5 lessons for the new generation
Tips for you from a Gen-Z guy’s experiences
I was born in 1999, and we all know what that means—yes, I'm a Gen-Z guy. It doesn't make much of a difference other than that we have access to technologies that the previous generations didn't (at least for most of their lives). With all these new options available, it's easier to make a fortune out of your garage.
Here are some lessons I learned so far and experiences that will guide you to the road to riches
Do what you love
Here's one of my favorite quotes of all time
Your work is going to fill a large part of your life, and the only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle. As with all matters of the heart, you’ll know when you find it.
— Steve Jobs
This kind of summarizes everything you want to know about your future, it’s not about making a fortune and dying. It’s about living a life that’s worth more than just money. You should've a purpose defined for yourself, something that keeps you moving. Sitting idle will make you old and sick.
If you have read about Ikigai (read about it if you haven’t), research has found one thing in all the centenarians and that's “They believe that having a purpose is essential for life fulfillment and that you can find joy and purpose in many aspects of your life such as helping others, eating well, and being surrounded by loving friends and family. They don’t even have a word for retirement and prefer to keep active well into later life, rather than ‘retire’ and stop all work.”
Don’t plan on retiring in the 40s and eating up your savings. Instead, find something that drives you, something you enjoy doing and it’ll keep you going. There's no limit to how happy, wealthy, and fulfilled you’ll be if you chose to do what you love.
Being the richest man in the cemetery doesn’t matter to me. Going to bed at night saying we’ve done something wonderful…that’s what matters to me — Steve Jobs
“Formal education will make you a living; self-education will make you a fortune.” — Jim Rohn
Leaning always comes before earning, meaning “You should learn before you can earn”. Don’t confuse this with a college education, that's formal education. I'm talking about the Self-Education part. This is something I realized quite soon in my life and hence always focused my energy on learning about the things in which I was interested.
For example, when I wanted to buy a new PC, I researched for quite some time to learn about how things are going in the PC market, so I can educate myself about specifications and pricing and also the return on investment—yes, my pc is an investment for me.
Similarly, when I wanted to start investing in mutual funds I read 2–3 books and 100s of articles about how the money market works before jumping into the boat.
“Never invest in a business you cannot understand.”
— Warren Buffett
Yeah this is true for everything because
“Risk comes from not knowing what you are doing.”
— Warren Buffett
So the first step to mitigating risk is to know what you’re doing. If you don’t know where your money is going, don’t give it away like that. Pause. Think about it. Research more and only go ahead once you understand how it works.
Learn skills that pay you more, if you're still figuring out what to do with your life. Start learning skills that pay comparatively more to others. Gather specialized knowledge, and be great at the one thing you do rather than becoming mediocre at several things.
I'd suggest you take some time to figure out the Ikigai diagram for yourself and see what's the right profession for you.
I hope you have a better idea about what would be a good occupation for you in a long run, now let’s see how you can earn more with what you know.
“It’s simple arithmetic: Your income can grow only to the extent that you do.” — T. Harv Eker
The best way to get rich is obviously earning more. This isn’t as simple as it sounds. Remember: “It’s not about what you know, it's about what value you create with that what you know”. It’s a big world, and people are ready to pay for your services if you make them believe it’s adding some value to their lives.
Here are some ways in which you can increase your earnings
- Acquiring skills that pay you more. Say there's a job that pays you $50/hr while another pays you $20/hr. Both require you to learn a new skill, go for the one that pays you more. Investing in yourself is the best thing to do, so find out skills that are paid the highest wages and then start working on yourself to learn those skills.
Learning new skills won't only help you with your primary job but also help you with finding a side hustle. Hence it's always a win-win to go after high-in-demand skills.
- Create multiple streams of income. You should never be dependent on one stream of income. Always create multiple streams. Like one could be your 9–5 job, then you can pick up some side hustle like a youtube channel or podcast or eCommerce. Anything that adds to your income but is a different source of income than your primary job.
This will take away the fear of losing your job and even someday you’ll have the chance to quit the job and live off the earnings from other streams you created with the side hustles.
