Suze Orman’s Advice For Millennials Who Want To Get Rich

Amanda Schwab/Starpix/Shutterstock / Amanda Schwab/Starpix/Shutterstock

When it comes to building wealth, millennials are far behind the generations that came before them. According to the latest Federal Reserve data, members of the silent generation have an average net worth of $1.29 million, baby boomers have an average net worth of $1.64 million, members of Gen X have an average net worth of $1.11 million and millennials have an average net worth of just $221,000.

So, what can millennials do to “catch up”? Here’s what Suze Orman, money expert and co-founder of emergency savings startup SecureSave, said millennials should do to build wealth.

Start Saving for Retirement ASAP

Millennials are now ages 27 to 42, so younger millennials, in particular, have a long time horizon to build up their wealth.

“For those people who are under 30 years of age, the main thing they have to understand is what they have on their side is time,” Orman told GOBankingRates. “Time is the most important ingredient in any financial wealth-building strategy.”

If you’re starting to save in your mid-20s, Orman said that even putting away $100 a month can be significant.

“Let’s say you put that $100 a month in a Roth IRA and you do that every single month for 12 consecutive months — that’s $1,200 a year — and you do that from the age of 25 to 65. And let’s just say over those 40 years, you are able to achieve, by dollar cost averaging, a 12% annual average rate of return. You would have $1 million at the age of 65,” she said.

Unfortunately, the longer you wait to start saving for retirement, the harder it will be to build wealth.

“If you start at 35 rather than 25, at the age of 65, you have only $300,000,” Orman said. “Those 10 years cost you $700,000. And that is at $100 a month.”

Make Saving a Habit

The best way to build wealth as a millennial is to make saving a part of your routine. You can start by contributing to an emergency savings fund to get into the habit of saving for bigger financial goals.

“Once a 25-year-old sees their money building and what it feels like to have money build up, all of a sudden they don’t feel as desperate,” Orman said. “We have changed psychological behavior so that they can [see], ‘Well, I was able to put $50 or $100 a month in my emergency savings account. I can put $100 a month in my Roth IRA as well.’”

It’s Never Too Late To Start

If you’re an elder millennial, you may feel discouraged about your ability to build wealth, but Orman believes it’s never too late.

“The main thing I would say is that it’s never too late to start,” she said. “Some money is always better than no money, and the sooner you can begin, the better off you will be.”

More From GOBankingRates