Since releasing my book in 2015, “Millennial Millionaire”, I have enjoyed speaking alongside icons of the business world and sharing my advice on all things money. As fun as this journey has been, I realized there never was a chance to look in the rearview mirror (a habit this forward-thinking millennial happens to frown upon). Although, during a recent radio interview with Forbes host, Gregg Stebben, he put me on the spot by simply asking, “How did you do it?” So enough of the grandiose wisdom of macroeconomics and high-flying business heroes, here are the 10 exact steps a confused 20-year-old took towards his million!
- Graduate college, fast! I entered college in 2005 at The University of Tampa. Despite attending four different colleges, I met my goal of graduating in four years from The College of New Jersey in 2009. Walking into my career three days after graduation gave me a huge head start on my peers, not to mention eliminated the need for more student loans.
- Be an entrepreneur! The subtitle to my book, “A Guide to Become a Millionaire by 30”, has provoked the hardest question I’ve been asked over the past two years… is there a prerequisite? The honest truth is yes, the prerequisite is capital. Without an advanced college degree, the most common way I’ve seen to high early income is sales and/or entrepreneurship.
- Live at home! Recognizing that capital is the precursor to wealth, a financial plan becomes feasible by either earning more or saving more. A combination of the two provides the best odds, so consider living at home. A go-getter might land a great job out of school only to watch much of his/her early earnings go to rent and living expenses. I lived at home until age 25, which made a nice income seem like an enormous income.
- Save! For the first six months of my career I did nothing but put money in the bank, satisfying the aforementioned condition. This allowed me to zero out my credit cards every single month, one of my proudest achievements is never paying a penny of interest while collecting some nice rewards along the way.
- Buy Whole Life! I purchased a $100k Whole Life Policy for $120 monthly premium at age 22. This locked in my insurability (health and age) and provided a permanent death benefit and guaranteed cash value with unique tax advantages. Two more larger whole life policies entered the mix before turning 30.
- Fund the 401(k) to the match! After my first year of employment, I was eligible for a 3% company match on my 401(k) contributions. I immediately began investing 3% of my compensation to the Roth 401(k) option, allocated to 100% equities. This quickly went from 3% to the IRS maximum after the next three steps were met.
- Buy Individual Disability Insurance! Knowing that income is the engine which makes any financial plan run, I purchased the maximum amount of “True Own Occupation” disability insurance with options to increase throughout my career. I’ve since added a second individual policy and maxed out our Group Long-Term Disability. This makes me feel invincible.
- Buy Real Estate! With capital at my disposal and the leverage of a conventional mortgage, I bought my first property at age 25. Such a large purchase was a frightening progression, but like anything else in life you adapt and continue moving forward. Two more properties have since been added, which yield additional rental cash flow while paying off my mortgages.
- Open a Brokerage Account! Once I settled into home ownership and restored my “rainy day fund” to adequate levels, I searched for greater return on my money. A moderately allocated, tax-sensitive ETF account allowed for growth opportunity without sacrificing much liquidity. Any extra, un-earmarked funds quickly find their way here.
- Fund a “Backdoor Roth IRA”! After exceeding the income limits for a Roth IRA, I refused to abandon my love for tax-free growth. Non-deductible contributions to a Traditional IRA that were immediately converted to a Roth IRA allowed me to play with stocks on my terms.
By no means are these steps direct recommendations for the masses, but rather a biographical sketch of my 20’s. Your goal might be $100k, $1 million, or even $1 billion. I hope a look behind the curtain at a CFP® and fellow millennial might help you make the most of your early years.
For more detailed information, please consult my book, “Millennial Millionaire- A Guide to Become a Millionaire by 30”.
