Millennials, here’s the ONLY way to build wealth
Is your life 90% worrying about money and 10% spending money you don’t have on treats because you’ve worried a lot this week? #adulting
Well, a Harvard study (allegedly smart people) recently found there’s only one way to build wealth…
Spend less than you make.
Shocker right? But the truth is most of our generation seems to think they can spend all their money AND get rich.
It’s either that or our generation is content with being poor…
This isn’t you because you’re reading this right now!
To build real wealth, you need to understand the importance of turning income into assets. And I hate to break it to you, but nothing on Amazon is an asset.
The better you are at converting income into wealth, the faster you’ll be on the path to financial independence. That’s why your savings rate is the single most important metric. When you’re accumulating wealth, it’s way more important than your investment return.
Savings Rate = Amount Saved / Gross Income
Some of your peers are saving 35% (including amounts paid toward student loans). I know that probably sounds aggressive as hell, but spending as much or more than you make is a pretty bold move too.
Now don’t get me wrong. You don’t have to save 35% to reach financial success, so maybe you shoot for 20%. Whatever works for you. All roads lead to Rome.
Why save so much? It gives you flexibility in the following ways:
- It gives you the opportunity to pursue a career you’re more passionate about.
- You can take time off work and travel.
- Now you can buy some cool stuff and not feel like you should eat Ramen for two weeks.
Bottom line – pay yourself first (i.e. save money) then spend the rest!
Godspeed,
Terry Andersen