When a baby boomer tells you, Well, I bought my first home by the time I was thirty, consider the false equivalency of that argument before it gets you down. Comparing the housing market and economy from thirty plus years ago to today’s is a lie that you don't need to buy into (especially since, let's be real, you can't afford to). Cry face. We know. We're all rowing boats in a sea of our collective tears—but this isn't all economic doom and gloom. 

A couple of facts first. Reports continue to show that millennials are putting off buying homes later than ever. From massive student loans to rising costs of living, the questions continue to be less about hardwood and more about unreasonable hard costs. In fact, 25% of American homeowners said that they no longer felt financially secure after purchasing their current home, according to Nerdwallet’s 2019 Home Buyer Report. Additionally, only 36% of Americans plan to buy a home in the next five years.

So, if we can't invest in property, what can we invest in?  Investments for millennials look different than they did for our parents, but that doesn’t mean investing is impossible. We checked in with Michelle Brownstein, CFP and Senior Vice President of the Private Client Group at Personal Capital, about "new” investment opportunities, and how we can still make smart moves for our future in a complicated economy. 

CREATE & CULTIVATE: What was the old style of investing and reaching financial milestones? How is this shifting?

MICHELLE BROWNSTEIN: In the past, a major financial milestone for women was marriage. The institution of marriage was a business deal in a sense; men were typically the breadwinners and women cared for children and ran the household. This has shifted dramatically in the past few decades with more women staying single longer and many households shifting to a dual-income model. In the past, after marriage often came a house purchase and a few kids, with (typically) the husband working into his 60s and both spouses receiving social security in retirement. Today, it is uncertain if social security will even be around for younger generations like Millennials when they reach retirement age, so they need to be sure to start saving early and often to build their own retirement nest egg. 

OOF. So, we want to know—how should we be investing today if/when traditional financial milestones like becoming a homeowner are not attainable?  

For many people, homeownership is not feasible and should not be considered a necessity. There are many cities where renting is actually a smarter option than buying. You can use an online calculator to help you figure out where your city falls on the spectrum. The homeownership obsession is a very American phenomenon. Many cultures globally rent for larger portions of their lives and are both content and financially sound.

Focusing on maintaining your lifestyle in periods where you are not working is the real key to financial stability, and that means starting with an emergency fund (3-6 times what you spend on basic necessities each month) and working longer term to build up a nest egg to rely on in the future. The other thing to consider is sacrificing a bit more today to get to where you want to be in the future. Personally, I chose to live with roommates early in my career (four of them to be exact) even though I could have afforded to live alone. It allowed me to save a lot earlier on so that today I have been able to reach bigger financial goals like buying a home sooner than many of my peers.

So, what are the first steps that you should take when it comes to investing for a sound financial future?

First and foremost, you should sit down and make sure you know where you stand. That means compiling your net worth (assets minus liabilities), knowing how much you make, save and spend each year, and then articulating your financial goals. Goals can be different for each individual but should have two traits in common: they should be time-bound (meaning they have a deadline) and amount-driven. As an example, a concrete retirement goal could be, “I want to save $50 per week in my IRA for retirement, so I can save $2,600 by this time next year.” If you don’t know where to start in terms of calculating these items, a free tool like the Personal Capital dashboard can be a great place to start. You can use our Retirement Planner to figure out how much you need to save for long and short term goals, and it will calculate your net worth, income, and savings automatically.  

Another thing that will help you secure a better financial future is to start saving today. It sounds cliché, but avoid the temptation to just live in the moment and worry about retirement “tomorrow.” The earlier you start saving, the more flexibility you’ll have over time.

Additionally, if you realize that you are spending more than you make after calculating your cash flow (income - spending), you need to immediately make some lifestyle changes to start living within your means and start saving. Ideally, if you start saving in your 20s you should save about 10-12% of your income every year to retire in your 60s; that number more than doubles if you wait until you’re in your 40s to start saving.

Arianna Schioldager wrote this for Create & Cultivate. You can follow her @ariannawrotethis. 

This post was originally published on December 19, 2017, and has since been updated.

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