Millennials’ finances are a mixed bag, with some hit incredibly hard as young workers during the Great Recession of 2008-09 and others suffering during the COVID-19 pandemic. Yet many millennials have bounced back, securing good jobs, engaging in smart retirement planning and securing what may be the last truly low mortgage interest rates on homes.
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Each millennial’s path looks different, however. Ruth (not her real name), a 33-year-old freelance marketing writer based in Connecticut, is grateful that she and her husband, also 33, are in solid financial shape. They own a home, have robust retirement accounts, have no credit card debt, have almost paid off a second car, and she nets around $120,000 per year as a freelancer. Her husband earns closer to $150,000 per year with his full-time job, and an additional $15,000 or so in a pre-tax side hustle.
She explains the steps they took to get to where they are.
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Lived Below Their Means
Just because you earn a high income doesn’t mean you’ll be in good financial health. Lifestyle creep is a real phenomenon that affects even the wealthy. Ruth has firsthand experience facing the temptation to splurge when she stopped living paycheck to paycheck, but she has always made an effort to live within a more restricted budget.
“This meant buying a home that cost much less than I was approved for,” she said, “choosing to put money into savings instead of splurging even when it was tempting, and keeping our costs of living lower than we needed to.”
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Minimized Debt
Ruth has made it a point to always pay off debt, particularly credit card debt. “If I don’t have the money to pay off a purchase before the end of the month, I don’t make it,” she said, barring emergencies.
She called credit card interest accumulation “a vicious cycle.”
Set Specific Goals
She and her husband carefully set one-year, five-year and 10-year financial goals for liquid savings and big purchases, and then they adjust their spending accordingly. They look to the future and assess their goals continuously.
Prioritized Savings and Loan Payoff
A large emergency fund was always a priority for Ruth and her husband, particularly because they had seen her husband’s parents struggle financially, and she had to pay down medical debt accumulated in her 20s.
They made sacrifices to achieve their strict savings goals. This meant putting off vacations, not going out with friends and not making pricey purchases such as an expensive lunch or shoes. Ruth would then put what she would have spent either into a loan payoff or a savings account.
She said, “At the end of the month, it can be eye-opening to see how much we saved, and we never regretted skipping ordering Uber Eats for lunch after the fact.”
Took Opportunities as They Came
Ruth does acknowledge that a little bit of luck is at play, too, in the form of opportunities that presented themselves.
For one, her husband was able to take advantage of his work’s tuition reimbursement program and is now about to finish his second master’s degree. He also leverages his employer 401(k) plan match to the fullest. He started a side business in addition to his full-time job because a past employer wanted additional work.
“I’ve taken extra work when my schedule allows it, which has allowed us to earn what we do and save more,” she said. “These are opportunities not everyone has, but it also requires extra time commitments on our part.”
Got Smart About Finance Structuring
Because it was important to them to always have a sizable emergency fund on hand, they have been able to take advantage of that multiple times, she said.
“Anything we don’t need for a large emergency, however, goes into high-yield savings accounts like CDs to maximize potential interest.”
Accounted for Price Hikes
While they did not anticipate the extremely high inflation rate of the last few years, they did always plan their budget based on the assumption that the cost of everything from groceries to property taxes would go up over time.
“We pad our budget so that we don’t go from comfortable to less than cozy in the blink of an eye, which has helped us immensely given the incredible inflation the last few years,” Ruth said. “Our dogs’ prescription food, for example, went from around $180 a month to $340 a month in [two years].”
Developed Skills
There are other factors at play that have been out of their control, Ruth said, such as having her business take off the way it did at the time it did.
“I connected with the right clients at the right time,” she said, “but those opportunities were also in front of me because I’d worked hard to develop skills and network despite really struggling with a chronic illness at the time.”
Strategically Built Stability
Despite the assistance of luck and timing, neither of their families gave them any financial support, because they didn’t have it to give. Once they acquired the resources through their own employment, Ruth said, “We also made a lot of strategic decisions to try to build stability.”
She added, “I think we mostly got lucky that hardships didn’t permanently hinder us, and we got lucky with opportunities that we then put effort into pursuing. Not everyone does have those opportunities even when they work for it, and I think that’s where the luck part is absolutely critical.”
Talked to a Financial Advisor
Even though Ruth is more financially literate than the average person, having done writing in the personal finance space, Ruth talked to a financial advisor a few years ago to ensure that she was doing what she needed to be set up for retirement — information that helped her set her course.
Utilized Momentum
Ruth said she and her husband both got a late start at earning decent incomes, but it was still possible to get ahead. They didn’t start hitting their income earning potential until around age 26, after Ruth paid off significant medical debt.
“So even if you’re starting late, that is OK and there is time to catch up,” she said. “Momentum can work on your side, especially if you’re privileged and able to leverage experience into higher earnings, and to catch up on retirement.”
Ruth’s advice to others is to focus on your goals. If work-life balance is more important than a big emergency fund, prioritize that, for example. “Determine what goals you have, what you need to do to get there, and when you want to meet them by.”
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This article originally appeared on GOBankingRates.com: I’m a Millennial in Great Financial Shape — 11 Steps I Took To Get Here