The average net worth for millennials is less than $11,000. While that is not necessarily a small number, it pales in comparison to the figures needed to achieve most long-term financial goals. While we might think the path towards these goals is to make more money, the real solution is building wealth. The two might seem the same, but they are very different. When you’re rich, you work for and/or have a lot of money. But when you’re wealthy, your money and your assets work for you. This is a great position to strive for, as it gives you leverage and options when purchasing a home or trying to fund a new venture. A little preparation goes a long way to creating a better future. How can you prepare? These three wealth-building principles are a great start.
We all have liabilities, or bills. But we have a lot more power over controlling these liabilities than we think. Are you really using that Disney Plus subscription? $6.99/month might not seem like a lot, but that’s roughly $84 dollars per year, and there have been plenty of success stories of people flipping $84 into $8400. You don’t need to cancel all subscriptions, but you should incorporate these words into how you approach spending: honesty, thoughtfulness, and moderation. It is possible to balance the occasional splurge or paying a premium for an exclusive gym membership with cutting back on things you don’t even use or there is a cheaper alternative. And after covering essentials, the attention should turn to balancing immediate wants with future wants.
How many consumer credit cards do you have? Do you know the interest rate for each one? As well as your outstanding balances? How much student loan debt do you have? What’s the interest rate? Would it be beneficial for you to refinance your home? These are the kinds of questions you must know the answer to if you are going to manage your debt properly.
Debt is a kind of liability. Whenever you take on debt, there are usually options for repayment and interest terms for you to choose from. What might seem like minor details could mean a difference of several thousands of dollars, so make sure to shop around for the best deal available, and know the implications of the terms you are choosing. If you don’t know what certain terms mean or how they could impact you, don’t rush into a decision.
None of this to say that all debt is bad debt. In fact, there is such a thing as good debt that you take on to finance the purchase of assets that could add value over time, such as starting a business, buying a home, or getting an education. But bad debt, with very high interest rates and obtained for something that adds no value over time, is something you should avoid taking on whenever possible, as it is counterproductive to our goal of building wealth.
Financial advisors, like Greenpath can give you relevant, accurate information on your financial situation and help manage your debts and liabilities to improve your financial health for the long-haul.
As a trusted national nonprofit, many people have been able to understand their options in handling debt with GreenPath’s debt management program.
There’s no way to talk about building financial wealth without discussing investment and investment strategies.
It’s critical to pay close attention to how the value of each type of asset you own or want to obtain changes over time, as fluctuations or market forces may drive your decision to buy, sell, or liquidate (turn into cash) an asset. This doesn’t mean all of your money has to go into savings bonds and the S&P 500. In fact, diversifying your assets offers a way to spread out risk and reap potential rewards from other asset types that might be doing better than others.
Certain kinds of jewelry, such as watches or gold, might offer a way to treat yourself now while also investing for the future. Cryptocurrency and the Foreign exchange markets are the hottest investment strategies around right now for millennials.
Focus on accumulating legal, proven, lucrative assets that build value over time. Be sure to know your exact reason for the investment. Acting merely on a “feeling” could lead to a pretty costly investment.
These three principles, managing liabilities, debt and assets are universal tenets that will help jumpstart a financial future that has many options, a lot of great assets, and even a little debt.
Contact a GreenPath Financial Wellness expert today to map your path to financial prosperity. https://www.greenpath.com/contact-us/