Why am I thinking about this? I’m the father of two upstanding millennials who turn 18- and 20-years old in May. There is nobody more proud of their accomplishments than me. My daughter is about to graduate high school with a strong GPA. She is interested in politics and diplomacy and is off to college this fall.
My son is closing out his sophomore year of college, excelling in physics, astronomy and calculus. He is a runner and has a big heart. Though both kids have part-time jobs, my son is the saver – and a good one at that (maybe he learned that from his dad!) – while my daughter is the spender.
Though I have great confidence in my kids, I am well aware that millennials have been branded as entitled, lazy, and reliant on electronic devices. A couple years ago, a poll showed millennials were quite pessimistic about their job prospects, but they are being hired for well-paying jobs – if they finish college.
Why I’m worried
When the rubber meets the road, I have faith in this generation. But I don’t know how they will handle the alarming, already-enormous, and still-growing debt our country is burdened with. We are near $20 trillion in debt. Who will end up paying for it? Millennials – and the generations behind them.
Many in the older generations have given up hope, saying there is no way the millennials will ever achieve enough wealth to live comfortably – not with the current situation as dire as it is. However, it is unwise to give up hope when there are solutions.
In order to create a safer and more secure financial future, millennials must start saving early, take some calculated risks, and not rely on the government (Social Security may be gone altogether). But it doesn’t look like they are.
A recent article on CNBC said that millennials are not investing. They are either confused about investing or can’t be bothered. Sure, many say they do not have the discretionary funds, but the time to create a secure financial future is now.
The one thing millennials can do to achieve financial security
Many in my generation (the lost one!) got started with 401(k)’s in 1978 – a brilliant way to save and often with lower tax consequences. Meanwhile, investment returns just from the SPX 500 over the past 40 years have been staggering. Many people who invested in the stock market have created great wealth for their retirement, whenever that comes.
Millennials, start saving to your 401(k). It is the easiest and most care-free way to invest in your future. If you can, max out your contribution – especially if it is matched by your employer. We call that “free money” – take advantage of it!
I am passing along the wisdom of saving and investing that my parents passed to me. Luckily, my kids get it and are eager to start socking away money to protect their future.
Next week we’ll talk about how the millennial generation can start saving for their children’s future.
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