Why You and Money Need to Have a Serious Talk
What do I know so well about money, that I have the audacity to even tell others on what to do?
I’m no David Ramsey or Suze Orman (if only), but I am a 25 year old money coach and enthusiast who has been able to amass 35% returns in my investments every single year, for the past 3 years (while also writing this as we go through the biggest pandemic of our times — shout-out to COVID-19). I have also paid off a 5 year $13,000 car loan, 2 years earlier than I was supposed to (this year), and so consider myself officially on my way to increased financial wealth and stability.
I can say this with no doubt, not because my ego is too big for my own head or weight to carry, but because I understand what it takes to save early so that I can retire early and with the utmost amount of comfort, when I do. I also want other millennials to know they can set themselves up on a path to do exactly the same too.
Let’s Talk Retirement
I can tell you that the average millennial will need between $500,000 — $1,000,000 by the time they retire, to live comfortably. *Current research suggests, that about only 24% of millennials (defined between the ages of 24–41 as of the year 2020), have $100,000 or more in their savings.
So, let’s say for example you are at the bottom of the age range described for a millennial — which is the age of 24. Let’s also say that the age you are set to retire at is 65. If my math is correct, you have approximately 41 years to save at least a **minimum of $500,000, so that you can live a life most comfortable in your retired years.
Why is This Important?
There are baby boomers right now, who fear retiring at any given second because they do not have enough savings to last them throughout their retired years. Due to this, most retirees don’t actually “retire”, and instead spend the rest of their able lives checking out your groceries part-time at your local retailer. You know your grocery grandma, who you love checking out your groceries with every Saturday morning because you two just have the loveliest conversations about baking bread? Yeah, her.
And, honestly… there’s nothing wrong with the conversation. I’m not here to judge on what you like to cook or bake, or spend your hard earned money on at the grocery store either. What I do have a problem with is a 70 year old women — who did not prepare and plan properly for her financial future — that even at the ripe old age of 70 still has to work a 9–5, just to make ends meet scanning out your groceries. While she could’ve been at her summer cottage (second home too) baking her famous homemade bread.
This is the story for many of us millennials who have immigrant parents, who are working well into their retirement years. Or, who will have to work well into their retirement, because they will not have enough savings to go without.
I look at my dad who is 67 (and is even worst off as he is “self-employed” and does not receive a pension) and continues to do his accounting business — not because he truly loves and enjoys doing it — because he needs the money and still has thousands of credit card debt and a mortgage to pay off. My mother has another 10 years before her retirement, and she will also have nothing saved, simply because my parents did not prepare nor plan for their financial future.
Instead, they will be spending the last years of their precious lives, in production mode (or relying on their kids) and not in rest.
The Aging Financial Burden
This leads me into the other dark side to this situation. Let’s go back to the example of grocery grandma. Grocery grandma could be at an age now, where her health is extremely poor and/or deteriorating, so she decides to quit her part-time job and her family has to put her in a nursing home. However, when looking at elders who come from low to middle-income households, the burden is instead placed on — you may have already guessed it — you. Parents are increasingly having to live with their aged children, because they do not have the money themselves to put themselves in a nursing home or a long-term care facility.
Living with in-laws is a great alternative to those who may want to live with their parents until their dying day, and have the financial capability to take care of them (I would love to meet you, no shade). However, when it comes to parents who have significant health problems that require 24/7 assistance and emergency care, this can become an extreme burden on families, who have their own problems to attend to, extra responsibilities (kids) or are just tied up with their own careers and lack of steady finances.
This opinion piece is not trying to say that being old is automatically a burden, and a burden to your children. This doesn’t always have to be the case. However, it is if you did not financially prepare yourself for your future or for generations to come. Being financially stable is so much more important, when you realize it’s not just about you, but about the people around you and who will come up after you. I grew up with immigrant parents, who have a traditional belief that the sole reason you have kids is so that when you eventually grow old, they will turn around and take care of you.
It Starts With You
This is the 21st century, and this belief that we need to rely on others financially because that’s just the way it is…needs to stop. This is what creates a world of codependents and a lack of emotionally independent decision makers.
