Why Millennials are struggling financially - and how can they become rich in life with no money
The generation of the millenials who are now in their 20s to 30s are experiencing a major social shift, not just according to polls. The questions of how to become rich in life will be especially hard for them.
They will be the first generation to have a living standard that will be below that of one of their parents, at least according to many different opinions and recent estimates.
Here I want to explain to you why this wide-spread belief seems to be more and more popular and the reasons for doing so, and also what real effects it will have on you if you belong to the millennials.
But I also want to show you a system that does work today, that has always worked in the past and that will continue to work in all sorts of economic conditions.
If you follow it I have no doubt that you can become successful and wealthy beyond your wildest dreams, even if the odds might be against you at the time.
And it actually is also very simple, and it is trivial whether you are a millennial or not. Let’s get you started!
Economic Pitfalls For Millennials
Now I have to admit that there might be some difficult times economically at the moment. The low interest rates in the entire Western World has caused a tremendous rise in living expenses.
And we needed the low interest as the only way out of the financial crisis of 2008, which still seems to be present in the mind of many people.
Especially in rent and real estate prices, the amounts went through the roof during the last decade.
In many big cities of the world, the situation has gotten worse that living in the city centers has become a privilege only the rich can afford anymore, forcing the “average” citizens to move to the suburbs or outskirt areas.
For Millennials and others as well, affording a place to live has become a struggle since then.
In the same line, the prices for basic food and utilities grow every year wide above inflation, making the most necessary things for survival in life more and more expensive
All this would not have been a problem if the wages would have also risen in the same way and the spending capacity would have stayed the same. But unfortunately, the wages have stayed the same for about 20 years now. That means with the rising prices the real spending power decreases every year.
That makes the situation for millenials who are young and want to build a future for themselves very tough, even though they are the future generation that will be ruling the world.
To make matters worse, the starting salary in many industries even decreased compared to prior times, making it even harder for them to start living on their own terms and move out of mom’s basement.
In 2016, 15% of the millennials aged between 25 and 35 (!) were still living in their parents home, as a sad result.
Simultaneously, there are massive amounts of debt lying on the back of the millennial generation, with college debt exceeding 1.3 trillion alone in the United States!
Therefore this generation is also the most educated ever since mankind with over 60% having a college degree in their resume.
And here the massive focus on education fires back at them: a college degree is no longer something to guarantee a high-paying job or a security for your personal affluence, instead it has become a standard equipment you need to be invited to a job interview in the first place.
So even if you took lots of debt, struggled for years through college, then your chances of landing that job you always wanted are still low!
And so many millennials end up in a job they had to take in order not to get eaten up alive by their debts, instead of a job that utilizes the education and personal strengths of the individual, what was initially expected of many.
Add to all that disaster now natural economic tendencies, like inflation that has always been there and will eat up any form of cash that is lying around for too long all by itself.
Altogether, we can clearly say that the world for young people has dramatically changed and the old system of our parents where you had to get a good job in a big company and make a good education to have a nice life are outdated and need to be re-written.
So how do we get out of this financial maze? Is there any to end the financial struggle? And as you probably know the answer is: of course.
One Way Out: Move Forward!
Now let’s look at the average young American or European Millennial and their situation based on what we know so far:
(Note: we use example numbers here, and relatively small ones. Depending on your country and city, the numbers can vary vastly and usually change for the worse)
Let’s call our example Michael.
Michael worked hard to finish his bachelor’s degree at age 27.
He is driving a car which he has leased, costing him 600$ a month with the insurance, and if we add up the fuel, average costs for maintenance, tires and other services we have a net of 900$ monthly only the car is costing him.
To pay back his student loan Michael also has to pay 400$ per month to the bank.
He has a flat he shares with his girlfriend, so they also share the costs of 500$ per person just for rent, making the small apartment a 1.000$ rent.
Then add all the utility bills and other expenses like a cellphone contract, health insurance, internet, Netflix and alike to make that 700$ per person easily.
For food Michael spends another average 300$ a month and another 150$ a month for shopping.
Now luckily and after several months of search, Michael managed to get a typical job with a degree: an unthankful middle-management position paying him 50.000$ per year starting salary.
Not even that bad, at least financially.
No matter where you live, 35% taxes will be a good number you will easily have to pay on that kind of salary, leaving him with 2708,33$ net per month.
2.450$ per month are his expenses.
That means our state-of-the-art, well educated Michael who is young, courageous, and has a degree has not even 250$ per month left for himself after covering his basic living costs! We did not talk about whether Michael maybe would like a new Mac that costs 1200$ or that he and his girlfriend want to make at least one holiday per year, costing them another 1.500$ per person easily.
And we also did not mention what would happen if they decided to have kids.
Now what happens if you earn less than 50.000$?
Or if you do not have a degree at all?
Or if you have a severe disease or suffer an accident that will prevent you from working 2-3 years?
Or if you have to pay rent in a city center?
Or if you want to drive a nice car with much higher maintenance costs?
What if Michael would lose his job and it takes 2 years to find another one?
Or if his girlfriend gets pregnant? Boy oh boy…. not a good place to be.
Also an interesting process for me is that today nobody talks about buying a car anymore, it is seen as a standard that you finance them instead.
While that is of course your full right to do, bear in mind that the bank also charges good fees and interest rates for providing the leasing option. This is another common financial trap many Millennials fall into.
Some people even finance their furniture or TVs these days!
The mean detail that is often overlooked is that even on the smallest finances three are fees and interest to pay - making you pay 1300$ for a couch that initially costs you 800$ - 500$ extra for fees, service charges and interest.
