Millennials are poised to be the wealthiest generation of all time for a variety of different reasons. They are certainly different from generations before them, especially when it comes to pursuing work they love and their entrepreneurial spirit. This combined with the opportunities for building wealth that are available to them now gives millennials the perfect backdrop to pursue long term financial success. Here are some qualities and opportunities that millennialshave right now that they can use to their advantage.
A Love of Entrepreneurship
One of the most talked about differences between millennials and older generations relates to the workplace. Most millennials are not planning on staying in one career for their entire working lives. In fact, many of them have entrepreneurial dreams that may lead them to venture out and start their own businesses instead. Entrepreneurship is not bound by yearly reviews or incremental raises. Unlike a traditional workspace, when you own your own business, your income potential is limitless. Many millennials have embraced this and if their businesses are successful, they have significant potential for wealth building. (For more, see: Measuring Job Satisfaction in the Millennial Age.)
Ability to Start Investing During Market Dips
Another great advantage that millennials have is the chance to invest during market dips. Not every millennial took advantage of this opportunity during the 2008 recession as many of them were in college. But as the market experiences different highs and lows, millennials can take advantage of these opportunities because time is on their side. Older investors might have to be more conservative but millennials do not have to be. The earlier they start investing the better.
Incredible Access to Financial Technology
Now more than any other time in history, people have incredible access to unique financial technology software, platforms and apps that can help increase financial literacy, encourage saving, and allow people to crowd source and reach more people than ever before. It seems ever month new financial tech startups come out aiming to make our financial lives easier and smoother. Because millennials were the first generation to grow up with computers and the Internet, it's much easier for them to learn these platforms quickly and incorporate them into their lives, whether it's simply tracking their spending or automatically investing their spare change. (For more, see: Retirement Savings Tips for 25- To 34-Year-Olds.)
Learning Lessons from Others' Recession Mistakes
Many millennials were old enough to see the impact of the recession but not quite old enough to be affected by it personally. For example, many millennials were not home owners in 2008 but they likely saw friends and families lose their homes. Witnessing this and struggling to find jobs during the recession left a strong impact on many millennials. In fact, this could be a negative because a recent study by Fidelity Investments actually showed that one in four millennials don't know who to trust when it comes to money advice. That said, many are willing to learn about money and want to put a focus on savings.
Strong Commitment to Savings
Recent reports show that millennials start saving earlier for retirement than any other generation. In fact, the average millennial starts saving at 23. Due to the wonders of compound interest, this fact alone will set millennials up to be the wealthiest generation of all time. The earlier millennials save, the more time they have for compound interest to work and dramatically increase their retirement savings. If millennials are working for a company and have a company match, they should be taking advantage of the match as soon as possible. (For more, see: 6 Books for Millennials Interested in Investing.)
Hope for the Future
At the end of the day, one of the greatest aspects of millennials is an enthusiasm and a hope for the future. Not that many in the millennial generation have families yet or are just starting to have families of their own. They want their children to have more opportunities than they had, especially when it comes to finances. Many millennials are even more committed that their children not go to college and accrue debt since debt is so pervasive in the current millennial generation. Many millennials are also committed to making money part of their family conversations and teaching their children how to manage it. This, above anything else, offers the most hope for the future.
The Bottom Line
Millennials are a unique generation because they have significant opportunities available to them that weren't to previous generations. This includes the ability to learn from the recession, a desire to save earlier than any other generation, a greater percentage of people who are pursuing owning their own businesses, and more. With all of these great advantages working in their favor, millennials have the potential to become the wealthiest generation of all time especially if they start saving and investing from a very early age. If millennials want to be a part of this, all they have to do is take advantage of these opportunities to build their wealth. (For more, see: Retirement Planning the Millennial Way.)