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One of the common “main stream media” myths about why millennials aren’t investing is because they are scared. They’re scared of losing money in the stock market. They’re scared of not know what to do, what tools they should be using, and don’t think they can learn the Wall Street jargon. They’re scared of shady advisors that might steer them the wrong direction.

However, I would argue that, as a group, fear is not what is holding millennials back from investing. What’s really holding millennials and young adults back from investing is competing priorities on a limited budget.

Well, you might say that’s nothing new – and you’re right. Everyone had to save and invest with competing priorities. But I would argue that millennials and young adults do have some different challenges than past generations.

Understanding Young Adult Money Priorities

When discussing a generation, it can be hard to generalize – just look at the average net worth of millennials by age. But there are some things that many millennials do have in common.

Many young adults have graduated college with student loan levels unheard of in past generations. Also, wage growth has been stagnant over the last decade, and incomes as a whole aren’t there to support much beyond first world subsistence living. For most people, it takes a few years after graduation to start earning a “good” salary – maybe 4-5 years. So, now at 27, they might start having some discretionary income beyond bills and debt repayment that they can start to invest with.

But what happens in most peoples’ late 20s and early 30s? Life happens – weddings, babies, housing. All of these big expenses start appearing, and it can be even more daunting to save and invest.

Real Life Priorities

I recently got this email from a reader about what’s holding her back from starting to invest. You might be a little taken aback by her thought process, but you have to realize that this is real life here.

You can sense that Amber wants to invest, and it’s not that she’s scared. She says a few things that really stick out to me (and I see emails like this daily):

I need to pay for groceries and discretionary spending like going out with friends

Husband is in grad school

I’m only putting 2% in my company’s 401k (which likely isn’t the full match amount)

The bottom line is that it’s not fear that’s holding Amber back – it’s finding financial balance to deal with competing money priorities.

But I want to bust this myth today – why you don’t need to make much money to invest. Let’s take a look at some numbers…

What Does “I Don’t Make Much Money” Really Means

It can sound daunting to invest if you don’t make much money or are feeling constrained in your budget – but it’s very possible, and it’s a pretty smart thing to do. I’m going to show you why it doesn’t have to be an either/or decision, it can be an AND choice as well.

But first, let’s look at what “I don’t make much money” really means.

In every circumstance, “I don’t make much money” really means you simply have a tight budget. Money is always relative. Not making much money means that your income equals your expenses (or even worse, your expenses are greater than your income).

You feel like you don’t make much money if you bring home $2,000 per month, and have expenses of $1,990 per month. But someone who makes $20,000 per month also feels like they don’t make much money if their expenses are $19,900 per month. At the same time, there are people who bring home $2,000 per month, and live on $1,500 per month, and feel fine. It’s all relative.

So, you’re giving yourself the wrong excuse about not being able to invest.

You Have Two Choices

The math around this is straight forward – INCOME – EXPENSES = MONEY LEFT TO SAVE.

If you find yourself feeling like you have a tight budget and can’t save, you always have two choices:

There’s nothing else. That covers both parts of the equation.

I’ve shared the story about my friend’s mom before, and I’ll share it again right now. His mom worked her entire life. She raised her son and did almost everything right. However, she was too timid to invest. Instead, she just saved. She saved a nice sum of money of for 30-40 years – approximately $300,000. But that was not enough to retire on where she lived. Instead, she had to keep working. She had to get to 70 to get the most Social Security possible, and boost her savings. She eventually started investing, but started at 62 when she should have been thinking of retirement. Now, her life suddenly was based on a choice she couldn’t control – she HAD to work. She HAD to invest and EARN more. She HAD to wait. Choice gone. That sucks.

If she had invested that same amount of money instead of just saved it, she could have retired at 62. She would have had double or triple the amount she ended up with. Her life would have been in her control. She could have decided when SHE wanted to retire.

Change Your Mindset

Instead of thinking about investing with money that you have left over, it’s time to change your mindset about investing. This is how I view that same formula:

INCOME – EXPENSES – SAVINGS = MONEY LEFT TO PLAY

Too many people fall into the trap that play money (like going out with friends) is an expense. It’s not. It should be done with the money you have left over. Instead, you should view saving money as an expense – something mandatory that you have to do. By making it mandatory, you start preventing excuses from hindering your progress.

Don’t Let Excuses Prevent You From Investing

In Amber’s case, she had both choices. Amber is a journalist, and can write exceptionally well. I offered two suggestions for her so that she wouldn’t be able to keep making excuses.

1. Make more money – she could easily freelance write and make an extra $100 to $200 per month. We’ve covered how to make more money freelance writing here. I also have a huge list of ways to make extra money as well.

2. Spend less money – she could cut that “eating out with friends” money a bit and save another $100 to $200 per month. There are also tons of other ways to save money and spend less. We have my personal list of ways that I’ve saved over $500 per month from random activities around my house.

Heck, she could combine them both and have $400 per month more – that’s $4,800 per year! That’s almost maxing out an IRA!

How much would she have if she did this? Well, if you start at $0, and contribute $400 per month for 30 years, at a 6% return that would bring the total amount in her IRA to $402,000! If the return went up to 8%, it could go up as high as $580,000!

Finally, Amber could always help change the equation. She’s already putting 2% into her 401k. Simply boosting that to 5% or more not only automates savings (which makes it a mandatory expense), but it helps her achieve her goals of investing more. Plus, chances are she would barely notice the change in her paycheck with the potential tax savings.

If you’re ready to stop making excuses and learn how to invest, why do you check out my free investing video training series?

What other advice do you have to prevent Amber from letting excuses stop her from earning $580,000?