Young Money: The Delusion and Unrealistic Financial Goals

Having young money simply means having wealth at the early days of your youth.

This is the delusion of getting rich quickly. You can tell yourself that you will become a millionaire in five months but that doesn’t mean it will happen.

If you aren’t happy with how you have not achieved your financial goals, it may be time to take a brutally honest work at what you are currently benchmarking yourself against.

It does not make sense to compare yourself to someone who is born into a wealthy family and has never worked for money in the early days of their youth. It makes sense to compare yourself to someone who has the same background and attended the same school you graduated from.

Young Money

Young Money

Why?

You can tell yourself that yourself can become a millionaire in dollars by the end of 2024, but six months isn’t enough if yourself have not even achieved 100,000 dollars by now.

This financial goal was unrealistic in the first place. It’s possible you have compared to your “peers” on Instagram, X or LinkedIn who are currently millionaires and “crushing it.” This can create a distorted view of what’s achievable financially.

Or do you have an overambitious mindset? You enthusiasm and optimism as a young person can sometimes lead to setting overly ambitious financial goals without considering practical limitations or timelines. How did you even arrive at this figure when setting your financial goal?

The only option is to revaluate and set realistic financial goals.

The Conscious Wealth Builder

You are worried about your financial future because you fail to consider your current income levels, expenses, debt obligations and other financial constraints. And these things are leading you to set goals that are not feasible.

Wealthy people aren’t worried because they understand what makes anyone wealthy.

The financially free individuals are the ones who live life on their own terms, with no constant worry for money.

The financially free individuals are not those who are the highest paid, nor the hardest workers, but the ones with full control about their work and lifestyle.

If you want to set realistic financial goals, you need the qualities that allow you to keep making and managing money no matter the circumstances.

These qualities comprise The Conscious Wealth Builder:

  • Discipline: Consistently following a budget, saving regularly, and avoiding impulsive spending.
  • Patience: Understanding that wealth accumulation is a long-term process.
  • Adaptability: Being flexible and willing to adjust your financial plans as circumstances change
  • Resilience: Overcoming setbacks and learning from financial mistakes
  • Focus on Value Creation: Focus on enhancing your skills and seeking opportunities to add value.
  • Perseverance: Continuously working toward your financial goals, even when progress seems slow, or obstacles arise.

If you want to consciously build wealth, you are required to always achieve financial goals.

How to Set Realistic Financial Goals

  1. Be Self-Aware

Be honest about your current income, expenses, and debt. This is the foundation for setting achievable goals.

Assess your current financial situation. Take an honest look at your income, expenses, debts, and overall financial standing. This will provide a realistic baseline for setting achievable goals.

  1. Research and Plan

Research what financial goals are realistic for your age, income level, and career path. Use online resources or consult a financial advisor for guidance.

Consider consulting with a financial advisor or planner who can provide personalized advice and help you set realistic goals based on your unique circumstances.

  1. Set SMART Goals

Make your goals Specific, Measurable, Attainable, Relevant, and Time-bound. Instead of “become a millionaire,” aim for ‘save 42,000 naira monthly in an investment account in two years.’

  1. Educate yourself on personal finance

Seek out resources, books, or workshops to improve your financial literacy and gain a better understanding of budgeting, saving, and investing strategies.

  1. Focus on Progress

Celebrate your milestones along the way!

Reaching smaller goals keeps you motivated and reinforces positive financial behaviors.

Now, it’s time to look back at those financial goals you set this year and validate them with these steps.

Turn them to goals you can still achieve in 2024.

Spending Habits: Almost Everyone Spends Carelessly

No matter how hard you try, managing your spending habits as a young person will always be difficult.

But it should not be as challenging as it sounds.

Because managing how you spend your money can (and likely will) be a major contribution to your long-term wealth – if you are paying attention.

Today, I’m introducing four simple tips to managing your spending habits.

Let’s dive in.

Spending Habits

Spending Habits

Your Spending Habits Can Always be Improved

Many young people don’t have a clear understanding of where their money is going due to a lack of tracking and awareness.

