Adulting? It’s hard, especially when it comes to figuring out where you stand financially.
Although millennials are sometimes criticised for their restless lifestyle, love of avocado toast, and delayed adoption of homeownership, it’s important to remember that they have generally been dealt a difficult hand.
The majority of millennials joined the workforce during the Great Recession or were recent graduates. To put it gently, the terrible economic slump was not the best moment to begin “adulting”.
Even though they have faced many obstacles, millennials have generally been able to weather the storms and get their financial life back on track; in fact, some of them have ended up being just as wealthy as their baby boomer parents.
However, figuring out which bracket your net worth places you in can be perplexing, even for millennials who think they’re doing okay. Which social class do you belong to—the lower, middle, upper, or wealthy classes?
And if your net worth puts you in a lower bracket, you might be wondering, how you could possibly move up the ladder.
First things first: How to measure your net worth
On the spectrum of net worth from rich to poor, where do you think you stand? Examining data on earnings and wealth might help you understand and determine your place in the market.
According to John Jennings, President and Chief Strategist of St. Louis Trust & Family Office, “For instance, you’d need to be pulling in over $560,000 to hit the top 1% of earners nationally, and you’d need to hit the top 25% of earners.”
When millennials reach the one percent benchmark within their age group
Millennials’ position on the net worth continuum is influenced by the fact that they tend to be younger earners.
According to Jennings, “They hit the top 25% at about $50,000 and the top 1% at about $175,000.” “These numbers obviously differ by state, as making $175,000 in San Francisco or New York City is significantly different from making the same amount in St. Louis or Milwaukee.”
Statistics though? They only talk about one part of the story
Even when statistics offer some sort of barometer, they fail to provide the whole picture or even serve as the most reliable predictor of your socioeconomic status—especially if you’re trying to figure out whether or not you’re rich.
When your income or net worth doubles in the future, little to nothing in your life will change other than how much you save (or donate to charity); you will have reached the stage of being “wealthy”.
People who, for instance, spend very little money and, should they make more, would simply store it; meaning that they would be exceptionally wealthy on what most people would regard to be a moderate income and net worth.
Some people satisfy the formal definition of wealthy because they aspire to own and spend more, even when they objectively have a high income and a large number of possessions. The idea is that being ‘rich’ can mean having assets and income at various levels, rather than passing judgement on people’s financial decisions.
Looking to spike that net worth? Invest in career training
Millennials (or anyone on the lower end of the economic spectrum) who want to significantly increase their net worth can start by investing in career training to hone their talents and expand their skill set.
Fiduciary financial advisor William Bevins, CFP, CTFA, advised taking a course in something new. “Keep expanding your skill set.”
Investing in yourself will not only boost your self-esteem and sense of motivation, but it will also help you meet the demands of a labour market that is constantly changing.
Shawn Carpenter, Chairman and CEO of StockAlarm, stated: “Job markets are constantly moving, so keep your skills sharp and your eyes peeled for opportunities. Achieving success in night classes, online courses, or workshops can lead to higher-paying jobs.”
Making wise financial decisions and concentrating on debt repayment
Anyone who wants to increase their net worth—or even just improve their financial situation—must use a wise budgeting strategy and work really hard to pay off high-interest debt.
The financial counsellor of Oak & Stone Capital Advisors, Joseph Catanzaro, advised paying off high-interest debt first. “Pay off credit card and student loan debt as quickly as possible.”
Consult a financial planner
It makes sense to engage in a connection with a reliable financial planner or advisor if your goal is to increase your net worth as soon as possible. These professionals can assist you in creating a portfolio and investment plan that suits your needs and will put you well on your path to financial success.
The first step in achieving this, according to CoinLedger CEO David Kemmerer, is frequently working with a financial expert like a planner or advisor to set some goals and determine how much money should go toward investments, savings, and current debt. “Building a strong net worth for the future can be achieved most effectively with a strong investment portfolio.”
As a millennial, figuring out your net worth offers a financial success path. Being proactive with your money management is essential, regardless of where you stand in the wealth hierarchy.
To guarantee a prosperous financial future, regularly review your net worth, establish financial objectives, and make wise decisions. Keep in mind that achieving financial well-being is a continuous process, but you can get there with commitment and careful planning for a more stable and prosperous future.
(Tashia Bernardus)