Young adults and millennials are getting a pretty bad rap financially. Many media outlets and news sites brand this generation as lazy freeloaders with useless degrees. Generalizations can be misleading, though. After all, entry level positions are hard to come by, and those that pay well are even rarer, regardless of a college degree. If you add in sky-high student loan debts, earning money and building wealth becomes even more of a challenge for millennials.
However, it is still very possible to start building wealth while young. By creating a plan and sticking to it, millennials can one day prove all the naysayers wrong and walk away wealthy.
Add More to Retirement Contributions
When it comes to building wealth, millennials have a great advantage that many older generations don’t. Time. Compound interest goes hand-in-hand with future wealth. By steadily increasing the amount you contribute to your retirement savings account, you’re working with time to generate money in the long run. Try increasing your contribution by 1% each year until they’re maxed out.
Be Responsible with Raises and Windfalls
As your career progresses, you’ll start to see an increased income. It can be tempting to take advantage of this money and enhance your lifestyle, but doing so can seriously eat away at your future wealth if you’re not careful. To achieve a balance between enjoying the money you’re earning and creating future wealth, adopt a 50/50 strategy for money earned. For example, if you get a raise, half goes to something of your choosing, and half goes to your retirement fund.
Pay Down Debt and Don’t Add More
The current average credit card APR is over 17%; some cards even charge 24.99% or more. So, what do you do if you have a credit card with a high rate? Pay it off right away. Doing so will save you a ton of money and interest. Once paid off, try not to create more debt unless you’re using it as leverage for future wealth.
It may seem like the world is working against millennials, but if you find yourself in this generation know that there’s still hope financially. Learning about your money, your spending and saving habits, and living below your means for a while will help you create wealth for your future.
Chris Jacob is a Registered Representative with Saxony Securities, Inc.. Securities offered through Saxony Securities Inc. (SSI). Member FINRA, SIPC. Non-security products and services or tax services are not offered through SSI. Cadeau is not affiliated with SSI.