Millennials have inherited a very difficult period, right now. They are having a hard time getting a good-paying job. They have a large amount of student debt. They are inheriting a climate situation that is very close to a disaster. They are inheriting a financial future that looks very bleak. Our goal is to assist them to make the best of this difficult situation. The millennials can make this into a good situation but it will not be easy. They will have a much harder time than their parents before them. The baby boomer generation was able to get an education at a very low cost. They were able to find jobs that pay well. They were able to find housing that was not too expensive. All of these benefits give them a huge benefit over the current millennial generation.
For the millennials to be able to keep pace with their generations before them. They won’t need to be able to take critical steps. They should look to invest early and invest wisely. They will need to take care of their spending. The millennial needs to budget properly. They will also need to act accordingly with this budget. They should plan on getting some investments very early on. The concept of paying themselves first is key, this is basically setting aside a certain portion of your salary and investing it. This should continue to funding this investment until the time that they retire. By doing this in a very smart way, they will be able to have a strong financial future. They will have a more difficult time then the baby boomer generation. However, they can succeed. They do need to take extra steps to have the same level of success. The generation before did not have to invest quite as early as this generation must invest.
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One area that is the very best possible increase in revenue for this generation is the ability to earn income on the internet. This did not exist forty years ago. And that is one of the few advantages that the millennial generation has. They have many disadvantages as mentioned earlier.
By starting early, the millennials can have an advantage that catches them up with their prior generations. So it is critical for every millennial to fully understand what they need to do with their budget. It is important that they somehow carve out some savings every month. It is important to note that it is much easier to say than it is to do. The millennial should, very early on, try to say a minimum of 50% of their monthly revenues. This way if they are earning $3,000 they should be looking to save $1,500 per month. These savings should go directly into their investment account. If they can start in their early twenties or even before their twenties, they have a great benefit to them when it is time to retire.
By starting early, the millennial can create a huge portfolio by that time it is time to retire. This is the goal. The ideal situation would be planning to retire by the time the millennial is 55 years of age or perhaps by the time they’re 65 years old. With this in mind, the millennials must build up a portfolio of millions of dollars by the time they are in their forties or maximum in their fifties. By investing every month, and by saving about 50% of their revenues, they can achieve this goal. It is also important to understand that when your revenues increase, your percentage of savings should also increase. Hence if you were earning $3,000 per month you should be looking to save 50%. But when you are earning $10,000 per month you should be looking to save 70%. This way as your earnings increases your savings also grow as a percentage. If you get fortunate enough for you are earning hundreds of thousands of dollars per month, then you should be looking to save 90% of your revenue. If you look at Warren Buffett, he aims to save over 90% of his revenues every month. This is the goal for everyone.
Looking at the chart below, you can see how much you save at the end of 30 years and also at the end of 40 years. This is the ideal situation. This chart is the necessary step that a millennial must take to be able to save for retirement. When you consider the amount that the government will give you for retirement and what your medical system can cover, it is very critical that you save a lot for your retirement. It is important that every month that you pay yourself first. What does this mean? This means that you hey yourself i. e. You pay your investment funds before you pay your bills and before you go out and have fun. So if you calculate that you are going to be saving 1,500 per month you must ensure that that goes into your bank right away. From the chart below, if the millennial can save $2,000 per month, then by the time they are 40 years of savings, they will have about $6 Million to retire with. This will not be easy but it is possible. After thirty years, they will have about $3 M.
By doing these simple steps of budgeting, saving, and investing, the millennial can retire very comfortably, but it is far easier said than done. The largest challenge will be being able to save enough each month.
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