I want every millennial to grow up to be a millionaire! The scary thing is that a million dollars won’t be that much money in 4o years. The idea of a millionaire, sitting in his wood paneled living room and smoking on his pipe with hounds at his feet is long over. Millionaires will be “thousandaires” by today’s standards as everything gets more and more expensive. But how do millennials feel about their retirement? They seem overly optimistic.
“They (millennials) are very optimistic about their retirement – believe they will have enough money to retire and plan to do so before 70 years old,” according to “GenYFinancials,” published by Abacus, May 2014.
But when you dig into the numbers you’ll see that they aren’t saving for either property or retirement! According to the same study (GenYfinanicals, Abacus May 2014), 66% of millennials 25-29 are not saving for retirement, and 65% of them are not saving for real estate. This will be a BIG problem if they still want to retire before 70 years old. The odds are that they will all live to over 100, or not die at all as a Douglas Coupland contemporary art show recently suggested.
They can all become millionaires if they follow these four rules. Here we go!
1. Buy property young and pay it off. Make sure that you don’t spend more than 30% of your net take home income on housing (after tax), and buy something cheap and cheerful or a rental property where other people help you pay down the mortgage. When you have one property paid off, buy another and repeat. Real estate is how the majority of people become millionaires.
2. Start investing for retirement early. TFSAs and RRSPs are great to start with. You’ll get tax savings from both that will help you sling shot your savings further. Ask a financial professional which one is best for you and your situation. Nothing beats the return of a long term investment. Look at the charts of the New York stock exchange over the last 30 years!
3. Keep a positive money perspective. Instead of working for someone else, when you have a good idea and set customers, start your own business. Selling your business for a pile of money is another great way to get rich. Or work hard to become a senior salary maker at a career you love. This is the second best way to become a millionaire.
4. Be sure to watch your “pennies”. Making sure that you are bringing in more money than goes out is crucial to being a millionaire. Stay out of consumer debt. Make more money, save more money, and invest more money so that you can hit your goals. Do work on the side, sell extra products or services, or squirrel away gifts or inheritance. Keep your money safe and growing by being smart with it.
These are the four big pillars for going from millennial to millionaire. EVERYONE needs to do it so start activating these four money strategies and see how fast you can get there.