After graduating from Babson College's top-ranked entrepreneurship program, Dandan Zhu joined a headhunting company. Rising quickly through the ranks to become one of its rainmakers, she set up its executive search division in New York City before retiring from corporate life at 28.
While most of her friends and colleagues enjoyed socializing, Dandan took a different tack. In her free time, she pored over books and scoured websites for information about investing, stocks, and real estate so she could learn how to convert her income into instruments that would grow her wealth.
In just five years, through several successful investments in real estate and the financial markets, Dandan earned enough to not have to ever work again--if she chose not to.
Dandan does work, however, because in addition to building her wealth, she wants to share what she knows about headhunting, recruiting, and investing with anyone who aspires to be successful. She accomplishes this through Dandan Global, the company she founded two years ago. Along with providing bespoke career advice, Dandan's firm finds, hires, and trains the next generation of top-billing headhunters.
Dandan, who turned 30 recently, also hosts a popular podcast, Daily Dandan, in which she dishes out punchy, practical career advice for professionals of all stripes.
I met up with Dandan in a coffee shop in Boston, where she shared several pieces of tough-love-style advice for Millennials struggling to make ends meet and save enough to invest.
The following are excerpts from my conversation with Dandan:
Glenn Leibowitz: Millennials just can't seem to catch a break these days. For several years now, people have been piling on criticism about how they're not motivated like earlier generations. What would you say about this?
Dandan Zhu: You hear a lot about what's wrong with Millennials in the media. I think it just boils down to the simple fact that we Millennials, because we're happy, hopeful people, we actually prioritize socializing much more than previous generations did.
Instead of investing in "boring" activities like wealth creation and income generation, we're spending 80 to 95 percent of our free time dedicated to "fun" pursuits.
But it's this single-minded prioritization of short-term gratification that is distracting us from building wealth, creating successful careers, and learning techniques to manage money correctly.
There's an expectation upon graduation that, no matter what, I'm going to enjoy life. There will be no delay to this enjoyment. I want it now. Millennials today want fun in great quantities, thus the proliferation of consumer spending on attending social events, dining out, and drinking.
But if you follow Maslow's hierarchy of human needs, fun falls into the category of "self-actualization." It comes only after people have managed to secure basic sustenance like food. However, people today are fast-forwarding to happiness before they can actually build the foundations for happiness.
Millennials are not the only ones at fault, of course. This relentless pursuit of happiness is an obsession of all demographics now.
The sad thing about happiness is that it's fleeting. Without building your foundation and the rest of Maslow's hierarchy of needs, happiness can't be sustained. Eighty percent of American adults are at risk of bankruptcy and financial ruin with just the slightest financial setback, yet most don't even know it.
To echo the lyric from the popular song from the '80s by Cyndi Lauper, Millennials just like to have fun, and this is leading them to potential financial ruin. Tell me more about what they like to do to have fun exactly, and why this is so detrimental to them?
So let's talk about finances. You read a lot about how the avocado toasts are killing the Millennial generation's pocketbooks. People are like, "Millennials live off avocados. That's what's killing their budgets, because they eat avocados."
Another common thing you hear is, "If you didn't have your Starbucks coffee every day, you'd be way richer." The compound effect of having a $4 coffee every day adds up to be, like, $1,000 a year.
But it's not those things that are actually killing people's finances. If you look at Millennials' finances, the root cause of their inability to build wealth is their alcohol-consumption habits.
That costs way more than the coffee, the avocado toast, your lunch, and your dinner combined. Whether you're consuming four to five drinks two to three times a week, or even if you have just one drink every night, the retail cost of alcohol exceeds all other expenditures besides rent.
If you live in a metropolitan city like New York or San Francisco, drinking becomes even more toxic. Fifteen dollars for a cocktail and $8 for a beer quickly add up and devour whatever savings you might otherwise have to make a downpayment on a house.
Granted, it is a very expensive and unhealthy habit. But to be fair to Millennials, and speaking as a Gen-Xer myself, yours isn't the first generation to waste money on drinking. What else do Millennials spend their money on that is hurting their ability to find financial freedom?
The biggest piece of advice I have for Millennials is this: Control your rental expense.
