“Youth is the best time to be rich, and the best time to be poor.” – Euripides
When you hit your twenties, you feel like you can finally enjoy life to the fullest past your parents’ supervision. You can drink, and party, and travel the world and then work hard in your thirties until retirement and sit comfy hopefully with a pleasant pension. Well, let me tell you something kids; this isn’t your parents’ generation – where you can lose one job and find one the next day, or work until your pension years and live stress-free. No. This is the generation where if you don’t strap up your own boots, you’ll be working until the day you die and you won’t have the time to relax – since your pension is non-existent. Here are a few ways to ensure that you’ll ruin the rest of your life while enjoying your twenties.
You don’t own a savings account.
Maybe you’ll be reading this thinking “who doesn’t own a savings account?”. Well, you will be surprised to know that the number of millennials with zero dollars saved is astonishing. According to MarketWatch, while there are more millennials saving, there are still “1 in 5 people who aren’t saving at all, and 21% of employed Americans who aren’t putting any of their paychecks aside for emergencies or other financial goals”. Saving is crucial for any millennial, as the government is getting more strict on interest rates and the rates at which first-time buyers can mortgage their home – as they so rightfully should (remember 2008?).
Saving is not only beneficial for home-purchasing but also investing. Be it the real estate market or the stock market, saving to invest is a better way to make your money work for you, rather than depending on crappy interest rates banks provide you with a smile on their face. It is better in my honest opinion to utilize the blessing of your young age to take advantage of compounding rather than getting a loan or leveraging from a bank to do your investment. It will bite you in the butt when it comes time to pay the piper.
You are fantasized with fast money.
Scammy businesses know that a majority of our generation is obsessed with dreams of wealth. Because of this fact, they are stirring up multiple ways to lure you into their scams by ensuring you thousands of dollars in your pockets daily once you join their multi-level marketing businesses or another slick-talking offer. Some millennials do not come from affluent backgrounds and may be struggling to make ends meet in the home. Therefore, they may get caught up in these fugazi (Wolf of Wall-Street reference there) schemes to take your money.
Of course, there are some legitimate start-up businesses where the owner truly believes in their company’s future but the ratio between those and the fake ones are not in their favor. When you sacrifice your morals to join these groups with the hopes of champagne showers and models on your yacht, you not only lose plenty of friends and family members, you lose the few dollars you had in your pockets. This will waste plenty of your precious time because not only will that company abandon you if things go sour, you will have to continue from where you left off prior to you joining. That is a lot of wasted dollars and sense. Focus on long-term goals. If someone offers to make you a millionaire in a year where someone else offers you to make a decent amount of money yearly that will compound into a nice pot of gold years down the line, hopefully, you will consider the latter and not the former.
Beer and Girls before Bills and Growth
When we are in our twenties, we sometimes believe that the most important things are girls/guys and chugging down as much alcohol as our bodies will allow us. I’m not against enjoying your Friday nights, but I am against that massive bill that is multiplying every time you go out. If you are in that category, think about how many nights you went out and estimate how much you potentially spent during that duration. I bet it is a huge amount. Imagine if you saved that money and invested it in assets, paying down your student loans and tuition or increased your knowledge outside of the university walls. Depressing right? Get out of the habit of enjoying tonight and forgetting about tomorrow, because like it or not, tomorrow comes. And you better be prepared for your consequences of being responsible or lacking responsibility.
Instead, LIMIT the amount you allow yourself to spend on particular “fun” activities. You aren’t only helping yourself now, you are helping your 40-year old self who potentially would have liver diseases or an assortment of other illnesses that you can’t afford to treat.
I left this one for last because this is one that EVERY millennial should be capable of doing. Some of you aren’t ready to invest or you simply cannot afford to. But all of you have bills to pay, transit and food necessities, etc. Budgeting is what can allow you to have hundreds of thousands in the bank being invested and saved whilst not worrying about haveing to dig into those accounts to put food on the table. By practicing how to budget not, you not only train yourself to spend within your budget and make sound financial decisions, you build the habit of valuing the dollars you have and how far they can go when you fully understand how powerful allocation can be.
To close, use your twenties not as a testing ground of how much buffoonery you can get away with, but rather preparation for a successful and promising future. Do not depend on a pension at the end of the tunnel, because if you haven’t been watching the news lately, your parents may not even have their own pension once they retire. Build positive financial habits into your daily routine so you can thank yourself years down the line for sacrificing short-term pleasure for long-term peace.
Until next time,
Live Long and Prosperous.