Here are some grim stats that are all too real today. According to a study by the Federal Reserve, the wealth of the lower class, working class, and middle class decreased substantially between 1998 and 2013. At the same time, wealth increased almost 75% for the top 10% of earners.
Meanwhile, the average millennial has a net worth of $8,000. And upward of 80%+ of millennials don’t invest—and cars, a depreciating “asset” (a liability, really), make up a greater share of millennial “wealth” than real estate.
In addition, Black families have $5.04 net worth for every $100 held by white families, per The New York Times, a wealth gap that will take 228 years to close. And women? They have around 60-70% of the net worth of men.
Overall, 45 million millennials sit on $1.56 trillion of student loan debt. They’re some scary numbers.
Being born in a nation where health care and education are both free, I can’t help but think Gen Y/Z Americans have been dealt a crappy hand.
Closing the Gaps
But here’s the good news. While we can’t change the hand we’re dealt, we can choose how we play it. And truthfully, it doesn’t take that much to start putting a dent in these disturbing trends.
According to a study from Duke University, something as simple as owning real estate would narrow the racial wealth gap by 31%. On a personal level, my goal with my writing is to help create 100,000 new real estate investors.
Whether it’s sharing tools with readers, or simply showing that a tool like me can do it… whatever it takes to get the job done. Either way, if you’re in that millennial category, here are four ways you can change your money habits and go from consumer to generational wealth builder.
1. Change your mindset around money
Here’s a stat I didn’t mention. Millennials are responsible for an estimated $1.1 trillion of the country’s $3.6 trillion in consumer debt. Not surprisingly, there’s a direct correlation between that level of spending and the majority of millennials not investing.
However, once you become a business owner or an investor, your relationship with money changes. Instead of finding the first and best way to spoil yourself (i.e., blow it), you start thinking of ways to make your money work for you.
That mindset starts to carry over. And before you know it, you’re saving, investing, and focusing more on making wealth gains versus looking cool.
2. Audit your circle—and find your tribe
This is basically an extension of what I mentioned before. Once you get into that mindset, you’re going to want to start to hang out with people who share that mindset, those goals, and more.
In books like Think And Grow Rich, there’s the concept of the mastermind group. Other schools of thought (but essentially the same idea) state that you become the average of the five people you spend the most time with.
In other words, iron sharpens iron, and a like-minded crew of investors will get your wealth-game on point. And there’s no better place to get started than on sites like BiggerPockets.
3. Find money mentors (and they even don’t have to be real)
This is probably the easiest, fastest way to get yourself in that state of mind. You always want to network upward, so you add in what you have to offer while learning what the best do.
Until you find those opportunities, you can find money mentors who you don’t even have to know in real life. Read autobiographies, study their life, decisions, habits, and philosophies. Eventually, you’ll start to absorb their thinking patterns, making it even easier to expand your tribe.
4. Read, read, read (but don’t forget to DO!)
I kinda mentioned this in the point above. But reading is essential.
Super-investor Warren Buffett, one of the wealthiest men alive, says he spends 80% of his day reading. When he began his investing career, he’d read as much as 1,000 pages a day. Because of this, Buffett says, he has the necessary information needed to make the right decisions.
“Look, my job is essentially just corralling more and more and more facts and information,” he said in an interview, “and occasionally seeing whether that leads to some action.”
Again, a site like this is probably the best resource online for information for investors starting out. There are others, as well, that teach personal finance. And there are always books, too. And investment newsletters.
Just don’t fall victim to analysis paralysis.
5. Get started, even with small money
Going back to the original premise of this article. It doesn’t take a lot to get started. I wrote this article a while ago about four ways to start investing from your smartphone.
In reality, you can actually have a diversified portfolio with tons of upside with just $1,000. Here’s an example of a hypothetical portfolio: You can use $400 to pick up Uber, Lyft, a REIT (aka real estate investment trust) or two, and a cannabis stock—plus some bitcoin, just for good measure. Then, spend $500 with Fundrise, which gives you access to real estate through a reputable crowdfunding platform.
(Full disclosure: I’ve never invested in Fundrise myself, but I followed it closely since its inception in my past life in media/journalism. At $500, it offers the lowest buy-in over its immediate competitors like RealtyMogul.)
The most important thing is you get started. Because once that step is taken, we’ve effectively on the path toward wiping out the wealth gaps.
What ideas do you have in terms of closing the wealth gap?
Join the discussion in the comment section below.