Because of social expectations, you only want to work in the "socially accepted" cities. Cities like New York, cities like Boston. So naturally, there's going to be a cost premium for these more "desirable" cities. You'll move to New York, where rent is high. Not only do you want to live in New York City, you want to experience Manhattan right away. I've seen my colleagues and friends sign on to leases at $1,500-$2,300 a month on salaries ranging from $40,000-$80,000.
When you do the math after taxes--and, sadly, as many of my friends have discovered--the numbers just don't add up. Many are thrown into further debt on top of their student debt. Their lifestyle and living choices set them back financially.
As an antidote to this problem, go by this rule of thumb: Your rent should only be a maximum of 30 percent of your salary. If your base salary is $35,000, live in a room that costs under $800 a month.
When I was moving to New York, I even thought about living in a bunk bed! Anything to keep costs to a minimum while I built my future. Luckily, I settled on finding an apartment with roommates in a quiet area of Brooklyn.
So how should people allocate their budget once they've covered their rent? And do they really have to cut drinking out altogether? I mean, life is short, so carpe diem--seize the day--right?
Drinking is totally doable, but you can't overdo it. Let's do a basic budget calculation using simple math.
Let's say, after rent, you'll have $1,200 left over to spend. That's about $40 a day. Forty dollars multiplied by 7 is $280 a week. Eighty dollars of that is for grocery shopping. The other $200 is 100 percent discretionary spending. Maybe $50 is for your spa expense. Maybe $30 is for your weekly commute.
You probably have $100 left over for socializing per week. What does that mean? That means you should enact a policy to minimize the time you spend out with your friends, especially if they also like to spend money that they don't have!
A hundred dollars is easy to blow in a 10-minute span in New York. One round of drinks will do that to you, so again, decide what's more important to you: drinking and being the life of the party? Or your future?
So you've talked about the costs and evils of drinking and how you need to cap your rental expense and stick to a budget for the rest of your essential expenses. That all makes good sense. What else would you suggest they do?
Let's talk about time and the opportunity cost of socializing. When you hang out with people, that automatically reduces your free time.
Most people reading this article work a 9-to-5, so your free time is limited to weeknights and weekends.
Let's say you're going through some career issues. You must learn how to job search on top of your existing social commitments. Will you really be able to pull back from the fun and focus on more work after work? Most people won't. It's less fun to spend the time necessary to work on the items most needing work.
When you get older, you may want to start preparing for your future. You should probably know well the benefits and drawbacks of various investment strategies. You'll also need to start learning how to file taxes as you potentially start owning properties and other financial investments.
That doesn't happen overnight. In fact, you could spend an entire lifetime learning how to be financially adept and still not know everything.
If you commit to the same social obligations that you've had since college, where you had none of those things to worry about, it just won't be possible to succeed within the time constraints that come with being a working professional.
What is the return on investment of your activities today? Other than the fleeting feeling of fun, what did you gain?
Many people spend decades before they figure this stuff out, if they ever do. You seem to have had an epiphany about all this pretty early on. What--or who--inspired you?
This is something that I got from my mom. My mom was always the old-school Asian parent. They're always against fun. I hated much of her parental style until I got older. Now, I appreciate her advice and have begun to see the benefits of my mom's approach to life.
To a certain degree, as much as I hate to admit it, fun doesn't pay the bills. Fun doesn't get you anywhere. Fun doesn't grow you as a human. Feeling happy for two seconds isn't going to make you wealthier. Fun should be extra. It should be your reward for a day's worth of work well done.
Where I disagree with her is that jobs and careers can be and should be fun. Although superficial fun generates less value, you can experience large financial rewards by monetizing fun in the form of investing in your career and financial future. If you can align fun with your financial wealth generation activities, you may experience wealth much faster.
Ultimately, happiness is really self-actualization. That's when people truly feel happy. Once your financial, security, food, and shelter needs are met, most people will be happy. However, many aren't because they live in a constant state of fear should any cog in their wheel fail. They have no option B. Thus, self-actualization becomes more and more intangible since it's at risk every single day.
As much as people don't want to admit it, financial security and mastery are the building blocks of happiness. Once you fully understand and internalize this concept, you'll be rightfully on the path toward happiness.