We need to become a society of financial independents, who rely on nobody else but ourselves to make sure we are in a stable financial position. I am not saying that you have to be rich, and that that is the end goal to all our life problems. Rich does not = wealth. Being wealthy is about having enough money so that you are not living paycheck to paycheck and are able to live the life you truly want, because you made plans to always have money set aside for rainy days, retirement and then last the other set of money for play.
Bob Marley says it best, when he talks about being rich. It’s not about how much money you have, it’s more about how you are able to increase the value of your life by being financially stable. Money can buy happiness, but only to an extent.
So, you have three choices to make with your money right now. You can either:
a) Slack off and worry about your finances when it’s too late. This leads to having to continue working well into your retirement.
b) Fail to prepare for your own retirement, so that now you must live off of your children. Not because they want you to, but out of financial need.
c) Get serious about your money, and start to prepare and plan for a financially stable and secure future.
So, seeing that the obvious answer would be C (please tell me this was your answer…) here are some quick things you can do to start getting your finances on track and in wealth mode.
Ready?
- Start putting a certain percent of money aside with each paycheck, into a high-interest or cash-back savings account. You can even set up automatic withdrawals, for those of you who are absent-minded (totally me?). I honestly don’t believe in giving you a percentage of how much to save, because to keep it real — the more serious you are about your money, the more you will save. Most advisors claim you should aim for at least 10% to start and then increasingly adding 1%, whenever you can.
- Build an Emergency Fund. This is usually recommended to be 3–6 month’s of your income or more and is separate from your usual savings account. I find that if you have children, own a home, are an essential worker and work in risky environments, you should be saving up to a year’s worth of expenses or more.
- Change your beliefs about money. Do you think money is evil? Do you think that the rich are bad people? Do you think that money isn’t meant for you? You are undeserving of being financially well-off? No matter what you have been socially conditioned or the stories you have heard based on your upbringing, if you do not believe that money is on your side and wants to grow and build with you, you will continue living a life of financial lack.
- Budget. Budget. Budget. You can get a free personalized budget sheet on my website, here. This is important in seeing your cash flow — the money coming in and out of your bank accounts — and learn what you have to cut back on or how much more you have to save. There are also great apps you can check out here, if you are not the stashing money in separate envelopes, writing our your daily spending or the excel sheet type.
- Invest. There is this beautiful concept called compound interest. This is pretty much where the term “make money in your sleep”, probably comes from. You want your money working for you, not you working for your money. How awesome would it be, if the interest on your principal savings amount is also making money? You can put money in various different investment account types, such as: Guaranteed Investment Certificates (GIC’s), Government Bonds, Mutual Funds, Electronic Transfer Funds (ETF’s) and Equities (Stocks).
- Find a money coach or a financial advisor. A money coach is key to getting the foundation of your wealth habits and behaviors down pat. They will walk you through, how to budget, create a debt repayment plan, money saving strategies and to build lasting wealth. A financial advisor helps to advise you on where to invest your money over time and manages these accounts for you, so that you can make money while you sleep. Compound interest, remember?
- Have fun! Just because you are saving for your future, that does not mean that you have to stop having fun or enjoying the things you love to do. One, there are plenty of ways to have a great time for FREE, you just have to get creative and do some quick research on Google for some fun things to do in your local area. Two, if you budget and automatically save a certain amount of money every month, you can use the extra money to do whatever the hell you want, without feeling guilty about not having saved.
The most important thing to do, is to save. Saving money is crucial to you living a more financially stable and abundant life. Not spending with no purpose and goal. You can go at whatever pace you please, this is not a race. What’s important is that you are planning ahead.
This can be as simple as calculating out how much you will need to retire and work everyday towards that amount. There are so many tools and calculators out on the great world wide web, that you can plug in to see how much money you would need to save to have a million dollar retirement, how much money you will need to put a down payment on a home, how long it will take to pay off your debts and etc.
The possibilities are endless, and there is no one formula that fits all. Of course, there will always be particular situations which may need special consultation and if this is you, you should definitely reach out to a financial expert for advice.
- Check out the link to the U.S. based article on millenial savings here.
- $500,000 is the minimum the average millennial will need to save for retirement, but this depends on your circumstances and where you are at in your financial journey. Please make sure you check for yourself what this number will need to be.
- If you are a person of color and from a low-income household, please reach out to me and I will be more than happy to offer you some free or discounted coaching, depending on your situation. I believe that everyone deserves a service that reflects their circumstances, and not just their needs.
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