9 Crucial Financial Tips for Every Millennial
How Young People Can Set Their Life Up for Financial Independence
1. To maximize your earning, start your own business.
Millennials probably know this already, but one of the best ways to earn the most in exchange for your time and effort is to start your own business. It typically takes years to build a truly profitable business, but if you are able to create a successful business there is no limit to the income you can make.
2. Sales jobs offer high earning potential.
Even though some people may ignore sales jobs in favor of other types of work, sales can present you with opportunities to bring in large commissions or bonuses. Millennials often feel like their work doesn’t serve a valuable purpose, however, sales jobs give millennials the power to control how much money they earn.
Billionaire Mark Cuban said the following when asked what he would do if he lost everything and had to start all over:
“I would get a job as a bartender at night and a sales job during the day, and I would start working.” -Mark Cuban
3. You should focus on wealth-building and not just high income.
It can be easy to look at people earning a lot of money and assume that they are financially secure and saving large sums of money. However, these people may have high expenses that completely offset their high incomes. If you make $1,000,000 per year, but you aren’t saving any money you are trapping yourself in a cycle where you have to continue working to support your lifestyle.
4. Financial literacy and knowledge are essential life skills.
People who are born into financially stable families have a massive advantage to those who come from unstable or impoverished homes. However, one of the biggest differences between children from each of these types of homes is their level of financial literacy in adulthood.
5. The most powerful financial tool is often a budget.
People who don’t track their income and spending often end up in a difficult financial place. If you just assume that you’re doing what you need to do to save money, you could end up in financial strain that prevents you from ever retiring comfortably.
6. Max out your retirement savings accounts ASAP.
If your employer offers a 401k program and offers contribution matching you should maximize that contribution. Employer matches are basically guaranteed 100% returns on your money. People who max out their 401k accounts and IRAs are much more likely to retire comfortably than those who don’t.
7. Building credit and having a good credit score early in your life is invaluable.
Credit scores not only allow you to get loans for purchases like homes or cars, but they also qualify you for better interest rates and more purchasing power for investments. If your good credit score gives you access to more liquidity to build wealth, you’ll be miles ahead of someone who is unable to even get a loan.
“If you have a good credit score, you’ll almost always qualify for the best interest rates, and you’ll pay lower finance charges on credit card balances and loans. The less money you pay in interest, the faster you’ll pay off the debt and the more money you have for other expenses.”
Source: The Balance
8. Not all debt is bad, but accumulating bad debt at a young age can cripple you for decades.
If you take on debt, you should focus on using that money to build wealth or gain a projected return. Debt used to acquire depreciating assets is bad and should be avoided if possible. For example, if you’re 23 years old with $10,000 in credit card debt, that could take a decade or more to pay off and may negatively impact your credit score.
9. Building multiple income streams now can pay off in a big way down the road.
As a young person, you have the advantage of more time until “retirement”. If you have a passion or side hustle, you can slowly build this and in 10 years you may have created a sizeable revenue generator. Having multiple income streams can provide you security if you lose your job or have an unexpected expense in your future.
We work out and eat clean to keep our bodies healthy. We meditate to keep our minds healthy. What we need to do is apply the same attention to our financial lives to achieve financial independence and security.
