Yahoo Finance I’m a Financial Planning Expert: Here Are 3 Ways I See Gen Z Becoming Millionaires
Living expenses are on the rise, but you’re undeterred. As a member of Gen Z, you know you might have to work harder to become a millionaire than past generations. Instead of giving up, you’re committed to finding ways to achieve financial freedom. Traditional methods approaches may no longer work, so you’re ready to forge your own path.
“Gen Z faces some unique challenges on their pathway to becoming millionaires,” David Daley, founder of Daley Financial Planning. He said one of these issues comes from content found on social media.
“If you’re on social media, you will see clips telling you to ‘do what the rich do,’ ‘buy this magic product,’ pretty much every idea under the sun,” he said. “It can be very overwhelming and easy to get caught up in.”
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Therefore, he said the first step toward becoming a millionaire is building a solid foundation.
“Without a solid foundation, you might find yourself much like Sisyphus from Greek mythology, eternally pushing a bolder up a hill,” he said. “I want you to know, a boring foundation works. Simple and elegant is actually beautiful.”
This might not be the most exciting method, but ultimately, it’s the results that matter. Your financial foundation can be comprised of elements like an emergency fund, a life insurance policy and paying off any high-interest debt you’ve accrued. After getting down the basics, you’ll be able to start building your net worth and set yourself on the path to millions.
Here are three ways to do just that.
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1. Consistent and Disciplined Savings
“Being a millionaire is achievable, and the earlier you start the better,” Daley said. “If you started at 25 and made $40,000 per year, saved 15% of your gross income in a Roth retirement account and achieve a 7% average rate of return, you could reasonably expect to have over a million dollars tax-free at 65.”
He said you can also boost your retirement account by taking advantage of employer-match contributions.
“The point is, your savings rate will likely have a greater impact on your success than a slightly better return on a given investment,” he said. “You don’t need to pick the next Apple.”
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2. Owning a Business
“I suggest this path only if it is something you are driven for,” Daley said.
If you decide to start a business, he said the same principles of consistent and disciplined savings still apply. “In addition to your family depending on you, you will have to think about your customers and possibly employees. That being said, it can be incredibly fulfilling and rewarding.”
Hopefully, your business will be a success, and if it is, he said you need to keep your spending in check.
“One mistake that new business owners make is letting lifestyle creep keep up with or exceed their growth,” Daley said. Regardless, your income will be your greatest tool. “Pay your future self with the same diligence you pay any of your bills. Few things will pay as high of a dividend as wonderful experiences.”
3. Track Your Net Worth
“Tracking your net worth is important because it helps you to understand if you are doing the right things to get to that millionaire status,” said Louis Guajardo, founder and financial planner at Brighter Days Planning.
This makes sense, as you probably won’t become a millionaire without a lot of careful planning.
“For example, you will see if you’re taking on too much debt and if you’re doing the right things to grow your assets,” he said. “I like to track my net worth on an annual basis, usually in January of that next year as this is when annual statements are usually released.”
If you determine you’re on the right track, that’s great. However, a careful review of your finances might cause you to realize changes need to be made to reach your goal of becoming a millionaire.
Implementing these changes could mean you have to make a few lifestyle choices. However, this is ultimately a small price to pay to join the millionaire’s club one day.
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This article originally appeared on GOBankingRates.com: I’m a Financial Planning Expert: Here Are 3 Ways I See Gen Z Becoming Millionaires
