In a world where wealth is often seen through the lens of income, the real key to success lies in a change in your relationship with money. Explore the secrets to building a solid financial foundation when you’re just starting out at the wealth game!
So, how do you build wealth, especially if you are young?
A typical answer: Make more money. The more you make, the wealthier you are.
The real answer: Hold onto more of your money and put it to work. Grow your money!
Side note: If you said ”winning the lottery,” please think again! There are better, proven ways to build your financial kingdom.
Think of it like this: Trey makes a lot of money but misses out on building wealth because every dollar he makes flies out of his wallet. Suzan, on the other hand, makes less money; however, by following a proper money management mindset, she builds a path toward wealth.
Through healthy savings habits, avoiding overspending, and making manageable investments, Suzan stays ahead in the wealth game. Suzan will surpass Trey regardless of the difference in their salaries because she is disciplined and puts her money to work.
Money Mindset: How Young People View Money
Younger generations are increasingly changing their relationship with money: how they spend it, why they spend it, how they view saving, and even how they view dating.
Gen Z and Millennials are making significant decisions based on financial goals with many deciding to break up their relationship over differing views on finances (38% and 36%, respectively per Intuit).
Remember Trey? For 17% of millennials, reckless spending is their biggest red flag. Changing his spending habits could be personally and romantically beneficial for him.
Re-prioritizing how you use your money is a fantastic practice in thinking about the lifetime of your financial choices! When re-prioritizing, keep in mind that although you may want to live in the moment, you can also put systems in place to plan for future moments.
Here are 5 concrete, actionable steps to reevaluate your relationship with money:
- Create a solid budget for your daily finances
- Define SMART financial goals, like buying a home or savings for college.
- Track your spending using money management
- Get #FinanciallyLit with our financial education courses
- Work towards eliminating debt
Aside from the above, what other systems can you put in place? Let’s talk about two key steps to reach financial success: saving and investments.
Separation Makes Saving Sense
Imagine separating your money so you maintain better control of where it goes. In practice, it’s simple but effective in helping you create positive financial habits.
While starting your savings journey requires discipline, it is a foundational part of the path towards wealth. You can open different OneUnited BankBlack Savings accounts for different savings purposes like emergency, technology, travel, or even holiday gifts!
With AutoSave, you can rest assured that each purchase you make with your OneUnited Bank Visa Debit Card helps you reach your savings goals. We will round up each transaction and automatically transfer the change to a savings account. That’s the magic of AutoSave!
Take your savings a step further and build a rhythmic habit by setting up automatic portions of your direct deposit to go directly to your savings account. No direct deposit? No problem. You can also set up automatic recurring transfers between your checking and savings.
Ignite Investments Early
Now that we’ve explored the savings mindset needed for financial success, let’s delve into the practical steps that can transform your earnings into wealth. It’s not just about making more money—it’s about making your money work for you!
With investment instruments like money mutual funds or exchange-traded funds (ETF), you can combat inflation. Inflation is the general increase in prices and falls in how much you can buy with your dollar. When investing in the stock market, it’s better to have a longer-term investment horizon (5 years or more).
Learn more about stocks in our #OneTransaction article showing ways to build generational wealth!
Another way to grow your money is by planning for retirement now! Seriously, retirement plans have tax benefits and compounding returns. Choose to invest in stocks, bonds, money market accounts, and/or mutual funds.
401(k) and 403(b) plans are prime options, especially when your employer matches your contribution. That’s free money when you participate!
You can still live your “soft life” while making room for retirement savings. With every 2 in 3 individuals of Gen Z unsure if they will have enough to retire, starting early never seemed wiser.
One key is to consistently invest whatever you can. Small steps make healthy habits. You don’t need to invest a lot.
The other key is diversification. Minimizing risk, a diversified portfolio gives you a greater certainty that your investment will grow.
Your Keys to Young Wealth
The earlier you start saving and investing, the more your money can grow. Balancing your spending, savings, and investments has the potential to put you on the path to generational wealth.
Remember, the odds of winning the lottery are 1 in 292 million, and your salary will only make you as wealthy as how well you put it to use. Start your journey today and stay ahead in the wealth game!
OneUnited Bank is not a financial advisor and recommends you discuss with your family and a financial advisor.
