*If you are reading this and you are a millennial, this advice is for YOU. If you are reading this and you are not a millennial, this might still be helpful.*
Why am I qualified to talk to you about money? Well, technically I am not. BUT I have done a lot of research and learned some useful tools that have allowed my family to not only become debt free, but to build actual wealth and security. Doesn’t that sound nice? I all too well remember the feeling of living paycheck to paycheck. I know the sinking, gut turning feeling of hearing that the car is going to cost hundreds of dollars to repair or, even worse, replace. I know what it is like to work 60+ hours a week and still wonder if you are going to have enough money for groceries at the end of the month. Unfortunately, I am guessing you might know exactly the feeling I am talking about.
First off, I am going to HIGHLY recommend that you read two of my absolute favorite books about finance, my financial “Bibles” if you will. Total Money Makeover by Dave Ramsey (find it here) is the ultimate book for getting out of debt and setting your life up for success. The Millionaire Next Door: The Surprising Secrets of America’s Wealthy by Thomas J. Stanley and William D. Danko (find it here) is my all time favorite financial guide and if you take the time to read it you will understand why. I know some of you thinking “are you kidding me? I am not going to wade through 700 pages for financial advice!” Well, fortunately I am going to give a quick summary of what I learned in those books and explain how those principals have helped me in my financial journey. Here is a list of goals that you should start implementing IMMEDIATELY:
Goal 1) My biggest message for all of you out there, millennials or not, is to STOP living past your means! I am so shocked that people still go into credit card debt over things like buying a couch, buying expensive clothes, buying new cars, the list goes on. Who are you trying to impress? You might respond with something like “It makes me happy” to which I would say, are material things ever going to truly make you happy? Or will the peace and joy of having financial freedom make you happy? True millionaires do not look like millionaires. They do not buy the most expensive suites, they don’t drive foreign cars, and they don’t worry about what other people think of them. To be honest, the more someone feels the need to show other people that they are rich, the less likely they are.
Goal 2) STOP consuming for the sake of buying. Have you ever gone a month without any extraneous purchases (Ie. Without buying anything except groceries and hygiene items)? I strongly encourage you to try it. Buying stuff gives our brains this incredible high, and it has become like an addiction in our culture of abundance.
Goal 3) It is COOL to be frugal! Be as cheap as you want! When I was a kid, my family was on a tight budget. We would go thrift store shopping before it was trendy and we were always so excited when we found something really awesome or that fit us perfectly. To this day, even though we can afford to buy new clothing (especially since we have a very small wardrobe), I love to go shopping at Goodwill. And I have no shame!
Goal 4) Save, invest, and be comfortable. I know you are probably screaming at the screen right now “Are you kidding me??? I can barely pay my rent, I don’t have extra money to save!” And to that I would encourage you to sell. Move. Get a second job. I don’t know what it will take for you, but for our first $1000 of emergency money we had a huge garage sale and even sold our computer. Having some money set aside that you do NOT TOUCH is critical for building your wealth. This is the safety net that you can fall into initially and it will help all future actions.
Goal 5) Budget and keep tight control on your money. If you don’t know where every dollar is going, how can you start to save and grow?
Let me give you examples of two different couples:
Couple A: This young couple got married at 22, bought a house at 24 for $125,000, had two children starting at 24 years old, and lived off of one income of around $75,000 a year.
Couple B: This couple also got married around 22 years old. They bought a house in the same area for about $350,000. They also had a child around 25 years old. They lived off of one income and one part time income of around $70,000 a year.
Now this may seem strange, but you have probably figured out by now that the first couple was actually my parents, and their events happened in the early 80’s. The second couple is my family and is happening in real time. I have inflated the numbers using an inflation calculator so that they are comparable (my parents bought their house for $50,000 and made around $30,000 at the time). Anyone looking at these numbers can tell that there is something off. Older generations love to chastise millennials and tell them how entitled we are, how we just need to get an education and work hard and stop spending money on frivolous things. However, if you have not noticed, housing prices have gone up almost 3x since my parents purchased and the wages have remained fairly stagnant. (Not to mention that if you make $30,000 now, that would be equivilant to $12,000 in the 80’s.) Basically the older generations can’t understand why we can’t jump over a 7-foot hurdle when theirs was only 2 feet. If you are around my age you probably understand this concept.
I am actually not here to rag on the older generations or be bitter since my husband and I are living very untypical millennial lives. I am here to give my comrades some hope and advice. From what I have witnessed, the most financially successful friends and acquaintances of mine have a couple things in common: boring but well-paying jobs, living frugally, support from family (even if it is just living with their parents for a few years), and living in low cost areas. This is not necessarily a formula for success, rather my observations about the life styles of my fellow successful millennials.
You personally might be doing great financially, which is awesome! If you are, I would just remind you that the future is always looming and will be here before you know it. Remember to be investing in things like a 401k and other stock options. Budget and be in control of where every dollar is going. And if you have the opportunity, take Financial Peace University, it will change your life.