Building wealth seems frustrating and confusing for most no matter where you’re from. Considering we are living in the most innovative, expansive gig economy that has been transformed by globalization, we would think there would be no problem. After all, the internet is all you need to make it nowadays.
Yet my generation (GenZ) in particular have felt increasingly more anxious about all the opportunities and seem to not have enough time nor direction on where to go! More graduates from top IVY League schools are unemployed and almost 20 million Americans don’t have access to broadband internet.
To be honest, I personally feel a bit bombarded about all the choices at times. Do I stick with day trading or YouTube, write for Medium or invest in myself through religious reading for the next 2 years until I graduate and then figure out how to earn stable recurring income to retire by 30?
So many questions, not enough answers! Luckily, I’ve got the cure and it isn’t as hard as we make it seem.
Good and bad news.
Good news, we don’t have to listen to our parents bad news, we don’t have to listen to our parents.
Our parents obviously want the best for us but when it comes to growing up, teens tend to ignore them and go their separate ways wanting to appear as young mature yet ignorant and quite unknowledgeable adults.
Our parents have a lot to teach us such as why a stable job is a great start to growing wealth and how recessions come and go every 5–10 years, but there must be something beyond that that can help us spread our wings and become successful.
After all, that’s their main goal in life to see their children be more successful than them. If not, well, it’s a disappointment but it’s frankly becoming harder and harder for GenZers and Millennials to earn more than previous generations. You can ease your fears and read here why.
At this point in my life, I’m 2 weeks away from half way completing college. I have to say I’m a bit nervous and excited at the same time. I know that I only have 2 more years to enjoy life until I gear up for the real world but at the same time realize that I’m an NYU student who’s lived in NYC all my life who’s worked since I was 10.
I’m already living the real life after all it’s just been less formal than what adulthood looks like stuck in a cubicle. That mindset helped reframe my mind and realize that financial responsibility is at the crux of all that. I’ve always been fortunate for my unwavering commitment and motivation.
If I wanted an icecream as a child, I got it.
If I wanted to grow this blog, I did it.
What stands between you and your competition is the dedication and commitment you put in.
That’s it.
Simple as that yet most don’t have patience, stoicism or the guts to just follow through with something when they don’t see results right away and that’s exactly what I had to learn the hard way.
Overseas
My financial journey started when I was born. My 529 for college, Roth IRA was opened in Vanguard and our wills and trusts were to be signed at birth. I wasn’t part of it, my parents initiated it when I was in the womb.
Although they were immigrants from Poland fleeing from Soviet rule and didn’t speak a word of English as were engineering majors, somehow they knew more than the average American household spending money on junk.
They saved up every penny on books and treated their time like money. They said a lot of ‘no’s’ in order to get the ‘yes’s’ they deserved. That’s how they were able to build a wonderful life for themselves and me. I find that most immigrants grow much faster than Americans because they are unsure about the journey and do anything that it takes without hesitation. They aren’t risk averse and don’t like to be comfortable. After all, Americans can thank immigrants for all their hard work. Without them, this country wouldn’t be the richest in the world. It’s what makes this country unique. Americans believe they have everything and are already here, so they don’t go for it. That’s why discipline is at the core of building wealth and the mindset. Anything is achievable and immigrants are more likely to do so.
The difference between those who are good vs poor at managing their money know how to handle their emotions, deal with the present, weigh risk and not let anything stand between them.
Personality and soft skills are at the top.
So I present you 10 ways my family was able to live comfortably in the most expensive city in the country, NYC, rise from the bottom as immigrants and pave the path for myself to be able to be financially free and independent at 10.
PS. It’s easier than you think.
#1 Picture The Worst Outcome
You’re going to get sick of me saying this but history repeats itself and people seem to never latch on, plan for the worst hope for the best. What’s certain is uncertainty and being positive and all jolly 24/7 that you will be able to keep your job forever and everything the same during a recession is a big big mistake. Being positive will lift your financial prospects, but being realistically stern will keep you financially afloat and alive. Positivity works when you need to get through tough times not when you are preparing for them.
We know every 5–10 years a downturn happens so why is it so hard to NOT to prepare for it? Pretend all your income sources, hopefully you have more than 1, went down the drain tomorrow, will you be able to support yourself on the cash cushion you have, preferably 6–12 months for as long as it takes to find a job?
And FYI, it doesn’t take 2 days to find a job. It can take months. What if stimulus isn’t provided? What if your can’t pay the mortgage or the stock market plummets? Will you be fine? This is a tedious exercise that the financially free only go through because they are comfortable with the uncomfortable and question themselves.
