As a student of school and life, I believe everyone must first learn to earn.Â
Thereâs no such thing as a bad experience. Every opportunity is worthwhile and if you want to gain something from it, you always can.
The same thing goes with procrastination. If you donât want it, then youâll find the easiest excuse to avoid it. If you desperately want it, you will do absolutely anything to have it.
I find students my age avoid opportunities that arenât compensated and put a label on them. Lately with The Great Resignation in full force, they have started to get too picky and say ânoâ more often simply based on pay.Â
Managing a side-hustle will teach you a great deal about operating a business but without gaining exposure to less glamorous non-paid opportunities, youâll be missing out. Some attempt to be perfect, follow one path, or control every outcome and end up missing out on the great potential that can come about from trying something new.
The younger we are, the more mistakes, hiccups, pitfalls, failure, and rejection we witness. These opportunities are essential and in fact necessary to succeed. Thereâs no success without failure yet as adults, we try to eliminate and avoid all possible mistakes. We prefer to follow the most comfortable convenient lucrative route. Yet in hindsight that sets us further behind later on.
Rock It
To make sure you are consistently capitalizing on your human potential is to strive to have fun with as much as possible. Now not everything will be engaging 24/7 and thatâs not the point. Challenges are inevitable and life will be hard but coming in with the mindset of believing it will get better and anything can be enjoyable despite the hurdles is such a powerful way of thinking.
The beauty about being a kid is that you are on the ultimate mission to have fun as much as possible and 110% focused on doing so. Kids fall, scrape their knees, donât earn the prize, and embarrass themselves constantly but eventually get over it by lunchtime. They donât care what others say about their sweater or pay attention to someoneâs tone. What doesnât make you happy, you avoid, not ruminate or gossip about. We do what we need to do to stay happy and let others follow or disagree if they please. Othersâ opinions are thoughts, not facts. They donât get internalized or feel as heavy as when we get older.
Why has it been so difficult for our older selves to follow this perspective?
As Iâve grown up, Iâve become more aware of my surroundings, responsibilities, perspectives, emotions, complexion, and perception. You name it, Iâm thinking about it and it becomes bombarding and distracting at times. I canât imagine how many things my brain is subconsciously pondering about currently. If I had my 10-year-old hat on but kept my knowledge, it would certainly be more blissful. If I can guess, roughly 80% of whatâs preventing us from achieving what we are capable of is through our destructive thoughts and obsession with the paycheck from the start not the process of learning.
Fail to Prepare, Prepare to Fail
As our brains develop, we lose our goldish memory. For better or for worse and we come to the frightening realization that our time on earth is precious and not guaranteed.
If students are good at one thing, it is procrastination and being able to persuade themselves not to do something. âDonât start investing until later when Iâll know moreâ or âretirement isnât coolâ are setting students on the wrong path. As a personal finance connoisseur, this bugs me the most since at the core of all these excuses is the concept of time. Time is of the essence and is money.
We wasted a lot of this as kids. On average, it costs an average American household $250k to raise a child up to 18 yrs! The median household net worth is $121,700, the average median home price is $374,900, and the average median income in the U.S. is ~$70k per year. Americans not only spend more than they have, but their net worth is also nowhere near the recommended benchmarks of 20x their gross income. Paying attention to the investment in yourself and the process of experimentation is underrated and directly correlates with earnings potential.
A lack of cash is also a nationwide problem. Even during high inflationary times, as we approach a period of tightening monetary policy and rate hikes, cash will become king again. 2022 may be more economically unstable ever since March 2020. It is advised to have at least 20% of your net worth in cash at all times to not only prepare for emergencies and stay out of debt but to take advantage of dips and discounts in the market when you can.
Not to mention less than half of America is invested in the markets! Investing in yourself and in the market is a great way to boost your human potential. Earnings will be made with little to no work this way so you can focus on learning more. About 54% of Americans still live paycheck to paycheck and shockingly, nearly 40% of earners earning more than $100k annually live this way. We are not frugal enough and waste a lot of potential here.
