The millennial generation has grown up in very unusual economic times.
From burdening student loans to weddings that cost an average of $33,000, the times have certainly changed.
Social media makes life different. Shiny things and having fun is a seemingly 24/7 lifestyle. Overbooked calendars makes life hectic as many try to spin as many plates as possible.
Much is written and talked about how Gen-Y’s work multiple jobs, and focus as much on side hustles, as they do building careers.
For good or bad, change is change. There will always be change whether we as humans naturally fight it.
I know personally I have felt entitled, something millennials are constantly labeled with. But as a whole, the Gen-Y’s of the world are not so bad.
In general, we care more about the environment, healthy choices and long term happiness. We put emphasis on doing what’s right and being entrepreneurs. And honestly, I feel like millennials as a whole are pretty much like every other generation.
But with all that said – aside from buying new cars and spending money on entertainment – there are several areas where millennials should be careful… especially with their money.
>> Millennials – Your Social Life is Why You Have Debt
Where Millennials Should WATCH Their Money
I have come across literature that says there is a decline in financial literacy. I actually agree and disagree with this statement.
With so much on the internet, it can sometimes be challenging to determine what is good and what isn’t. (I mean I did start a blog one random Friday)
But some things are clear. For one millennials don’t trust the stock market, as investing is down compared to previous generations.
I can’t pinpoint the exact reason with so many theories as to why this is, but I find it quite logical.
For one thing, most millennials were old enough to be at least somewhat aware of the terrible crashes that caused the economic recession in the U.S. roughly a decade ago. For another, they grew up with everything from op-eds and documentaries to full feature films discussing issues of financial manipulation and Wall Street scandals.
If previous generations came of age looking to the stock market as a beacon of opportunity, millennials did so seeing it as a quagmire of corruption.
All of it adds up to a generation that can be somewhat distrustful of traditional forms of investment – and in some cases seeking alternatives.
This leads us to the main point here, which is to highlight a few areas of alternative investment where millennials need to be careful not to get carried away with!
1. Watch Yourself With Cryptocurrency
A report from May of 2018 noted that millennials are buying cryptocurrency to save for retirement.
That’s a pretty alarming concept given that bitcoin has fluctuated in roughly an $18,000 range over the course of the last 18 months.
(I have .000027 of a Bitcoin that is now worth like $2, and my Litecoin isn’t doing well either. Now my GERN stock from May…! :))
To be fair, there is some major potential for cryptocurrency, and some still argue fairly convincingly that bitcoin will be worth tens of thousands of dollars in the future.
Given this, I have considered looking at bitcoin again just because it is so low, but big decisions are in flux with it’s future – so proceed with caution.
However, aggressive investment in cryptocurrency is a very risky strategy. For every get rich story there are 1000’s of lost a ton of money stories.
This is a space that feels almost uniquely designed for millennials, but it’s one in which the generation would be wise to proceed with caution.
2. Avoid Betting & Gambling:
Betting is an area that’s only just becoming a concern in the United States, but has the potential to impact countless millennials there.
Sports betting is in the process of being legalized in several states, and potentially most of the country in due time. Established sports betting in the UK and Europe involves a huge range of contests in different sports and ultimately results in an incredible amount of activity.
A similar environment in the U.S. will encourage millions to speculate on sports and put real money on the line.
It’s plenty of fun and can work out favorably, but it’s something it’s important for people not to get carried away with.
I still remember a classmate at WVU who gambled like crazy with sports… and he did well sometimes.
But every time I had him place a bet for me I lost. Sports betting is a bit of an art and skill, one that I personally stay away from!
3. Real Estate (Do Research)
Given the aforementioned distrust in the stock market millennials largely share, it figures that young people are looking specifically for alternative ways to grow their money.
Passive income is in!
And real estate is popular.
And data indicates that real estate is one of the main areas young people are turning to. Real estate markets are fairly difficult to predict in the long term however, which makes them somewhat questionable as young people’s primary investments for savings.
That’s not to say there aren’t good opportunities in real estate, but as a direct alternative to the stock market it isn’t always the most sensible option.
What Should Millennials Do With Their Money?
I have done all three above. Some with success, some not. I am actually in the process of selling some real estate as I write this.
While I think cyrpto, sports gambling, and real estate all have their pros and cons, the biggest thing is to start with the basics.
For starters, millennials should make sure they have a practical and working budget!
Next, make sure you can say yes to the question, “Do you pay yourself first?”
Start with those, save a lot, focus on earning cash flow and then diversify! Just be smart with your money!
I recently asked this on twitter:
Q: What is the worst financial advice you have received?
Josh writes about ways to make money, pay off debt, and improve yourself. After paying off $300,000 in student loans with his wife in less than five years, Josh started Money Life Wax and has been featured on Forbes, Business Insider, Huffington Post, and more! In addition to being a life-long entrepreneur, Josh and his wife enjoy spending time with their chocolate lab named Morgan, working out, being outside, traveling, and helping others with their finances! I got serious with money when I used Personal Capital to track my finances.