Millennials and Gen-Z’ers are facing a financial landscape that is very different from the one their parents and grandparents grew up in. At times it may seem bleak: the cost of living is rising, wages are stagnant, and student loan debt is at an all-time high. But even with these challenges, young people still have plenty of ways to overcome the obstacles they face and they can learn to build wealth at a young age.
Saving and Wealth-Building Tips
- Start saving early. The earlier you start saving, the more time your money has to grow. Start with a small amount, save it consistently, and watch it increase over time.
- Pay off your debts. Debt is a major stumbling block to building wealth. Start with your highest interest-rate debt. Pay it off as quickly as possible and then focus on the next highest-interest debt. Your debt will shrink if you stay consistent.
- Invest in yourself. One of the best investments you can make is in yourself. This could mean getting a college education, learning new skills, or starting a business.
- Invest in the stock market. Historically, the stock market has been a good way to grow your wealth, but it's important to research prior to investing, so that you can do it wisely.
- Live below your means. This is one of the most important things you can do to build wealth. If you spend less than you earn, you'll have more money to save and invest.
Build Wealth at a Young Age by Finding Your Niche
Outside of getting a 9-to-5 job at a corporation, (though these days you’re very likely to work far more than those standard hours), there are alternative ways to earn, instead of living paycheck-to-paycheck. One way to build wealth is to identify an unfulfilled need or a void in the marketplace, and start a unique business. In other words, become an entrepreneur. With the right concept and of course, putting in a lot of hard work, you can create a successful business that can provide you with a steady stream of income for years to come.
An increasingly popular way to build wealth is to use social media platforms. We’ve all seen how YouTubers and influencers are making money (in some cases, lots of it!) by creating and sharing content online. Earnings vary widely depending on the type of content produced, their niche audience, and of course, the size of their audience. Once they’ve established a strong following, Social Media Influencers see revenue from multiple streams: sponsored posts, affiliate marketing, merchandising, and brand partnerships. In many cases, they are making money as they build their business. Their followers are often the first, and most direct form of revenue they see, through things like tipping or subscriptions.
Finally, don't forget to factor in the importance of financial planning. This means setting financial goals, creating a budget, and making sure you're on track to reach your goals. Financial planning can be a complex process, but it's important to get started early. The sooner you start planning for your financial future, the better off you'll be in the long run.
Additional Tips for Financial Planning
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Set financial goals. What do you want to achieve with the money you’re earning? Do you want to buy a house or car? Whether your dream is to start your own business, travel the world, or eventually settle down and raise a family, once you know what you want to achieve, you can develop a plan to reach your goals.
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Create a budget. A budget is like a roadmap for your money. It helps you track your income and expenses to see where your money goes. Once you have a budget, you can start to make changes to your spending habits so that you can save more money.
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Invest your money. Investing is a great way to grow your wealth over time. Do your research when investing to ensure first and foremost that the company or business into which you are investing is legitimate. Just because something sounds like the next big thing doesn’t mean it’s wise to sink money into it - in other words, don’t invest - without investigating first.
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Get financial advice. Getting financial advice from a qualified professional is always a great idea if you're unsure where to start. Your CPA can guide you on everything from cash flow to tax planning to asset building. A professional advisor can help you create a financial plan that meets your individual needs and goals.
Myrick CPA can help with financial planning, by providing timely advice and practical strategies, as you navigate your own wealth-building journey. Call to schedule a consultation today.
