What does it take to be wealthy? A six-figure salary? A life with no debt? It’s a million-dollar question with a thousand different answers. How you feel about it may depend on your age.
A LendingTree survey found 59% of Americans don’t believe they will ever be wealthy, but a high number of millennials and Gen Z are still holding out hope.
“Younger generations have a more optimistic viewpoint of building wealth because they have more time,” says Justine Nelson. She founded Debt Free Millennials six years ago, a platform to help her peers get control of their finances. Nelson says optimism is great, as long as it’s paired with action.
“Where we have to be careful is you can easily just not even get started with investing or building wealth,” says Nelson. “And it's kicking the can down the road.”
There are some actions you can take to grow your net worth. Nelson suggests budgeting, saving, and paying down debt as quickly as possible, so you can free up more money to invest. Most importantly, even if it feels stressful, don’t ignore your finances.
Write everything down
“Write your income and your expenses in a monthly spreadsheet using a budget,” says Nelson. That way you can track your income and spending and avoid any surprises in your personal finances.
Do a financial inventory
Next, do a financial inventory. That means looking at all your accounts and assets to determine their value. “Knowing all of those numbers gives you a bigger financial picture so that you know exactly which steps to work on,” says Nelson.
Build an emergency fund
Finally, work to build up an emergency fund that has enough money in it to cover your expenses for a few months. That way, if you’re hit with an unexpected costly problem, you won’t have to take on more debt to handle it.