If you’re Gen Z or Millennial and Want to be Rich Someday, Here’s What You Need to Do
Multiple studies have shown that millennials/Gen Zs are “dramatically worse off financially” than older generations were at their age. According to a recent study released by Deloitte, comparing 2007 to 2017, millennials are spending 16 percent more on housing, 26 percent more on food costs, 21 percent more on healthcare costs, and 65 percent more on education. The struggle is real, but does that mean financial independence is unobtainable for our generation?
Although the statistics may be true, millennials need to understand that what they have is TIME on their side. Investing is not just for older folks or the upper class. Starting early is key to financial success. Be mindful of these tips and remember that good habits will regularly beat good luck, especially over the long run:
Step 1: Learn to save: You can do it if you make it a priority. Take a look at your spending and evaluate what’s important to you. Can you cut out a few of those items? Some of the easier things to scale back on might be overpriced beverages, weekly nail or spa appointments or excessive restaurant eating.
Step 2: Use your new savings to pay down debt: Interest payments will make it so that you are paying way more in the end for an item than its initial purchase price. So, don’t give away your money; pay down your debts so you can focus on getting your money to work for you instead.
Step 3: Start saving for retirement (it’s never too early): If your employer offers a workplace retirement plan, it’s time to consider enrolling. It’s an easy way to save; amounts get automatically contributed from your paycheck so you don’t have to think twice about it (and you don’t get a chance to spend the money first). If your employer offers a match, that’s free money that you’re possibly leaving on the table. No workplace plan? No excuse. Open a retirement account at any brokerage firm or bank (you can even do it online). From there you can set up recurring payments to fund the account automatically.
Step 4: Arm yourself with knowledge: If it’s anything millennials know how to do, it’s “Google”. There are so many free resources out there (thanks Youtube!). All you need to do is spend a few hours brushing up on some investing basics and you will already be ahead of the game. In addition, most financial institutions offer free consultations or have free content on their websites from which you can stand to learn.
Step 5: Seek professional advice: When you’ve built up your nest egg, it’s time to talk to the professionals. They will focus on customizing your portfolio so that the allocation is efficiently built for your long-term goals. That leaves time for you to focus on enjoying the things that money can’t buy — like your relationships.
Remember, we have time on our side. The key is to save handsomely, invest early and for as long as possible. Live below your means and try not to fall into the rat race of earning more and spending more. If you want to manage $100,000 or $1 million someday, first you need to learn to manage $1,000.
Start the conversation today with a team of seasoned professionals to determine which strategies and vehicles could be used to achieve your goals. We at Coral Gables Trust Company look forward to leading you on the path to living your best financial life.