The millennial generation is not expected to be an especially affluent one. Predictions that we will be poorer than our parents are popping up more frequently. Millennials from the United States are often riddled with debt and in Europe, this generation is still a lot more likely to be unemployed than their older peers. We were definitely not the winners of the financial crisis of 2008 as it wasn’t our assets being saved by government intervention, but our austerity that pays for it.
Although I am definitely one of the more privileged of our generation, earning an above average income and living in better living conditions than most, until recently I felt poor. It was a long process finding out why I felt this way, although by any objective standard I was not. I travelled frequently, the few things that I possessed were of fantastic quality and I even had a decent amount of savings.
But what do I mean by “feeling poor”?
I wasn’t surrounded by people who had ridiculous spending habits or extravagant lifestyles that I felt I had to match. I also didn’t have exceeding material expectations or wants. It was quite simple: although I was doing well financially I was afraid of money. Although I know this was partly due to my upbringing, there was a factor that I couldn’t account for. I was nervous checking my bank account and that something I cannot control had happened or that an unexpected payment would come in. In my opinion, it is not a lack of money that makes you poor, it is a feeling.
When I understood why I was feeling this way I decided to take action. To get rid of the feeling, and thereby quit being poor did the following, in that order:
- Paying off debt. Duh. But you are probably underestimating how fantastic it is to be absolutely debt free. In my case, I was investing my money although I was still in debt because I thought investing was more important. I have no idea what financial gurus would say on the return-on-investment side, but I can say from a psychological standpoint being without debt blows having money invested out of the park.
- Not spending the paycheck. This means that when you spend money, it’s money you received over a month ago. In short: at the end of the month, you still have at least the amount of your monthly pay in your bank account. Every bit of money that comes in rests there for a month before it gets spent. Not being directly dependent on your paycheck is a wonderful feeling. You don’t need to go much more than one paycheck though, that money should go towards:
- Invest! A little. If you look into investing, you might get the impression that you need to go hard or go home. I have read about “taxing yourself 25% of your income” to invest in your retirement. Quite frankly there are enough people who can’t afford this and then don’t do it at all. For others it becomes such a burden that they kill their savings plan altogether (like I did), and delay it until “they earn enough to be able to save”. Don’t do that. Take 25 Euros/Dollars/Equivalent and invest it in an MSCI World ETF or Global government bond ETF every month automatically. Do not ever touch that money. If you notice after 3 months that you can invest more, go to 50, and then to 100. Being engaged in building wealth, no matter how slowly it is, will help you feel more secure and responsible financially.
- Buy an item of real quality. And by that I mean something that you will use regularly, like shoes or a jacket. Why? Because that is what being rich means: having the cashflow to be able to invest in something that will save you money in 5 years. Having a handmade, goodyear welted shoe from Northampton will cost you a lot of money upfront. But it will last you more than ten years, saving you money in the long run.
One of the most important aspects that I have not touched on. In my opinion we can treat our personal consumption, and the resulting feeling as if it were an economic model with a demand and supply side. What I have touched upon is how to increase your supply, and especially reserves that make you feel more secure. However: if the demand side, what you want or feel like you need to purchase, your supply will never ever be enough. Remember: happiness is the gap between what you expect and what you get, even in money. Therefore analysing and controlling what you want or need is about 50% of the equation. But that is for another article.
The Article on Medium: https://medium.com/@menellial/4-steps-to-getting-rich-in-2019-b0fe575fb5d7
Submitted March 23, 2019 at 08:23AM by niphaedrus https://ift.tt/2HDAAq3