They understand that what’s certain is uncertainty and changing when life really gets bad is too late.
When will you prepare? Tomorrow is already late, today is the best time. You have nothing to loose.
#2 Open A Pre or Post Tax Account POW
When I was born, my parents knew I should go to college in order to get a stable job, have a family, buy a home and eventually retire. This is the conventional stereotypical American Dream and there’s nothing wrong with it. They wanted to solidify a base and once those needs were met, it was my responsibility to chase after something larger, set up passive income streams, not solely rely on 1 earned income and set myself up for success. They taught me the importance of taking every opportunity presented and never stay in 1 place for too long.
College will always be popular because students want a reliable and stable path towards a job. Although the rising rates of tuition and ed-tech remote landscape are conflicting, college will always be in demand and that’s why colleges (a.k.a businesses) are able to rise the rates as they please.
My parents didn’t decide to open a 529 college fund when I started high school right before college, they planned ahead while everyone else was partying or living in the moment.
Regardless if you are planning on opening a 529 to Roth IRA to 401 (k) or IRA, they all work in your favor due to compound interest. Let your money grow for you by earning interest on top of interest. Simply by waiting 10 more years to start depositing funds, smaller amounts through dollar cost averaging the better not lump sums, you would have made almost double in the next few decades.
It’s about time in the market not timing it.
There’s a serious cost to NOT investing. Stop with the excuses, “I don’t have enough to invest” or “I can wait until when I secure this lucrative job”. Every time you wait, you are loosing because money = time and keeping your money on the sidelines in cash is devaluing your precious hard work.
Before interest, $20 per month adds up to $240 per year. Over 25 years, that is $6,000. That alone is a nice little bit of cash, but thanks to the power of the stock market it can be worth quite a bit more. If you were to invest the $240 at the end of every year for 25 years and earn 10% — roughly the annual return of the S&P 500 over time — you would have $23,603 at the end.1 If you were to invest the $20 automatically every month instead of at the end of the year, you would have $26,537 at the end of 25 years.
If you’re employed and your employer offers you a 401 (k) match, match every dollar for dollar. Take those benefits, set up life, health, dental, vision, home insurance. If you work for yourself, open up that IRA ASAP for free benefits and to invest as much as you can to hit the maximum the IRS offers. This will set you up on track to beat out inflation and earn double what the market makes. Your goals are worth living so plan for them accordingly.
#3 Be Selfish
Comparison is the theft of joy. Once you start comparing yourself to others, there’s no doubt you will get jealous, envious and start buying frivolous junk to keep up with the Joneses. Every time you compare yourself, you are taking precious time away from building the life you deserve. You have absolutely have no idea how much debt your neighbor across the street may have gotten themselves into to purchase that shiny new Range Rover to impress you with or what’s up with their divorce, illness or trauma they are going through at home.
If your mental state isn’t in check, nothing’s in check.
Live your life not someone else’s so pay attention to you.
Financially stable and wealthy individuals stay in their lane. They understand it’s not about how much you make/earn, it’s how much you keep. Where you live, how much you spend, how many kids you have, the types of vacations you take and what food you eat are some of the major expenses and considerations that most people neglect. They focus on the mini expenses debating between McDonalds or KFC or Netflix or Hulu subscriptions that won’t move the needle! They don’t bargain hunt, they just go for the first option because everyone else seems to be using it.
This is your life not someone else’s. Don’t fall into the trends or lifestyle inflation needing to keep up with every new style. It’s not only a waste of money, time, closest space and cleaning that must be done, it’s disrespectful to the life you were made to live.
If there was a group of non-millionaires and millionaires hurdled together, it would be extremely easy to identify a true millionaire from someone poor who tries to possess a stereotypical ‘fake’ rich persona wearing bling and shiny nonsense.
The true wealthy individuals could care less about what others think of them as. They are frugal minimalists that live the stealth wealth lifestyle. They are grateful for what they have by being selfish and appreciative.
Quality > Quantity.
Ask yourself what you really need not want.
#4 Cash Is King
Yes, cash devalues due to inflation, is a waste of money, doesn’t help you grow your wealth, blah blah blah but it also is the first and only asset that you can use if you are deep under the trenches. Cash is king because it is the most liquid asset. History repeat itself and we have to expect downturns, recessions and collapses.
They are part of history and the companies to individuals that come out alive are always the ones that not only have several passive income sources to keep them afloat, they have a cash cushion in case unexpected emergency expense come up, their renter can’t pay, they loose their job and must support themselves until everything gets back to normal. Too much of anything is bad so I wouldn’t suggest more than 20% of your net worth in cash or 6–12 months of expenses. It always takes longer to get back to recovery than it seems.
