- Everyone can save money
- Mindset matters
- Wealth comes in many forms
When you look at the millennial generation, roughly ages 25-39, you don’t see as much home ownership as you do with previous generations. In the past, owning a home was considered the single crowning achievement for the American dream. But not anymore.
Defining Financial Success
So what’s a millennial to do? With housing process out of reach, rising student debt, and poor credit scores, owning a home seems a long way off. Does that necessarily mean that financial security is unattainable as well? No. It doesn’t have to mean that at all.
Without owning a home, you can still have success in your finances. More important, perhaps, than owning a home, is the mindset that comes with owning one, and it’s a mindset millennials, and everyone can have even without making a major purchase like a house. Getting into the right frame of mind is the single most important step in creating wealth. Why does your mindset matter? Behaving like a saver means more money and greater financial clarity.
Younger millennials may appreciate the flexibility of renting as a big advantage over home ownership. If you have to move for work renting can be a blessing, as it can be much easier to leave a rental than it is to sell one house and buy another. While owning a home prepares you for the long term, and helps look ahead, renting can do the same thing with the right frame of mind.
Saving for Retirement
It’s important to make saving a priority. Budget your money for rent, savings, and down-paying your debt. All three are important aspects of budgeting. Rent is the same every month, so that goes into your budget as a known item. Retirement savings should be an automatic amount, too. When you work for someone else, you can elect to have a percentage of your income go into a 401(k) plan. However, you must be proactive if you are self-employed.
A Solo 401(k) can help you save if you’re an entrepreneur, allowing you to put money away for your retirement. You can use your funds to invest in traditional and alternative investment opportunities. If you’re a freelancer, you can still put money away when you aim to have a steady amount coming in and going into savings. A Solo 401(k) is an IRS-approved account for the self-employed enabling retirement savings, and works much like a 401(k) sponsored by a traditional employer.
Creating Wealth as a Millennial
Investing in yourself and your education is another way to establish wealth. Make certain you’re taking complete advantage of any courses your company offers, and if they’ll send you for external or internal training classes. Learn all you can at every job you hold, so you’re always doing your best.
There’s always the traditional manner of establishing wealth, home ownership, but if you don’t feel confident to make a home purchase, don’t let that discourage you. Owning a home comes with additional expenses renters don’t have to deal with. Being free to move as jobs demand, paying down your debt, saving for retirement, and investing in yourself are important ways to establish wealth without owning a home.