Learn how starting early, setting goals, and sticking to them can help you build wealth—at a young age and for the long term.
Every generation must lug around its own figurative baggage. For millennials, the stereotypes include an addiction to selfies and avocado toast and an inability to escape from mom and dad’s basement. But these are, of course, just stereotypes—inaccurate at best and flat-out wrong at worst.
When it comes to managing money wisely and saving for retirement—even becoming millionaires while they’re young—millennials may have a leg up on their parents and grandparents. In fact, some are already millionaires, and became so without hitting the jackpot in Silicon Valley, showing up on a “30 under 30” list, or inheriting a large sum.
So what are the “secrets” of millennial millionaires? Those who established wealth and financial independence early embrace many of these seven components in their investing, career, and life strategies.
Not really a secret here—just a firm grasp of the fundamentals. This includes establishing and maintaining a sensible budget, using credit cards wisely (if at all), monitoring your net worth, and regularly assessing your progress.
“Coming up with a disciplined plan and sticking to it is important,” said Robert Siuty, senior financial consultant at TD Ameritrade. “One needs to have an approach that is defined, something that puts all the pieces of a financial situation together. Starting early and saving regularly is key."
Plus, a recent Goal Planning Survey by TD Ameritrade revealed that those with a plan are more confident and set higher goals for retirement.
How much you’re getting paid is essential, according to Grant Sabatier, who runs the Millennial Money blog. “A vast majority of the people I know just simply aren’t making enough money to be able to accumulate $1 million within the next 10 to 20 years,” Sabatier wrote. “The math just doesn’t work.”
Sabatier suggested talking to recruiters and researching salaries to get a sense of what kind of money people with similar experience and skills are making in your field. Then, if you’re making less than the market rate, take that information to your boss and ask for a raise.
In 2019, the unemployment rate fell to its lowest level in 50 years. In many places, wage pressures have been building. And if your career path is among those where salaries are still stagnant, perhaps it’s time to look for ways to pivot. A recent study by the U.S. Bureau of Labor Statistics estimated that millennials will hold between 12 and 15 jobs in their lifetimes.
Millennials are entirely capable of socking money away, and many are already doing so. According to the 2018 TD Ameritrade Millennials and Money survey, all but 6% of respondents said they were currently saving for something, with the top categories being a vacation, an emergency fund, and retirement. According to the survey, 70% of millennials consider themselves “savers” versus “spenders.”
When weighing investment alternatives, a top consideration should be investing in yourself. And one way to invest in yourself is to make regular contributions into a savings or investment account. Better yet, make things automatic, advised Sabatier: Have your company deposit at least 20% of your income directly into an investment account before you even see it.
Explore all the “gig economy” possibilities—ride-hailing services, website building, dog-walking, you name it. If it’s something that can be ordered up via a few taps on a smartphone, there may be a potential to make some extra bucks.
Avoid the temptation to spend this money right away. “Think of your side hustle as a key to building wealth over the long term instead of just being rich today,” Sabatier said.
Learn to spot here-today-gone-tomorrow fads and recognize where consumer trends seem to be headed. Boring doesn’t mean bad. It’s common-sense investing, according to Sabatier. He said that the stock market tends to favor things that are “useful and essential” to our lives, and that he personally allocates 20% of his investment capital toward individual companies’ products that he “uses and believes in.”
Many millennials are old enough to remember the Great Recession (and what caused it), but young enough to avoid lasting damage. Take the initiative to educate yourself on how the markets work, what separates good investments from bad ones, and how to use and manage debt wisely.
Just as a workplace mentor can help you shape your career goals and put you on a path toward achieving them, a financial mentor can help you set and follow your financial goals.
And for many, it starts with family. Although money is often considered a taboo topic, there can be tremendous value in openness—from learning good saving and spending habits to learning from the mistakes of others.
You may also choose to seek help from a financial professional. “Having an advisor to help pursue your goals could be a big help toward accumulating assets,” said Siuty, “mainly because an advisor can assist in keeping clients on track.” He recommended periodic reviews of your financial situation and said to “make necessary changes along the way to help you pursue your goals.”