- Investing money in the right instruments will help you generate monthly income. Investing in equities with good dividend payouts is always a good option. Moreover, investing money in equities is passive income. Once you invest the money grows even while you’re asleep.
You can multifold your earnings by investing them in the right instruments over a long period of time. “Compound interest is awesome”.
“I’d like to live as a poor man with lots of money. “ – Pablo Picasso
Earning more isn’t enough, you should be mindful of your spending. We know celebrities who earned millions and still went broke in a year. We don’t want that to happen to ourselves. Remember: Your expenditure can always exceed your earnings. Let's see what we can do to save money
- Invest first and spend later. We're so much focused on spending money that by the time we realize there’s nothing left to invest. So make it a habit to invest before you touch your salary.
- Create a budget and stick to it. Budgeting is the best tool to avoid spending more than you earn. Be conservative about it and mention every possible category you can to avoid surprises.
- Live with family, rent is a major portion of our expenditure. Try to live with your family or friends. This will save you a lot in rent and it’s always good to have people who care around you. I live with my parents and hence I get to save up to 80% of my salary.
Combine earning more with spending less and you’ll be good to go. Don’t compromise on the essentials, but also don’t go overboard with luxuries either.
Personal loans are bad
I cannot emphasize this enough “Stay Away from Loans”, loans are bad. I see people reaching out to their credit cards every time they want to buy something. Yeah, credit cards are helpful at times, but you shouldn’t rely on them too much. A debt of any kind is bad. It eats up your fortune like a termite and well it’ll leave you with nothing but regret.
People in their 20s are very energetic and enthusiastic, they want the latest iPhones and brand new cars. Well, there's nothing wrong with that, if you can afford them you should buy them but not when you have to take a loan for them. Loans charge you 10–12% interest while any modest low-risk investment will give you 8% at max, so why put your money into a depreciating commodity which is gonna lose its value sooner or later.
Here's my take on buying new things
- Always compare the price versus value ratio for anything you want to purchase. Like if you want to buy a new iPhone, see what value it's going to add for those 1000 bucks you’re planning to spend on it. If you can’t list 3 good reasons, don’t go for it.
- If I want to buy something, I'd start systematic investments towards the goal amount rather than paying hefty interest on EMI I'd rather earn interest on my investment to support the purchase. So if I need that iPhone, I'd invest 200 bucks every month for 6 months in a low-cost mutual fund to reach the goal.
- Making a purchase takes 2 days time, so your brain gets enough time to compare options and a decision. Sometimes we buy stuff we don’t really need and regret it later. It’s better to wait before buying things.
Taking a loan makes sense
- For educational purposes, we talked about this earlier as well. Education is the one investment that pays the best dividends. Taking a loan to get into an Ivy League is a good deal.
- For buying a house, now rent is the biggest expenditure for most of us. Having a home of your own is the best thing for you and your family. Home loans are good if you plan on repaying them asap. Some countries like India provide a rebate on income tax based on home loan interest paid. So it's a win-win.
- Do what you love, doing what you love is the only proven way of fulfillment in long run. Money on its own can't make you happy and content. Find something which drives you and align other pieces with it. Take the help of the Ikigai principle in finding the correct path.
- Learn more: Always aim for learning something new every day, be it related to your work or investment principles or how to save money on rent. There’s no limit to it and there's no one who can take it away from you.
- Earn more: With the knowledge acquired you must always aim to earn more. Acquire skills that pay more, skills that can save you time that you can spend with the people you care for.
- Save money: It’s not the income that matters, it's how much you make out of it that matters. One might be earning 100K and still go broke while the other person can become a millionaire earning 60K. So be smart with your expenditure, don’t go over your budget. Live frugally.
- Stay away from loans: Always keep yourself away from loans, unless it's an emergency. “If you can’t buy it twice, you cannot afford it”.
Don’t rely on credit cards to pay for your luxuries, save money, or simply earn more to afford all those things.
Well, these were my 5 tips for Generation-Z people on their journey to riches. I hope it helped you. If you haven’t already please follow me, to get notified about such posts.
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Disclaimer: This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions. I do not promote any stock, mutual funds, or investment schemes.Have a great time and all the best on your journey towards riches.