Millennials face many proverbial financial hurdles, but there’s one very important factor that’s always been on their side when it comes to securing a healthy financial future: time. But with the oldest members of this generation approaching their mid-40s, it’s past time to get serious about investing to build wealth.
This is the finding from a new study. Alta FinanceAccording to a survey by the investment platform, millennials are more financially anxious than any other generation and are the most likely to say they need more than $1 million to “thrive in today’s economy.” Additionally, 47% say they need $1 million just to be financially stable.
From record student loan debt to a home buying crisis to persistent inflation, the economic situation isn’t great for millennials, says Samita Malik, consumer wealth advocate and chief insurance officer at Alta Inc. All of this helps explain why they’re feeling financially anxious and underscores why it’s so important for them to focus on building wealth quickly.
If earning $1 million is your goal, many people are falling short: Only 16% of millennial respondents said they have a net worth of more than $1 million, 64% said they have a net worth of less than $250,000, and one-third said they have assets of less than $50,000. Nearly four in 10 have less than $10,000 saved.
“Longevity in the market is paramount, and millennials still have a lot of wiggle room, but we want them to get started now,” Malik says. “Time is definitely on Gen Z’s side, but millennials are right around the corner.”
Malik emphasizes that you don’t need a ton of cash or a huge investment to get started — in fact, starting small gives anyone an advantage.
“People think that to become a millionaire, you have to be super successful in whatever field you’re in, be it tech, finance, entrepreneurship, online influencer, or whatever,” she says. “Most millionaires come from hard work, savings, and investments. Small, consistent steps and habits built over time create financial security.”
Malik says there are three key components to growing your net worth, and he breaks it down into three main steps: know it, grow it, and protect it.
To know your assets, you need to understand your income and expenses—what you spend your money on and what you earn. Creating a budget and tracking your spending can help with this. “Once you know your situation, you can start to evaluate how much you need to set aside each month for savings and investments,” she says, adding that it makes more sense to focus on “big-ticket items” like housing and child care costs, rather than smaller expenses like buying coffee.
Once you know where your money is currently, you can focus on growing your assets. Start by determining your financial goals and risk tolerance. From there, you can decide where to invest your money, whether that’s in stocks, alternative investments, or something as simple as parking your cash in a high-yield savings account.
“It would be nice if money earned you while you sleep,” she says. “It’s so important to get your money to start working for you. And don’t forget to diversify. The old advice about not putting all your eggs in one basket makes a lot of sense and is so true.”
The final step is to protect your savings with products like insurance, tax and estate planning, said Malik, who describes these services as “Kevlar.”
If all of this seems daunting, Malik recommends focusing on one step at a time and slowly building up: Building your net worth isn’t achieved overnight, but rather by making small decisions every day.
“Given life expectancy, millennials still have 30, 40 years to go,” she says. “Nothing beats investing time in the markets. Compounding interest is truly a magical phenomenon. They still have a great deal of control over their financial future.”
