Luckily, millennials have a great advantage when it comes to gaining wealth because they are still young in their careers and have plenty of time to figure things out and put money away for the future. But, you must not procrastinate when it comes to saving, or you could end up another statistic. The good thing is that there are many ways that you can eliminate your debt and grow your wealth simultaneously, and all it takes is a little knowledge.
Make Your Job the Priority
If you really want to grow your wealth and save for the future, you need to start thinking about your life and your plans for the future. Since you are still young, think about college and the careers that pay well and will always be around. While it might be fun to major in theater or bakery science, school programs including accounting, mechanical engineering, and computer science are almost guaranteed to land you a job, and they have the highest entry-level salaries.
Now that you are making a good amount of money, work towards earning more. Make yourself indispensable around the office. Take on all challenges and prove that you are the best person for the job. You should also get all necessary certifications, attend classes and conferences in your field, and network with the higher-ups in your company. Then you can negotiate for a higher salary and continue to grow your wealth.
If you have accomplished the goals in this plan, then you are probably sitting pretty, and you’re impressing family and friends with how much you are earning. However, stay humble. The last thing you want to do now is make the mistake of buying an overly expensive car or a new penthouse because all you will end up doing is accruing new debt. Instead, live modestly as you progress in your career until you have made a plan to buy what you like while also saving for the future.
Put Money Aside for Debt and Savings
If you have any debt, then you are slowing the wealth earning process, and without a plan, debt can snowball into a huge problem. In fact, studies show that 62% of millennials live paycheck to paycheck, much of that being attributed to outstanding debt. Whether it be credit cards, student loans, or a car loan, you want to get rid of these expenses as quickly as possible so you can use that money for better things like investing and saving. When it comes to paying off credit card debt, there are several methods that experts recommend depending on your situation.
Many recommend the avalanche method, which means paying your highest items off first in an effort to pay less in interest over time. The snowball method involves going from the other side and paying your smallest items first. You won’t take care of as much of the interest as the other method, but the fact that you are eliminating the debt from your card may give you the emotional charge to keep going. You could also decide to consolidate and transfer your balances to a new card with a 0% interest rate, so you are only paying for what you purchased without extra fees.
If your student loans are getting out of control, then you might consider refinancing or joining a company that offers repayment assistance. Whatever debt you are paying, make sure not to go overboard, so you still have money left for necessities such as rent and food. Once your debts are paid off, you can use the left-over funds for savings or investing.
While you are paying off debts, you can also contribute money to savings. Doing so is easier said than done because we often forget to save once the expenses start rolling in. One way to ensure that you are always saving is to set a rule with your bank, which states that every time you get paid, a certain percentage of the paycheck goes into a savings account. That way, as you are working hard, that extra money is in your savings, accruing interest. This mindset also applies to retirement savings, of course, though depending on the plan you use, it can come with contribution limits. Even if you’re unable to meet this limit, contributing a portion of your paycheck toward retirement is imperative — especially when considering many millennials won’t be able to retire until age 70.
Take Advantage of Fintech
Millennials are growing up at the perfect time as advancing technologies make all aspects of life easier to manage, and that includes finances. One such advancement is fintech, which is a combination of “finance” and “technology,” and this science has resulted in a number of helpful apps for managing money and growing wealth. For instance, if you still need help managing your debt, there are fintech apps for that, including Debt Book, which provides payment reminders and groups your debt by creditor.
If you want to accumulate wealth and eliminate debt at the same time, then you must have and stick to a budget. Once again, fintech can help with several apps such as PocketGuard, which not only keeps track of your spending but also creates a customized budget based on your spending habits. Another great app is CountAbout which actually links to your bank account, so that necessary debts can be paid right away. It also memorizes your recurring transactions as your budget keeps evolving.
Once you have paid your debts and put some money in savings, you have the option to invest some of your money in the market or cryptocurrencies. Some millennials can feel overwhelmed when it comes to investing and the many options available, so fintech apps can help with the process.
One very popular investing app is Acorns. Ideal for the millennial who might also be wrestling with debt, Acorns encourages you to contribute whatever “spare change” you may have to a selection of high-quality investments, and the advisors behind the app can help you choose what is best for you and keep an eye on your money. Another such app is WealthFront, which also gives you a place to invest along with expert advice on how to maximize your portfolio.
There is no time like the present to start thinking seriously about growing your wealth and saving for retirement. If you are serious about your financial future, then use these tips to get where you want to be.