Question: Hi Ma’am Rose. I always read your articles and I learn a lot from them. I must say you do have an appeal to millennials, as I am one. I have been working for a few years now. My employer pays well and I have been able to save regularly. However, I still think that my salary is not enough for my goals in life. What can I say, I have big dreams! Do you have any tips for this twenty-something millennial on how I can fulfill all my goals, which I estimate to cost quite a sum of money?
Thank you. – Big Dreamer Millennial via Facebook PM
Dear Big Dreamer Millennial,
Thanks for your message. Maybe I appeal to millennials because I raised three of them, and did so happily. They’re now 26, 23 and 20. I thoroughly enjoyed parenting them and I think you know by now that money lessons were very much part of their growing up years.
Since you belong to the age group of my sons, I’m going to talk to you the way I talk to them about money.
1. First of all, I am pleased that at this age, you already have your big goals and dreams, and big ones at that. That’s great. I am all for big goals. Write them down because studies show that those who write down their goals earn 10 times more than those who don’t!
2. Start with your WHY. You said that your concern is that your high salary right now may not be able to afford your big dreams in life. The Why that I’d like you to ponder upon is “Why do you want to achieve those big goals?” Let’s say you’re dreaming of having a certain lifestyle that’s quite expensive – a lifestyle that includes a 1,000 square meter house, European cars, etc. Ask yourself why. Hopefully, your answer will not be in the line of keeping up with the Joneses but something connected to your core values. Let’s say you tell me that because you want to provide well for your family and enjoy the fruits of your labor. I won’t argue with that reason but I will ask you to figure out what it really takes to provide well for your family and enjoy the fruits of your labor. Chances are, you may be able to achieve those values with a lot less than what you think. But hey, as you go on accumulating more wealth, I will not stop you from buying your 1,000 square meter house and European cars. What I wish to point out here is that, don’t get lost in the “bigness” of your dreams that you delay being happy. Being happy is a decision. In going after your big dreams, don’t forget the underlying values. Don’t sacrifice the things that you hold dear in the pursuit of material goals. You’ll be surprised to find out that most of the time, it costs a lot less to be truly happy and content.
3. Pay yourself first. This is the essential foundation of being wealthy, the first basic law of money. I’m happy that you already save regularly. How much? When my boys were still in school I gave them a minimum of 20% of their allowance as their automatic savings. When the two older ones started working, they were happy to increase their savings to at least one third of their gross salary. Come to think of it, if we pay the government around 30% of our salary, why should we pay ourselves any less than that?
4. Side Hustle. I’m not sure if your current job is something that you’ve always wanted to do since you were a child. A lot of millennials now side hustle in their spare time. Make some extra cash that allows you to pursue what you’re most interested in and passionate about like writing, fashion, travel, etc. without quitting your current job. This is connected to the second law of money: Get into a business that you understand. It’s important that you find your true calling so that work will be fulfilling. It is when you are fulfilled in what you’re doing that success comes which is almost always followed by earning well.
5. Delay your gratification. In this social media crazy days when what is of value is what is “postable,” I can understand the pressure for you guys seeing your friends post their nifty stuff and vacations left and right with #Blessed! Even if you say those posts sometimes irritate you, let’s face it, you are somewhat persuaded to also have those stuff to feel you belong, or to feel equally successful. But remember the third law of money: Let your gold work for you. Have an army of golden slaves before you buy luxury.
I tell you this basic law of money is what separates those who just get by from those who are able to accumulate considerable wealth. To give you an easy to remember guideline, I say:
Sorry if it sounds way too strict but this is the only way you can maximize the power of compounding.
To help you in delaying gratification, have a Balance Sheet that you update periodically. That way, you will experience gratification, not by spending your money but by seeing your money grow.
6. Automate your investing. You said your employer pays well. So talk to the bank handling your payroll account and enroll in automatic investing. Once you’ve completed your Emergency Fund equivalent to six months of expenses, invest the rest in equity fund. Equity Index is your best bet. You may also wish to include some fixed income instruments to have a healthy asset allocation. (Click link to read more on this.) There are online platforms to choose from and I know millennials now do most of their transactions using their smartphones. Automating your investing takes away the behavioral challenges you face every payday in this consumeristic society.
7. Fund your own retirement. Unlike your parents and grandparents, I don’t think you can count on the retirement fund provided by your employer plus your SSS or GSIS. For one, take note that the average stay of millennials in a job is now a very short 1.6 years! Gone are the days when employees would work with the same company for 20+ years resulting in a decent sum of retirement pay. So as early as now, prepare for your own retirement fund. Whenever you leave a job and get some form of separation pay, set aside a substantial amount from it and invest it in your retirement fund.
So there you go Big Dreamer Millennial. You have your life ahead of you. Enjoy your financial journey. Always remember to use your core values as your compass in making your day-to-day decisions, because if what you do with and for money does not align with your core values, no amount of money in the world will make you happy.
Start the year right by knowing your FQ Score, click link to take the test.
Rose Fres Fausto is a speaker and author of bestselling books Raising Pinoy Boys and The Retelling of The Richest Man in Babylon (English and Filipino versions). Click this link to read samples – Books of FQ Mom Rose Fres Fausto. She is a Behavioral Economist, Certified Gallup Strengths Coach and the grand prize winner of the first Sinag Financial Literacy Digital Journalism Awards. Follow her on Facebook and You Tube as FQ Mom, and Twitter & Instagram as theFQMom.
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