Wasted Potential Is Not Trying It
Paycheck to paycheck living on minimum wage isnât expected to be the case with one earning over $100k per year yet 60% of millennials report living as a HENRY, High Earners, Not Rich Yet. These are individuals who earn between $250-$500k per year but have not saved, invested diligently enough, got started too late, donât contribute the max to their tax-advantaged accounts, rely on minimal income sources such as their primary job, owe more than they own, and spend too much, invest too little.
They work hard but play harder. This can be dangerous when higher interest rates rise and student, car, and credit card loans loom larger. There are far too many people who look better off than they really are. They are blindsided by their paycheck. While passively invested it tends to be easier to downsize, live the stealth wealth lifestyle, and invest in oneself since returns arenât sold periodically and instead continuously growing behind the scenes. Similarly to owning a home, it is recommended not to sell prior to 5 years of investing to earn a substantial return. HENRYs impress others with things they donât need with money they donât have to impress people they donât know. Donât strive to be a HENRY. It is wasted potential not to consider investing earlier and learning instead of only earning early on.
There may be more Americans earning over $100k in the top 20% marginal tax bracket but with a higher income, not only comes a higher tax bill but more likely an unnecessary lavish lifestyle. Until you save more and spend less, you can never be truly free and HENRYs are dealing with this dilemma.
So how do we combat this?
Feeling financially stretched and stressed arenât unusual feelings millennials carry. In their lifetime they already dealt with 2 recessions, the Housing Crisis, and the covid pandemic. Although in many cases the roaring 3-year bull run boosted earnings potential for many more than in any prior year, their lifestyle choices, debt load, pent-up demand, and poor spending habits have continued to dampen their potential.
This goes hand in hand with wasted potential. At the start of our careers, we want to capitalize on every opportunity, learn as much as possible, and meet as many people to learn, grow, and connect. Gaining experience as a teen usually takes the form of a minimum wage job or volunteer opportunity where transportation and food can easily surpass earnings. At the start of oneâs career, expecting to earn more than learn shouldnât be the goal and this mindset has troubled many studentsâ future prospects by solely focusing and getting picky on earnings instead of reaching for any opportunity that is available to them.
This is a mindset and belief that has carried on with millennials, an indebted generation that needs to spruce up their financial lives by becoming financially literate. Ironically, despite the pandemic, theyâve gotten back on track and millions have joined the gig economy. In addition, within a few years, a massive wealth transfer inheritance will be passed down from Baby Boomers that amounts to over $35 trillion in the next few decades according to the FED.
Millennialsâ earnings power will increase by around 75% across the next few years thanks to their generous parents/grandparents as the wealthiest generation but beyond this inheritance, I always urge younger generations to not waste their potential by only focusing on earnings. Any lump-sum inheritance or lottery win can distort your reality and hurt your potential.
I believe any experience is a great experience but many times, people donât bother trying opportunities that arenât related to their major, area of study, or liking. We tend to forget that most venture into different fields beyond what they studied in school. Not experimenting and learning outside the classroom is wasted potential.
Itâs easier to take up something that may seem easier or pay better now but it may not be as beneficial in the long run. The ideal way to increase your earnings starts with exposing yourself to different ideas, cultures, people, and coming in with the perspective of wanting to have fun and really learn not confirm what you already know. We all have massive potential. It is unfortunate many arenât willing to get uncomfortable and be patient enough to learn first in order to earn more later on. Thank goodness we have our portfolios as a backup.
Be an open-minded generalist, not a close-minded specialist to be able to adapt everywhere and learn at a rapid pace. Know a decent amount about a lot not too much about a little. Without enthusiasm and curiosity early on, this can lead to weaker financial habits later since the best investment will always be in yourself. Yes, your time is as important at age 10 as it is at 85 but saying no to something that may not seem terrific now but will immerse you in something different is the best experience you can give yourself. When starting out, with fewer options, learn and grow anywhere you can. The earnings will follow.
You have absolutely nothing to lose besides regret. Take every opportunity you can to try something new earlier than later. Be a kid again and explore. Focus on your finances once you put that investment into yourself and in the markets. Learning leads to massive earnings later on if you commit to it. Donât waste your human potential anymore.