It’s possible that you have never received formal education or guidance on personal finance management. Or budgeting. And the importance of tracking expenses.

Or it could be impulse spending. With easy access to digital payments and a world of online temptations, it’s easy to spend without thinking twice.

What about peer pressure? The desire to keep with your friends, school mates and colleagues’ spending habits can also lead to overspending.

All these habits are natural to young people, but it should not be left to chance in your case. Your goal is to create and grow wealth both in the short and long term.

So how can you improve your spending habits?

Here are four practical ways, with some real-world scenarios.

Tip #1: Analyze and Track your Current Expenses

First things first – before you start spending your next money, analyze your previous expenses including small purchases. Allow yourself to look at your bank account to understand what is going on. Because you won’t learn anything if you make more money, and not pay attention to how you currently spend it.

Example – let’s say you got a credit alert and now you cannot account for the money. Don’t just shrug it off and move on.

Instead, open your bank app and take some time to look at your debit alerts, receiving account numbers and transaction charges. What did you spend money on that was not necessary?

At first glance, it might be difficult to fish out the ‘why’ behind your spending habits. But analyze your spending patterns to identify areas where you can cut back or adjust. Look for recurring expenses that may be unnecessary.

You’ll be better equipped in your financial journey if you can learn to analyze and track your expenses. “What could I have done better here?” is a powerful question to consider when tracking your expenses.

Tip #2: Categorize your Spending.

When you have an idea about what you spend your money on and what should be left, your next step is to categorize your spending, based on your findings.

Divide your expenses into categories like rent, groceries, entertainment, etc. This helps you identify areas where you might be overspending.

Sometimes, we are used to some expenses that we can’t see that they might be unnecessary or repeated too often. So, sort your debit alerts. Use apps or spreadsheets to categorize spending for better visibility. You’ll be impressed by the valuable information these tools will give you – if you’re not lazy and willing to look at them.

Tip #3: Create a Budget

Now that you have analyzed your current expenses and labelled your spending, it’s time to do something with this valuable information.

Based on your income and expenses, create a budget that allocates funds for essential needs, savings, and discretionary spending. Even with limited income, a budget helps prioritize needs and identify areas to cut back.

Stick to this budget as much as possible.

Because this is where most young people, including the financially literate ones give up.

Sticking to your budget might be the most challenging thing ever. But if you can manage it, there are a whole lot of benefits on the other side.

Tip #4: Find a Tracking Method that Works for You

There are many options! Try a budgeting app, a physical notebook, or even a spreadsheet. The key is to find something you’ll use consistently.

Utilize budgeting apps, spreadsheets, or online tools to easily record and categorize your expenses. Many of these tools can provide visual representations of your spending patterns.

I recently had a tracking problem with my budgeting tool, and I discussed it with my colleague, who was kind enough to help. He shared how he combines his tracking with a spreadsheet for budgeting and his Notes app for instant expenses and I had this major “a-ha” moment.

And on this tip – it’s worth mentioning – Make sure you review regularly. Regularly review your budget, expenses, and progress towards financial goals.

Adjust as needed to stay on track.

Your Money, Your Rules

Managing money and building wealth legally as a young person is a unique experience, no doubt.

But remember this. When you hit a bad spending ditch, whether unexpected expenses, or financial debt – it’s not the end of the world.

These spending habits are just small signals telling you there are other directions to explore. That you haven’t arrived at your destination quite yet.

I hope these little tips will help you navigate your financial journey. And maybe they’re just the push you need to get back on track and keep going.

If you buy what you don’t need, you steal from yourself.

Building Wealth: How to Access the 7 Types of Income

When it came to money and building wealth, I was lied to as a child.

I have a feeling you were too.

I remember sitting at my dad’s house in Benin City after concluding my NYSC, staring at my laptop with a rough draft of my cv, wondering what career path I was going to start and commit to for the rest of my life.

They had told me that graduating with good honors and getting a job was the fastest path to making money and being comfortable. This was not totally false, but it was not the full truth either. I only discovered this as time goes on.

There is more than one type of income

Getting a job is just one type of income. There are five more types of getting paid.

