7 Habits That Separate High-Net-Worth Millennials From Everyone Else
When people picture wealthy millennials, they often imagine six-figure salaries, luxury cars and expensive homes.
But financial experts say those outward signs rarely tell the real story. In many cases, the biggest difference comes down to their financial habits.
Here are seven habits that separate high-net-worth millennials from everyone else.
1. They Prioritize Saving Over Lifestyle Inflation
One key habit separating wealthy millennials from everyone else is resisting the temptation to spend every raise. “They lead lives of discipline,” said Johnathan Ness, certified public accountant (CPA) and founder of Know Money, Yes Money.
In fact, high earning millennials may not even show signs of being wealthy. "When we think of millionaires, we often think of people driving Porsches and living in 6,000 square feet homes or better. For most, it's the opposite,” Ness said.
"You wouldn’t know many of these folks are wealthy “until you look at their investment accounts,” he added.
Achim von Bodman, certified financial planner (CFP), CPA and senior tax manager at Watter CPA also added to the conversation. "[They] increase the amount of money they put into their 401(k) account the same week they get the raise, so they do not start spending more money," von Bodman explained.
2. They Know Where Every Dollar Goes
Wealthy millennials don't necessarily have perfect budgets, but they know what their money is doing. Regular tracking, adjusting and intentional allow them to consistently invest.
Ness recommended a zero-based budget: “[M]eaning that you give every last dollar a job. Then follow that and track your actuals."
He even suggested making saving a game. “Write down how much you were actually able to save last month, then try to beat it this month, even if it's only by one dollar. Get yourself a small treat if you do, something in line with how much extra you saved."
Most importantly, simply have a budget and track your expenses.
3. They Invest Consistently
Experts say high-net-worth millennials typically aren't trying to beat the market. Instead, they make a habit of investing regularly and stay patient so time can do the heavy lifting.
As von Bodman pointed out, simplicity wins. “They invest their money automatically [and] they use low-cost index funds. They do not try to time the market. They are not the ones who try to make a lot of money by picking the right stocks."
High-net-worth millennials also understand that getting wealthy isn’t about luck and stock picking, but “comes from being consistent and patient."
4. They Treat Debt as a Tool
High-net-worth millennials aren't necessarily debt-free. They’re selective about when borrowing makes sense.
While most of us need a car, the wealthy aren't usually going for that new Lexus or Porsche but “a five-year old Toyota that will last another 150,000 miles and they tend to pay in cash to avoid interest," Ness said.
Wealthy people use credit “as a financial tool,” according to Steve Min, chief credit officer at Credit One Bank. “Having good credit, manageable debt and staying away from high interest debt preserves financial flexibility leaving things open for buying the next home or financing that small business."
5. They Focus on Net Worth
High earners don't automatically become wealthy. The ones who do save more and grow their income through compounding.
For example, Ness said, if someone makes $800,000 per year but only has a net worth of $1.2 million, “that’s not very impressive.” Someone who earns, say, $100,000 per year and has that same or even similar net worth, on the other hand, has “saved quite a lot,” he said. "It's very difficult to out-earn poor spending habits."
6. They Automate Good Financial Decisions
Rather than relying on willpower every month, wealthy millennials build systems that make saving and investing happen automatically.
"One of the big misconceptions is that you need a great salary to be rich, but wealth tends to stay around for good with a row of consistently made decisions, repeated over decades,” Min said.
It’s the habits, however, such as automating savings, staying away from high-interest debts, regularly reviewing financial standing and increasing retirement contribution that make it happen, he stressed.
Ness suggests=ed another automation strategy for people struggling to save. "Pay yourself first.” He recommended putting aside a percentage of your income, at least 10% and more if possible.
7. They Keep Learning About Money
Wealthy millennials invest in financial knowledge itself. Learning about investing, taxes and personal finance improves decision-making for decades.
"High-net-worth millennials read more, particularly about finance or ways to improve their job skills. The average non-millionaire reads three to four books a year. The average self-made millionaire reads 12 to 24 books a year. The average billionaire targets 50 books a year. It may sound trite, but knowledge really is power."
He believes these habits matter even more today.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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