Sunday’s Podcast AAU/Social Media Sunday with the Delaware Blogger featured guest Steve Bealey, author of Financial Success Starts Now! The Young Person’s Guide to Money in America.
Steve and I talked about the attitudes of spending, smart spending -vs- frivolous spending as well as the importance of investing.
On the Podcast he talks not only about investing but the importance of budgeting and building a buffer or a cash cushion first. Suggestions on how much you should be saving with a 1 and/or 2 income household.
If you want to set yourself on the path to financial success, then you need to learn the basics of how our money system works, and you need to be able to make smart decisions for yourself within that system.
It is no secret that personal financial education is lacking in our schools. Yet, even before we graduate, most of us are making important financial decisions that can have lifelong consequences.
“Financial Success Starts Now! The Young Person’s Guide to Money in America” is here to fill that void – to provide a clear and concise overview of the foundational areas of your personal finances – a guidebook to financial topics which anyone should know, yet many do not.
Topics covered include: cash flow, budgeting, debt, growing your wealth, investing, insurance, and taxes.
Before the interview with Steve, I shared these 10 Wealth Building Tips for Millennials:
#1 Start early! – Now is the time to start saving and investing. For example, if you invest $5000 each year from the time you are 25 years of age, you will have over $1 million at age 65. If you put $5000 per year in a mattress, you will have only $200,000. This illustrates the power of investing and compound interest.
#2 Conquer your fears! – 40% of millennials surveyed are uncomfortable with investing in stock. This is a fear you need to conquer.
#3 Tune in, turn on and don’t drop out! – Shockingly, about one-third of those between the ages of 25 and 34 do not participate in their employer’s 401(k). Tune in to the benefits your employer offers, turn on the payroll deduction and don’t drop out of the plan.
#4 Guard your credit score. – always pay on-time. Carry three or four credit cards but use no more than one or two. A good credit score will save you thousands in interest costs over your lifetime.
#5 Buy previously owned cars. – Want that new car smell? It comes in a spray bottle for $6.99. Buying a second-hand car will save you $9000 over a 5 year period. Avoid buying someone else’s problems by targeting off-lease vehicles. Lease agreements mandate proper maintenance and leasing companies charge the lessee for needed repairs. This removes the financial barrier for leasing companies to repair the problems and enhances your odds of getting a trouble free vehicle.
#6 Watch your pennies! – In short, be thrifty. If you watch the pennies, the dollars will take care of themselves. Your $4, four times a week, Starbucks latte racks up $16 of budget drain each week, invest that money!
#7 Open an IRA account – There are two types of IRAs, the conventional and the Roth. The conventional IRA is funded with pre-tax dollars. This can save you Federal income tax expense. You will be taxed on this money at withdrawal, but you will likely be in a lower tax bracket at that time. The Roth is funded with after-tax money. As a result, there is no immediate Federal tax relief. However, when you withdraw it, you won’t have to worry about Federal income taxes. Get one of each and cover all your bases.
#8 Set Goals – if you don’t set goals, you are playing the game but failing to keep score. Goals are the destinations on your financial map. Goals force you to watch the road and keep you from making wrong turns.
#9 Learn to measure the value of a buck – for example, you earn $20/hour. You see a watch in the jeweler’s window that you admire. It is priced at $200. Ask yourself if the watch is worth the 10 hours of work necessary to buy it. If you begin thinking about purchases using this yardstick, you will see a great reduction in the number of your impulse buys.
#10 Never stop learning – take your finances seriously. Learn all you can about borrowing, investing, stock, bonds, credit, politics and current events. The older you get, the more you will recognize that everything is intertwined. Navigating life successfully requires that you read the charts.
Click this link to listen to the entire Podcast with Steve Bealey.