So the needy and poor people get only more in need, a vicious circle, but unfortunately common and socially accepted these days. Putting all this together, the financial struggle is really no surprise many young people find themselves in.
But think back to Michael with his 250$ leftover at the month, what would happen to him if his dishwasher, fridge and washer would break down in the same week? Would it even be possible for him to pay such things in cash? And the vicious circle continues deeper and deeper…..
Now after seeing those numbers, it is obvious that one out of five working millennials today has reported forms of depression already, even though we are talking about very young people here.
Although it might be painful and horrible, complaining never solved any problem so far. Think of it like a D-Day landing.
Despite thousands of casualties, the Allied soldiers on that day in their landing craft had only one way to go: forward and directly into the German defense lines, right into the heart of the enemy.
And we are going to do the same - economically speaking, thankfully.
We will also advance to the heart of our financial system and make use of every little inch of cover that we can use to protect ourselves from the certain financial disaster that awaits those who will continue to follow the herd.
Escaping a system that is designed against you
To escape the system today’s millennials are born into there is only one way:
we will have to boost your income.
I am not talking about the 3% raise here you negotiate with your boss, if we really want to advance then you have to earn 4 or 5 times as much as the average earner around you, in our example the ideal income would then be around 10.000$ net per month.
If we get back to Michael and manage to boost his income up to 10.000$ a month, 90% of his problems would vanish immediately.
We are not talking about becoming rich as a Millennial, and also not talking about becoming a millionaire. We are only looking at the core of what makes living worthwhile that is denied to most people:
To live in the house you want to live, not the one you can afford.
To drive the car you want to drive, not the best you get for your money
To eat the food you and your body wants and to do your best to stay fit and healthy and not eating out of the can to save money.
To take the vacation you would like to make and to see the place in the world you always wanted to see, but you could never do because it would cost you too much and you would have to cut on other expenses.
To provide for you and your family all the standards and resources that ensure your best possible future for your kids, and not that they will be doomed to public school forever.
How does that sound to you?
Do only the rich have those privileges?
I can tell you they are accessible for all of us, if you only know how and where to look for them.
Look at your situation you are currently in, and think for yourself how much you would need to have all these options. I assume that many of you would not even need 10.000$ a month on a consistent basis, often even 6.000$ or less a month can make it all happen already.
And now we are going to see how you will get to that number.
Hint: it also does work if you are not a Millennial.
High Paying Job vs. Having A Business
What is the single biggest difference between a high-paying job and running your own business?
Obviously there are many, but which one is the most significant?
Is it the differences in the tax system or the amount of self-determination? Those 2 are also very important, but not the ones we are looking for because that is:
Value creation.
Or put in a simpler way, the direct process of how your salary is earned.
Why is it so different?
Because in a job, the company you work for has your office and your salary calculated in it’s expenses and pays you the exact amount that makes it profitable for them to employ you and pay for all your benefits, while gaining enough value back in form of the time you work there.
That is what the job pays you for, why there will always be money coming in at the end of the month for you.
There is only this one company you work and this one salary that you receive. To exceed it you either have to be promoted or find another company that pays you more, which are both not easy to do in real life although it might sound easy in theory.
While in a business, the money you earn is determined by the value you create for the customer. People buy a product you sell if they see enough value for themselves to profit from the purchase, whatever it is you sell.
And here comes the interesting thing: there are lots of people!
That means by having a business, even a small one, you can find ways to serve more customers simultaneously. And that will increase your salary according to the number of further customers that you will be serving.
Be a servant of many and you will have plenty for yourself - actually a rather easy way to look at it and yet it describes precisely what makes owning a business so significant in our economic insecure and hard times for millennials:
Companies grow and expand, salaries get adjusted to inflation
Sounds good, but the thought of starting your own business is still too daunting too you, or you think it is too risky or too hard?
Well we do not talk about starting the next Microsoft here, nor do you have to become the next Elon Musk.
Starting a business can actually be something very simple, check out this blogpost on various different models that are low-cost and you can use and start right away for example.
The overall goal should be 10.000$ in net profits for you to live as a millennial, or to fit it to your situation look at your expenses, your goals and the things you want to accomplish in life and the make your own calculation how much it would be.
Make sure you also keep in mind all forms of taxes and hidden costs, as many will not be visible up front in the planning stage of a business.
Let’s be honest - 10.000$ a month for a business is not much. But for you as a private person the amount is tremendous! This is the financial power we seek to get Millennials out of their struggle.
And this is the form of leverage we want to tap into - build a business to have the profits of a business where the numbers are large by nature and you have many tax advantages, instead of collecting a steady paycheck where the number are small by nature (every cent you earn more is 1 cent more expense for the business - and management always tries to cut expenses!) and where you have the highest of all possible tax rates.
To make enough revenue, you will need a steady and large amount of customers. I don’t want to sugarcoat it for you, despite all the mentioned advantages and the life in abundance that awaits you on the other side, you will first have to endure a often long and harsh time where everything and everyone will try to come up against you, even if you do everything right.
That’s why you should start early, to make sure the factor of time and your personal growth will work in your favor. It still does not make it a sure thing but it certainly raises the odds in your favor. Even a daunting failure carries in it the seed of future success.
If you are a millennial reading this, this is your wake up call!
Try to learn as much as possible in the fastest possible amount of time, our blog here will help you as good as we can to set you up for the necessary financial literacy and entrepreneurial skills.
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