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What Millennials NEED to Know About Net Worth - It's Not About The Number, It's About These Money Habits...

What Millennials Need to Know About Net Worth

 

There are only two things that really matter when it comes to worth – self-worth and net worth.

How you feel about yourself and the value you place on your time are indicators of self-worth.

Remember the time you finally stood up for yourself at work and demanded credit for the projects you completed? Or how about the night you dumped the jerk who rarely returned your calls yet always expected you to be available? Those were times you knew you deserved more. You knew your self-worth.

But what about the day you decided to become a Lyft driver on weeknights to avoid taking on more debt? Or the nights you attempted to cook Pad Thai at home instead of having yet another night of takeout?

Those choices were in service of your net worth.

Feeling confident and killing it in all aspects of your life is directly correlated to your understanding of money. And in many ways, your net worth can be a useful way to gauge where you stand on your financial journey.

 

Assets – Debt = Net Worth

 

Your assets include money in the bank, investments and the current value of any big ticket items you own, like a car or house. (Sadly, your handbag collection probably doesn’t count.)

Your debt is any money that you owe — student loans, car payments, credit card debt, mortgages, etc.

I personally use Personal Capital’s free software to aggregate all of my account information to track my spending and net worth in real time.

Having a visual snapshot of where you stand financially at any given moment can be a powerful in the moment gut check when asking yourself questions like ‘Can I afford it?’ or ‘Is this purchase going to bringing me closer to or push me further from my goals?’

Click here to start your own free account!

 

Millennial Net Worth: How Do We Compare?

 

When I first calculated my net worth, I looked at the number and had one question, “How do I compare?”

 

Depending on who you ask, your net worth at age 30 “should” range from $3,000 to $150,000+.  

 

If you just read that sentence and scratched your head, you’re not alone. $3k-150k is no small range. And whether the “experts” realize it or not, millennial net worth is different from that of previous generations.

Fourteen years ago, the Class of 2003 had an average of $18,271 in student loans. For the class of 2016, that average has skyrocketed to $37,172.

 

In the last fourteen years, the average student loan debt has risen by nearly $19,000.

Meanwhile, average earnings are in decline.

 

In 1970, 92% of U.S. 30-year-olds earned more than their parents earned at age 30. Today, that number is just ~50%, adjusted for inflation.

 

In other words, the financial landscape has completely changed.

 

You often need to pick up a side hustle to pay rent, and your college degree no longer guarantees a full-time job with benefits. The struggle is real.

 

 

How Millennials Can Grow Their Net Worth

Instead of focusing on a specific number, implement smart money habits that will increase your net worth long-term.Click To Tweet

 

Here are a few to get you started…

 

1.  Create a plan for your debt

 

Even though it might be scary to look, it’s important to know exactly how much you owe.

Create time to sit down and look at all of your accounts.

Once you know the numbers, create a plan to pay it off. Your plan might involve extra payments towards your loans, refinancing your balance, taking on an extra job or even income-based repayment for student loans.

The most important thing is that you know the numbers and are ready to kick ass. You’ve got this!

 

2. Create an emergency fund

 

Finding extra money in your budget can be hard, but not having the money when you absolutely need it is even harder.

An emergency fund that is three to six months of your living expenses is ideal. If that number isn’t doable, start smaller. $500-1,000 is an excellent starter buffer against emergencies.

 

3. Start investing (even if it’s small)

 

If there is one thing that millennials have that other generations don’t, it’s time.

Regardless of whether you’re more comfortable with robo-investing, a traditional portfolio manager or index funds, the most important thing is that you start investing your money NOW. Compound interest is your best friend.

 

4. Give your money meaning

 

If you don’t have a purpose for your money, it can feel meaningless—just numbers that enter and leave your account.

To avoid the pitfall of apathy, give your money a purpose. Whether it’s a downpayment to buy an apartment or a trip around the world, determine the purpose before you start to save.

When you’re working towards your dreams, money is no longer boring.

 

5. Earn more

 

Sometimes it’s not about saving more; it’s about earning more. Whether it’s through promotions at work or hustles on the side, earning more money can change everything.

 

Wherever you fall on the net worth scale, remember this: all that matters is what you do NOW.Click To Tweet

 

Even if you’ve never invested a penny, or even opened up a savings account, you can reach your net worth goals.

 

Don’t throw in the towel because of where you land on a chart. You have the ability to re-write that chart, and to re-write your own financial story.

 

And you’ll probably find that as your net worth grows, so does your self worth.
 

 

12 responses to “What Millennials Need to Know About Net Worth

  1. I think everyone of every age needs to know their net worth! 🙂

  2. I am 31 and bought my first home few months ago..

    my assets – liabilities come to ~225k… guess I am ahead of the curve though i dont feel rich lol

    1. Ahead of the curve is great. Though unless you’re in the millions, it’s still a long road to rich. Though you seem to have the rich habits that are going to get you there, and that’s ultimately what matters!

      1. Thanks for your words !
        my parents got there in their 50s… I am trying to see if I can get there sooner… challenge makes life interesting

  3. Hey Stefanie,
    Great post with helpful financial advice for generation as always. Are you more of a fan of younger Millennials (especially those singles who live in expensive cities) focusing on career, renting, and investing most of their extra $ in a diversified portfolio as opposed to buying real estate and considering that the biggest investing component of their net worth??

    1. It really depends on your goals. If you’re not committed to living in certain place for more than 5-7 years, I say rent. In expensive cities I’m not convinced buying is always the best option. So I say rent – guilt free 🙂

  4. Knowing net worth is so important! How can you make big financial decisions without it? It’s somewhat scary figuring it out at first, but it’s so important to know where your floor is at before you can climb up any higher.

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