Millennials are the next generation to take the world by storm, and they are next up to bat. Starting in 2017, they are going to have more buying power than all other generations. They are the most diverse, educated, populous, and now in debt generation of all time. Millennials are defined as being between 18 – 34 years old in 2015, or having been born between the early 1980s to the late 1990s. I am by definition a Millennial (1983), however I wanted to get a take on Millennial life and the 411 on Millennials and Money (see what I just did there….you’re welcome) from someone who knows best. I went out and found none other than the Millennial Money Man to give you the top 5 concepts all Millennials must know about to win in life and money. Take it away M$M!
Millennials and Money – Sounds Weird Together, Right?
Everywhere you turn, there’s more and more news and information on the most entitled generation of our time – the Millennials. These whining, ungrateful kids that use their fancy internet and smart phones to be consistently lazier than any generation that precedes them. If they would just go out there and stop living in their parents’ basements and working at hipster alternatives to Starbucks, maybe they could actually make something themselves!
Now THAT ^^^ Sounds More Like It!
The unfortunate reality is that a lot of the hype and typecasting of Millennials is just that – noise by major media outlets to get solid ratings. In my short time of writing about personal finance, I’ve met a lot of Millennials that are the exact opposite of our public perception. They are generally hard-working, thoughtful and innovative young people that are finding themselves trapped in the financial rat-race that has become America.
Millennials face unique financial challenges as we start out our careers. We’ve graduated with more debt than any generation in the history of this country – especially in the form of student loans. (1.2 trillion freaking dollars if you are keeping up at home!) Competition for solid, decent paying jobs is at an all time high. For young people, “debt free” has become a dream that seems as far away as retirement…which we also aren’t preparing for.
Sorry if I’ve hit you with way too much doom and gloom on a site with such happy colors, but it’s right in line with what the 20-somethings are going through that I talk to every day 🙂
So, what do you do to get ahead in your 20’s? The good news is that getting ahead financially as a Millennial boils down to some REALLY simple concepts. They take a bit of an attitude shift from everything you’ve seen in your life, but if you can master the following 5 concepts you will be a Millennial with Money and better off financially than the majority of the people you grew up with. Check it out:
#1: Learn About Delayed Gratification, and Practice it Daily.
When I graduated from college with $40,000 in student loan debt, I was on track to do everything else that my friends were. Specifically – I wanted to buy a new car and house that was way out of my price range. I wanted this stuff because I thought it was what I was supposed to buy. Luckily for me I got some great financial advice early and decided to lay low and wait. I’ll be honest – delayed gratification sucks. It sucks to watch your friends have nicer things than you. It sucks to feel like you aren’t as successful as them. It sucks to feel like you’re being passed up.
If you can live below your means right after college and wait to make a lot of the big ticket purchases – you’ll be shocked by how much your bank accounts grow compared to your peers. All the friends that passed you up quickly out of college will wonder how the heck you have so much money and freedom later in life. Trust me.
#2: Recognize the Advertising Around You and Ignore it.
“Entitled” is the tag that got slapped on to the Millennials years ago that won’t seem to go away. I think entitlement is an absolute sham. Do people honestly believe that an entire generation of humans just happened to be more needy and feel like they deserve more stuff than all of the other people before them? More likely, entitlement is really an effect of marketing.
Millennials have been immersed in super-effective advertising by every imaginable source throughout their childhood and early adult lives. Advertising tells you what to buy and why you should buy it, regardless of the financial repercussions. I always tell young people to try to see through that noise, and focus on their future financial goals rather than give into the ads that they are constantly blitzed with.
#3: Make Debt Freedom Your Number One Goal After College
This goes hand in hand with delayed gratification. While you are laying low and watching your friends press the self-destruct button on their financial future with new cars, vacations, and nice houses, start making the biggest debt payments you can and be a jerk about it. Think of paying off debt as a guaranteed return on your money! My student loans were at 6.8% interest, and by paying them off early I kept a ton of future interest in my pocket. I couldn’t get a GUARANTEED return that high in any other type of investment vehicle.
Once you are done paying down your debt, start paying yourself just as aggressively and you’ll be amazed how quickly you start to build wealth.
#4: DO NOT BUY A NEW CAR!!!!!!
If you get anything right after college – you have to get the car thing right. Other than student loans, a new car is the fastest way to handcuff yourself with tens of thousands in debt and interest. If you have a car from college, drive that piece of crap into the ground and then buy another piece of crap. The kind of car you drive has nothing to do with how awesome you are.
I’m way awesome (my wife says so at least), and my car cost $6,000. Boom.
#5: Find Old People, and Talk to Them About Money.
Admittedly, this one sounds a little harsh/weird…but stay with me here. The only reason I was able to pay down my student loan debt in less than two years and then quit my teaching job to start my own company was by listening to people who knew a lot more about business and money than me. People who are successful with money LOVE to share their advice for free. You can’t put a price on wisdom. If you know someone in your family or a family friend that is a financial success, go out of your way to pick their brain. There is an unbelievable amount to learn from someone who is already where you want to be.
It’s crazy how far I’ve come in my 20’s financially just by doing the 5 things listed above. There’s obviously much more that you need to know about money, but at the same time there really isn’t. Personal finance can be really simple when you are young- just avoid the things that everyone in a bad financial spot is doing, and always make your financial education a priority.
Thanks for reading!