#5 Don’t Look At What You’ve Earned
Setting up automatic transfers was one of the best decisions I’ve made for my spending and budgeting. I’m not big on making to-do lists or setting up a color coded highlighted budget because I know when I need something and when I don’t.
I don’t obsess over what others have, I keep quality items for a several years and my major expenses are housing, transportation and food for a reason. Nothing else. I live my life and truly enjoy it by not looking at my paycheck. Setting up automatic transfers to take a portion of your income directly into your investment account is a great way to make sure you don’t over spend your salary and believe you made more than you should and not believe a bonus is ‘extra’ funny money.
Nothing is extra. There’s no free money. You put in the time somewhere so invest in it wisely. Automatic transfers makes the processes of making more money directly into the market even easier by not needing to split up my income in my checking, just directly portioned out into my savings and investments right away.
Make things work easier for you.
#6 Debt Has Different Meanings
The real rich understand that debt is good and bad. They aren’t afraid of lending some or borrowing it if they know what the purpose and outcome will be. The first priority to managing debt is to raise your credit score to around 700. Scores range from 300–850. This will not only make your life easier, it will boost your earnings without even knowing it. It’s the easiest thing you can do by simply paying off your credit card balance in full each month.
Don’t leave any trailing expenses. Pay them off and make sure you always have enough money in your checking so the charges don’t bounce. Once you start delaying your credit card purchases and don’t pay off certain amounts, you start incurring charges and this is where the bank haunts you. They are waiting on customers who forget to pay back so they can make extra money off of you. Similarly to automatic transfers with your bonuses to salary, set up automatic payments with your card so you don’t miss a month. If you’re busy at the end of the month and forget to pay off your charges one time you’re covered.
Once again make your life easy.
#7 Do Less Work
In order to be wealthy, you must live like no one else now in order to live like no one else later. Working hard leads to results and there’s no way out. 90% of millionaires are self made and did NOT inherit their wealth.
Doing less work ins’t about relaxing and retiring at 30 through the FIRE movement (read here), it’s being strategic about where your time is used. Work smarter not harder they say and do more in less time but what does that exactly mean?
Specifically within the stock market, the best opportunity for you to make consistent gains is by long-term passively investing. Yes, I know it’s tempting to become a full-fledged day trader like RoaringKitty on Reddit and deviate 10 hours to reading 10ks, dial into earnings reports and attempt to beat the hedge funds but 9 times out of 10, active investors always loose money.
Play it safe by being strategic not stupid, save your time, hassle, money and energy by simply investing in low-cost index funds or ETFS that track major indexes as a whole such as the S&P500 or Dow Jones Industrial Average. Long-term investing isn’t about beating and playing the market, it’s letting money work for you over time.
Be patient.
It’s an underrated skill.
#8 7–10 All Around
The average millionaire has 8–10 passive income sources and most of the time has a full-time job working for someone. I know this number seems intimating and it is but it doesn’t require as much work as you think and is also pretty fun at times to construct.
Relying on your sole income (earned income) from your job is a mistake. You don’t have to be an entrepreneur to be rich, you just have to be strategic about your income sources and not put all your eggs in 1 basket.
Holding on to 1 source is guaranteed to make you poor, not be able to sleep at night and not allow you to live the life you deserve. To have a roof over your head and sleep well at night, it’s best to have at least a couple independent sources of income so if 1 flops, you aren’t living on the streets or back in the parent’s basement.
Don’t be a disappointment and put that upfront work and effort in through passively working hence the name, passive income.
My passive income streams as a 20 year old include:
-Capital gains from selling and buying holdings in the market- 70% passive, 20% active
-Royalties from my startup
-Intellectual property: blog
-Real estate: rental from my tenant
-Dividend income: not much but a couple hundred per month from defensive blue chip stocks
-Marketing/Affiliate Partnerships/Advertising
-Tennis Coaching
-Tutoring
Future Plans:
-Business Ventre + Many More!
The sky’s the limit with building passive income. Let money work for you when you sleep. Don’t be a slave to your time, if you do, you will work til death.
Work as an immigrant. It will keep you humble, not be lured into prestige and status, something Americans are fascinated by and only lead them down a deeper rabbit hole. We can all learn from immigrants and adopt their impressive habits. They’ve built this country and most companies wouldn’t have been founded without them.
Focus on what you can control which is more than you think. All it takes is a shift in mindset and 10 years of unwavering commitment to bring about plenty of luck.