A Millennial’s Guide to Finance
The Finance Lowdown
Ever wondered how some people do so well, retire with so much, and others die with little to no legacy at all?
Disclaimer: Hopefully this post isn't too cheeky or b**chy for you. I'm brutally honest. :) #sorrynotsorry
For the last three years, I was working in finance. I recently decided to pursue other ventures and leave the financial advising world behind. BUT there are MANY take-aways.
I’d like to share with you the ways in which I’ve seen people either come out ahead… or retire way behind.
Do you want the bad news or the good news first? Let’s start with the good news.
5 Types of Successful, Wealthy People
#1 The Logical Choice
If you Google “Top Paying Jobs” and then you pick one (provided you have the smarts and the wherewithal), you will most likely be able to stick it out and make decent money. Doctors, engineers, nurses, accountants, etc. You’re going to make good money and live well. You still have to save, though, or you’ll be out of luck in retirement. I’ve seen so many people making TONS of money and living right up to their means… with nothing to show for it on their 65th birthday. Nonetheless, if you want to ensure that you’ll be able to feed your family… do this. BUT unfortunately, these are typically not the people that become SUPER DUPER wealthy.
#2 The Grinder
If you’re in something high risk and unusual, learn a skill that not many people can handle, and are okay with a lifestyle that is contrary to a 9-5, you can also make a ton of money grinding it out. An example of this is someone that is on the slopes, managing people who are doing high risk oil drilling. You’re on the slopes away from your family for 2 weeks, then home with your family for two weeks. This will make a TON of money and these employees will retire very well. If you’re a city boy who likes to grab a beer after work… this isn’t for you. Many of the wealthy clients I’ve seen have been with the same company for 20+ years and were highly specialized in one particular area. This makes them valuable. Value and grit are paid well. This type of job is a step up from being an engineer or a doctor when it comes to generating wealth.
#3 The Lucky Son of A Gun
Some people wind up in the right place at the right time. This does not rid you of hard work, talent, and grit… it just helps, a LOT. If you are a 42 year old in charge of design at Adidas who makes a mill a year and has 10 million saved (PS this is a real life example of someone I know - different company though), then you were passionate, effective, and able to execute well enough with the opportunity you were given… but you also got lucky, young. I mean, some of these people majored in art…. In ART. So if you just want to be an artist, hang in there, it’s possible to make it big if you’re in the right place at the right time. These guys come out WAY ahead… but unfortunately you can’t bank on luck. It is true that the harder you work, the luckier you are.
#4 The Entrepreneur
This is even more rare than getting lucky in a big company. 90% of start ups fail. You lost your money, you lost your bet, you went out of business. I would vouch that starting your own business holds more risk than any of the other options. No risk, no return… that has been proven time and time again. These are the guys that I’ve seen collect REAL wealth. Like dozens of millions kind of wealth. They usually own some properties too. They leverage their assets to invest in other projects. They have so many irons in the pot that surely one will take off. The problem is that you have to have a bit of luck here as well. With 7 billion people on the planet, your business idea has probably already been taken *tear. However, the world doesn’t have another you… so I think you should go for it anyways.
#5 The CEO
One time I did a photoshoot for Renee James, who was at the time the President of Intel. Her house was SICK. I was so amazed at her wit, spark, and personality. I wanted to be her. How did she get there? I’ve heard a multitude of answers from various Intel workers one of which was that she was the assistant to someone important and shot straight up the latter. This is a combination of grinder, luck, logic, and an entrepreneurial spine. No matter what business you’re in, you want to OWN it. Not just metaphorically, but literally. I’ve witnessed a few of these badass men and women in my life here in Portland and holy cow, they’re firecrackers. This is another way I’ve seen people become stunningly wealthy.
Okay... on to the bad news.
5 Fatal Flaws of the Broke
#1 The Perpetually Broke
I’ve had meetings with people who are working at a job the “love” and “like the people they work with” and “never want to leave their coworkers hanging” and “don’t want to risk it” and blah blah blah. These people will continue to struggle until they die. Side note: Listen to Gary Vee talk about the fact that the only reason why artists starve is that they don't know how to sell. So I'm not telling you to leave your low paying job that you are passionate about... Just hear me out. It’s hard to save no matter what you make, but let me tell you… these people don’t even have the OPTION of saving. It made me so mad overtime I met someone who would stay in their comfort zone. I’m like, dude, how do you live? Take that risk that will help you do what you love AND make a decent living at it. If you want to be broke, “stick it out” in that job where there is no upside potential and you're not growing... go ahead? I wouldn't recommend it though.
#2 The Spender
Some people make a ton of money but they spend all of it. I once saw a $70,000 watch listed in the memorandum of a will. Ummmm, I don’t know if it was a gift or this person bought it but… really? That’s a little much. Not to mention that is ¼ of her yearly income. These people will stay broke if they don’t change their spending habits. For sure.
#3 The Average Joe
Some people just were not given the talent, grit, charm, or smarts for success. As much as I hate to say it… some people will always be average money-makers. It takes all kinds of kinds, don’t get me wrong… we need people to do the tasks that not every person wants to do. You may make a decent living but you will not be wealthy if you don’t have something special about you. Just to put it into perspective, a teacher who saved up $1 million by 65 may feel like they did really well. At a 4% withdrawl rate, that is $40,000 a year in retirement. $1M doesn’t seem so big anymore, does it? Personally, I'd like to have somewhere between $4-5 million in the bank when I retire.. at a minimum.
#4 The Empty Pockets of a Retiree
You think that living on a low salary is hard when you’re young? Think again. When you can barely walk because you’re old and brittle and you have $2000 to your name… it really is.. sad. It’s not pathetic, it’s not unheard of… I know that there are crazy situations and divorces and medical bills and bankrupsty.. blah blah blah. I get it. But the best thing you can do is to start saving NOW. When I started my big girl job, I put 10% (at least) into my 401k, at least $100 a month into a Roth, and started up a brokerage account with taxable $$. Just to do some quick math for you… if you saved $500 a month from the time you’re 25 until you are 65 at a 6% rate of return you would have roughly a million dollars. Not too shabby, eh?
#5 The Bankrupt
Kids end school with 60K in debt. A medical catastrophe leaves you with 60k in debt. THESE are debts that you can’t bankrupt away. I’m talking about the “I want to drive a Lexus” “I want a Louis Voiutton purse” “I want a lush vacation in cabo” kind of people who literally make 30K a year. Sorry, not sorry. Bankruptsy is not necessarily a cop out and some are embarrassed by it.... but how are you supposed to raise your kids to be frugal and money-conscious when you’ve spent a ton of money that wasn’t yours and then... had to be forgiven for it?!? Ahhhhh. I can't handle it.
So there you have it!
I'll be posting a blog soon on my own personal virtues and vices when it comes to finance... but I would challenge you to dig deep and think about which category you want to fit into... and which ones you absolutely do not want to describe you.
Hopefully you learned something new about wealth. I sure learned a LOT while working in finance and I will be better off the rest of my life for the things I've learned in the last 3 years.
Save some money!
Byeeeee
Chelsea
P.S. Super excited for the development of the Blog Biz.... see below :)