I want to show you what to focus on so you don’t get trapped in 9 to 5 called salary. Either as an employee or business owner.

I want to show you the six types of income so you can diversify your revenue streams and build a more robust financial foundation.

When King Solomon said, “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.”. This was probably what he was talking about…

Building Wealth: The Seven Types of Income

Building Wealth: The Seven Types of Income

  1. Earned Income:

This is the most common type of income and comes from employment. It includes wages, salaries, bonuses, and tips earned from working.

HOW TO GET THIS INCOME: This is the most straightforward. Get a job. Look for part-time or full-time employment in your field of interest.

If your desired job is not forthcoming, Learn a skill and freelance. Or gain experience by working as an intern.

  1. Profit Income:

This is income generated from buying and selling goods and services. It’s the profit made after subtracting the costs of running a business from the revenue earned.

HOW TO GET THIS INCOME: Start a small business. Buy something. Sell the same thing with a profit margin. This can be online or offline.

You can also sell your services or expertise as a business. We have discussed this before – Productize yourself.

  1. Interest Income:

This is the money you earn on your savings. It’s the interest paid by banks or other institutions on money you deposit in accounts or lend out.

HOW TO GET THIS INCOME: Stop leaving all your money in your bank account. The interest rate in bank accounts is currently too low.

Open a fixed deposit account. Open a mutual fund account. Let these accounts be your main savings account. Your normal bank account should only be for your daily expenses.

  1. Dividend Income:

This is the money you earn from owning shares of stock in a company. Dividends are a portion of a company’s profits that are distributed to shareholders.

HOW TO GET THIS INCOME: Invest in stocks that pay dividends. Research companies with a history of paying dividends and consider your risk tolerance. There are apps that give you access to these companies with ease.

Tech companies pay dividends. Nigerian banks pay dividends. Just learn to open your eyes, my friend.

Start with small amounts and gradually build your portfolio.

  1. Capital Gains Income:

This is the profit you make from selling an asset, such as a stock, investment property, or collectible, for more than you paid for it. Assets are the things that you own that put money in your pocket, whether you work or not.

HOW TO GET THIS INCOME: Understand and pay attention to your sources of profit income, interest income and dividend income. Then this type of income will come easily to you.

This income simply comes from the appreciation of your investments.

  1. Rental income:

This is the income you earn from renting out a property, such as an apartment, house, or commercial space.

HOW TO GET THIS INCOME: Consider house hacking, where you rent out a room or basement in your residence while living there yourself. You’ll need to check local regulations for legality.

In the future, you can also look into renting out a property you own.

  1. Royalty Income:

This is the money you earn from allowing someone else to use your intellectual property, such as a patent, copyright, or trademark.

HOW TO GET THIS INCOME: This is a longer-term goal. If you’re creative, focus on developing content (e.g., music, books, inventions) that you can copyright or patent. Royalties come from licensing your work for others to use.

You can also create digital content like videos, online courses, or blogs that can generate ongoing revenue through licensing or ad revenue.

Building Wealth: The Seven Types of Income

Building Wealth: The Seven Types of Income

My Experience in building income streams (and a list of avenues I use)

I started earning income by getting a job (earned income) at a financial services company. My work experience further exposed me to interest income where I learned to save with apps like Vbank, Piggyvest and my personal favorite – SEEDs by Anchoria.

Capital gains and dividend income became a part of my income stream when I finally understood Bamboo and Risevest (these are mobile apps to buy US stocks and save in dollars). Then, I have gained Profit income during the sales of my books. This also came with royalty income when I learned how to sell and publish books on Amazon.

I have never earned anything from rental income but it’s something I will definitely try later.

Trust Yourself First when Building Wealth

What works for me might not work for you.

That’s why building wealth and life itself is so fascinating. I have friends who built businesses (profit income) and it is their major source of income.

There are also friends who ventured into cryptocurrencies (capital gains income) and it became the hill they are willing to die on.

The options are limitless, my friend.

Do your research. Gain knowledge. Acquire skills. Keep building on what you already have.

And that’s how you start generating multiple streams of income, contributing to your financial independence and long-term wealth building.