love to hear them. Please leave a comment or question below and we’ll try to respond asap.
