“Compounding returns is the idea that growth drives more growth. That growth can help your money accumulate at a faster rate over time.”
In the book “Everyday Millionaires” Chris Hogan says, “The average American pays $509 per month on their car payment. If instead they put that $509 into an IRA, 401(k), or mutual fund monthly, over 30 years that would grow to $1.1 million dollars.”
That growth would happen ALL by this technique called the compounding of interest returns.
Imagine how much the average American would save on just forgoing the car payment and instead putting all that cash into an asset growth vehicle.
I believe now is a time more than ever that young millennials need to get educated and stay informed about their finances.
All of us millennials have at least 30 years left that we could continue investing. That means nearly all of us could be millionaires sometime in our lifetimes.
Even if our “net worth” falls short now when we are young, we have to start thinking long term. Now is the time to start coming up with a game plan and a strategy for the long term.
I know that long term thinking is hard for me. We all want that instant gratification.
For me it’s extremely difficult to think long term when I get on Instagram, and I see my friends purchasing hot tubs, pools, putting tennis courts in their yards, engaging in high risk behaviors like Robinhood single fund trades, and then living the high life on IG.
But something that has helped me is my new goal to just live a simple life that focuses on loving the people around me.
I don’t need to have a flashy new truck, car, or a hot tub in my backyard that sits on 10 acres to live the life I want.
The life I want to live is already right in front of me, and what matters is how I love people. How I serve people. How I laugh with and encourage the people right around me to be the best version of themselves.
Chris Hogan also says, the average millionaire is not caught up with trying to watch on IG what their friends are purchasing and posting to look like they are living the richest perfect life.
He said the two single things that keeps most people from building wealth are:
(1) Trying to keep up with their friends and neighbors &
(2) Waiting too late to save for retirement.
Here are some of my thoughts on that first concept:
Social media is a platform that Tedtalk says is designed to buy our attention. The more attention our account gets or we get, the more money Instagram can make.
So it’s designed to wire us to want more attention from others, to seek more attention, and to give attention.
The more attention we get, the more money Instagram makes because our account is drawing people to our account that Instagram can make money off of.
The more we can spend to show we can keep up, the more money Instagram makes and the less money we have in our pockets.
But let’s get straight to the point, people might post photos that look like they are so rich and wealthy, but they might not actually be feeling wealthy especially if they are spending too much.
People that are actually wealthy aren’t posting about how wealthy they are on IG (unless they own a business and are actually marketing to you to try and get you to buy something).
I think we can’t fall into these traps.
If we do, we hurt ourselves and we hurt our own real wealth building potential. Which means we could be hurting future generations and generations of our family line (I know this from my own family history that I wrote about earlier).
Next, my my thoughts on waiting too late to save for retirement and investing long term.
If you are a millennial like me, you are living through and have already lived through some rough economic times, and we have seen lots of market crisis’, volatility, and uncertainty that has led to job loss and/or job insecurity for many of us.
For millennials like myself, many of us are skeptical to put any of our cash into investments. Partially, because we don’t trust the market having lived through the ’08-09 Great Recession where housing prices plummeted and the stock market crashed.
As a result, we graduated college right before or during a time when people were seeing significant jobs loss, job insecurity, and income stability.
I know for my husband Stephen, when he graduated college, he couldn’t find a job for 5 years in his degree. He majored in accounting, but accounting firms were cutting back in 2007 when he graduated, not hiring.
I only had a different situation because I was lucky. I graduated the top of my class in 2005 right before the recession. I did running start, finished school early, and in some ways got lucky finding a job at a CPA firm right before the recession.
I saw a lot of the students I went to school with who graduated just a few years behind me not being able to find any jobs other than in retail or other jobs that didn’t require their college degree.
Fast forward to 2020 and the Covid pandemic. This recession feels a lot like 10 years ago, same song, on repeat, oh yeah expect for without the housing market also crashing.
Now, we have lived through two major financial crisis in our very short millennial careers.
It’s no wonder if you are a millennial like me, you are fearful about the market and economy.
Look at these crazy statistics:
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“Fewer than a third of millennials, often considered those born between 1981 and 1996, are saving in a 401(k) retirement plan, according to Charles Schwab’s 2019 Modern Wealth Survey.
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“Not even 1 in 5 of us has an investment account. Overall, nearly half of Americans don’t invest.
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Fewer than a third of young people are saving in a 401(k) retirement plan.
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Not even 1 in 5 millennials has an investment account.” Annie Nova
A lot of us feel a lot of fear and anxiety about the market, so we don’t invest, or we don’t invest enough, or we don’t invest soon enough as that fear drives us to keep waiting.
Many of us pile up cash savings. We board savings instead because we know savings are certain and a hedge against the crippling fear we feel about the uncertain and unstable economy.
But while fear is driving us to hoard savings, we are missing out on opportunities when we are young to increase our wealth building potential. Our savings in cash won’t keep up with rising inflation, so we need to invest in assets. For many of us our employer sponsored retirement account is an easy way to grow our assets.
I think it’s so important that we millennials start taking responsibility to get educated on this stuff ourselves.
A lot of us (like myself) had parents that were educated and took care of everything for us.
Yet, what I’m realizing now after my dad passed away is that I can’t keep relying on my parents knowledge, and I have to learn these basic money concepts myself now, otherwise when I am older, I may regret it.
All of us millennials, at our young age, still have so much potential.
I am hoping we each learn how important time value of money is and don’t fall into the trap that we have to be like everyone else on IG trying so hard to be Insta famous.
I live a very simple life. When I was 22, I started my very first retirement savings account when I started working.
I lived in Portland, ORE in an apartment decorated with olive green kitchen countertops from the 1970’s. I drove a Crystler Labarron that my grandma passed away and gave to me. The paint was chipping off the front of the old car that I drove.
As much as I wanted to buy a new car like all my friends did when I graduated college, I did not.
My father told me that unless my car broke down, I didn’t need a new car, I needed to put money in my 401(k).
So I lived in a crummy apartment and drove a crummy car, but I was 22, so I rode in my friends cool cars, and that seemed to help satisfy my need for a nice ride.
I didn’t make more than $44,000 a year, so I didn’t have a lot to invest, but I put in 10% or $4,400 of my earnings at 22. That small amount has now grown to be 20 times that initial difficult investment through continuing to incrementally save and put just a little in there at a time. It has taken time, but my 401(k) has grown tax free.
I don’t regret not living as well as I could have when I was younger now. I don’t regret not dating the men that wouldn’t call me back because they thought I was not smart or successful based on what car I drove.
I know now that a little pain now can yield more gain later, and that’s where my mind is headed now.
After reading Chris Hogan’s book everyday millionaires, I highly recommend any of my loved ones or friends to read this amazing book.
Financial Day Dreamer 
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