Millennials, this one is for you. You don’t get a lot of love from financial advisors because, frankly, you usually don’t have any money. Fortunately, I’m an older millennial and I love you, so I’m going to give you tips I’ve gleaned from observing and interacting with millionaires, reading books, and being a financial advisor.
Tip 1: Avoid debt. It may already be too late to not take out any student loans, but you can start avoiding debt by not getting in to any more debt. Get on a budget and get mad at your debt so you can get rid of it. Most people, when properly focused, can be debt free in about 18 months. Once you’re out, don’t go back into debt again for any reason other than a first mortgage on your residence with a 20% down payment already saved up for and paid.
Tip 2: Don’t wait to give. Most of the wealthy people I’ve met are pretty dang generous. There’s often a correlation between generosity and success. While that doesn’t necessarily mean success is caused by generosity, I think it’s pretty wise to include giving in your behaviors. I know it’s tempting to put off giving until you’re out of debt and out of tough times, but if you do that you could end up like Scrooge McDuck when you’re swimming in coin. The inerrant and infallible Word of God encourages a tithe of 10% of your increase (income). That’s a great place to start.
Tip 3: Save early. Save often. I’ve extolled the power of compound interest before. Saving early makes a huge impact on your overall wealth. If your job offers a matching contribution, take it. Start a Roth IRA and start putting as much as you can into it. A pretty common rule of thumb is saving 15% of your gross income for retirement. A Roth is a powerful tax-advantaged savings vehicle that can help make you wealthy.
Tip 4: Invest without complication. If you’re young, mutual funds and exchange traded funds that are broadly diversified in growth companies make a lot of sense. Just don’t get overly complicated. Numerous studies have found that the more you trade, the worse you do. So invest in something you understand, contribute regularly, and don’t worry about it too often. If you want help with this, I know a guy.
Tip 5: Consider term life insurance. If you have a family that depends on your income or you have debts that would cause a burden on your loved ones then please shop for some term life insurance. It’s not expensive. I’ve written about this in detail here.
There’s more to becoming wealthy, but this is a good start. What do you think? Any other great tips for Millennials to become wealthy? Chime in on our FB page.