Millennial Realities & Myths: 12 Important Ways To Build Wealth
Millennials have a lot of pressure on them. They’re the most educated generation in history, but they’re also the most indebted. And while they’re often lauded for their entrepreneurial spirit, millennials are actually less likely to own businesses than previous generations.
There’s no question that millennials have it tough. But despite all the challenges they face, there’s one thing millennials can do to set themselves up for a bright future: invest in themselves.
Self-investment doesn’t just mean putting money into a 401(k) or IRA. It also means taking the time to learn about personal finance and investing. And it means making smart choices with your money, like paying off high-interest debt and saving for long-term goals.
If you’re not sure where to start, don’t worry. We’ve got you covered. Here are seven important ways to build wealth as a millennial.
Of course, life is more complicated than just those seven steps to achieve success. So, “what should a millennial do?
There are a lot of ways to build wealth, but millennials have unique advantages that can help them succeed. Here are twelve of the best ways for millennials to build wealth:
1. Get a college degree
College isn’t for everyone, but it is a great way to start building wealth. A four-year degree can add about $1 million to your lifetime earnings, and that’s before you even factor in the increased earnings potential from a graduate degree. A college degree is still one of the best ways to increase your earnings potential. (“These college majors have the best return on investment – CNBC”) Millennials with a college degree earn 56% more than those without one. And while the cost of college has increased, so has the earnings premium associated with a degree.
2. Invest in yourself
One of the best ways to build wealth is to invest in yourself. That means taking care of your health, investing in your education, and building your skills. And it’s never too early to start. Millennials who invest in themselves will be in a better position to take advantage of opportunities and build wealth over the course of their lifetimes. You can do this by taking courses and learning new skills that will make you more valuable to your employer or future employers. You can also invest in your health by eating well and exercising. These investments will pay off in the form of higher earnings and lower healthcare costs down the road.
3. Live below your means
One of the best things you can do for your financial future is to live below your means. That doesn’t mean you have to be a cheapskate, but it does mean being mindful of your spending and making sure your lifestyle doesn’t outpace your income. Living below your means will help you build wealth over time and put you in a better position to weather financial setbacks.
4. Invest in assets, not liabilities
Another key to building wealth is to invest in assets, not liabilities. An asset is something that puts money in your pocket, while a liability is something that costs you money. Buying a house can be a good investment if you’re able to sell it for more than you paid or rent it out for a positive cash flow. But if you’re buying a house purely for the purpose of living in it, it’s not an investment; it’s a liability. The same is true for cars and other consumer durables. So, when you’re thinking about how to invest your money, focus on assets that will generate income or appreciate in value over time.
5. Save early and often
The earlier you start saving, the better. That’s because of the power of compound interest. Compound interest is when you earn interest on your principal investment plus any previous interest that has been earned. The longer your money is invested, the more time it has to grow (SEC.gov | An Introduction to 529 Plans). So, if you start investing in your 20s, you’ll be able to take advantage of compound interest for longer and build wealth more quickly.
6. Diversify your investments
Diversification is a key element of any investment strategy. It means spreading your money across different asset classes and investment vehicles. That way, if one investment loses value, your portfolio as a whole will be less likely to suffer. A diversified portfolio will also help you earn a higher return over time.
7. Have a plan
The best way to build wealth is to have a plan. That means setting financial goals and developing a strategy for reaching them. It also means being disciplined about your saving and investment habits. A well-constructed plan will help you make the most of your money and reach your financial goals.
8. Invest in universal life insurance
Universal life insurance is a type of permanent life insurance that offers cash value accumulation. This means that you can use the cash value to pay for things like college tuition or retirement. Universal life insurance also offers death benefit protection, which can be used to help your loved ones financially if you die.
9. Take advantage of employer-sponsored retirement plans
Employer-sponsored retirement plans, like 401(k)s and 403(b)s, are a great way to save for retirement. The money you contribute to these plans is tax-deferred, which means you won’t have to pay taxes on it until you withdraw the money in retirement. And if your employer offers a matching contribution, that’s free money!
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10. Save your money
Saving money is one of the most important things you can do to build wealth. You should have different savings goals, like an emergency fund, a down payment for a house, or money for retirement. And you should start saving as early as possible. The sooner you start saving, the more time your money has to grow. (“Top 10 Ways to Prepare for Retirement – DOL”)
11. Invest in real estate
Real estate is a great way to build wealth. You can invest in residential property, like a single-family home or a condo, or you can invest in commercial property, like an office building or a retail center. Real estate is a long-term investment, but it can be very lucrative.
12. Hire a financial planner
A financial planner can help you reach your financial goals. They can help you create a budget, invest your money, and save for retirement. A financial planner can also give you unbiased advice on the best ways to build wealth.
Millennials have a lot of pressure on them to succeed. But with the right strategy, they can build wealth and achieve their financial goals. They also have a lot of wealth-building potential. By taking advantage of their unique advantages and investing in themselves, they can build wealth over time and secure their financial futures.
**Disclaimer: Always speak with a professional before doing anything that may affect your rights or finances. This advice is general and not specific to any particular person.**