If you are between the ages of 21 and 36 you might not know what to do with your money. I get it. It’s hard to save and investments are confusing. If that describes you, you might decide it’s just easier and safer to keep the money in the bank.
If so, you aren’t alone. A recent study by UBS found that “millennials are the most worried of all generations.” In fact, they found that people between 21 and 36 invest as conservatively as people from the World War II generation. The report went on to say that young people have 52% of their money in the bank compared to all other generations who keep 23% in cash. The problem is that cash in the bank doesn’t grow. That means it may be harder for the young folks to ever achieve their financial goals.
Of course keeping money in the bank might be the right thing to do if you need it for a large expense like buying a house or car. But my experience tells me that millennials keep way too much money in cash out of fear and misunderstanding.
Interestingly, the UBS research also found that only 28% of the people in this age group think that long-term investing is the key to financial success. This compares with 52% of other generations who do think investing is important. Instead, they millennials feel that working hard is the key.
While hard work is absolutely a major component for success, it’s important to be smart about your investing too – no matter how old you are. And the thing is, if you are a millennial, you have a huge and priceless asset that you can take advantage of – time. But if you are one of the young people who keep your money in the bank because of your fear, you are wasting that treasure. Here’s how to make sure your money is working for you:
The more you learn about investing the more comfortable you will become.
Make A Plan.
Once you create a financial plan, it will be easy to see how the different parts of your financial puzzle fit and work together. It’s very helpful to have a big picture view of your financial situation and your plan gives you that.
If you are out of your comfort zone or you are just learning about investments, put your feet in the water before diving in head first. You have plenty of time to get fully invested. But if you get in too deep and/or too quickly, you might blow yourself out of the water at the first sign of trouble.
Neal’s Notes: While we’re on the topic of patience, the same concept applies to investing money – or time. Lots of people are putting together side hustles which is great. The problem is they sometimes expect fast results. Mistake.
Here’s a story of one young entrepreneur who put together a plan, executed it carefully and slowly, and then noticed he had earned over $200,000 from his side hustle. The take away from his story is that he had a plan and built it. He didn’t focus on the money at first. He focused on the plan. His patience paid off – and it can pay off for you too.
Invite Someone To Be Your Mentor.
Look around for someone who is a little older than you are and who has the financial life that you want for yourself. Ask them to mentor you and if they agree, pay attention to their wisdom. You don’t have to do everything they say of course but remember why you selected that person and open your mind and be willing to get out of your comfort zone a little.
Re-Evaluate Each Year.
Keep track of where you are financially now and review how you progress each year. Keep a notebook. Write down how you invest, what the results are and how you felt about it. Share your journal with your mentor and stay on point. These re-evaluations will help you fine tune your program each year and it will help you detach from your emotions when the market becomes turbulent.
If you are between the age of 21 and 36 you have tremendous opportunity – its called time. Let time grow your money. Granted, it’s not always fun to be an investor but if you educate yourself, map out a plan, start slowly and get a mentor, odds are good that you’ll be happy you did.
If you are millennial, how are you investing your money? Why?