millennial in debt

The older I get the more I realize that I didn’t know as much about money, like I thought I did. And you have to know the ins and outs about money in order to make better decisions. I’ve also realized that I’m not the only one. There are so many people don’t have a clue about when it comes to money and that is because we were never taught them. We were kind’ve just left to figure it out as we stumble through making mistake after detrimental mistake.

In high school we were learning the Pythagorean theorem, and by the time you get to college it’s pretty much every man for themselves. It’s also quite likely that when you’ve gotten to college you have signed your life over at the ripe old age of 18 and packed on some debt that you will be paying off for quite some time. It’s also likely (as it was with me) that you’re going to start on the paycheck to paycheck path.This path starts off usually when you work a job that helps you get things you want, and pay your basic bills. However you don’t really realize right way that you have no extra money to throw into savings or carry over to your next check. This isn’t the route everyone takes, but it is very common especially during the college years.

Now that I’ve been out of college for almost 8 years (holy shit… that’s pretty scary) I’ve learned quite a bit from my mistakes, and hopefully this will help you  avoid.

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things you never learned about money

Things You Never Learned About Money Growing Up

1. Emergency Fund: Building an emergency fund is slightly different from a savings acct, yet it is essentially a savings account. It is a savings account that you do not touch, unless you are having a real emergency. Meaning you have no other option at financial survival. Using an emergency fund for anything besides an emergency, is going to disrupt your financial focus and goals. What counts as proper use for an emergency fund would be something along the lines as using the funds to pay your monthly bills if you’re facing a layoff or disability that is preventing you from working. It is wise to smart small and build/ add to your emergency fund as you gain more financial responsibilities.

You should create a goal of what you want to have in your emergency fund and by when. Then you can start setting aside a small amount monthly until you meet your goal. Then… keep adding and keep updating your goal.

2. Setting Financial Goals  (The SMART way and the 10X Way): From a very young age, we are told to create goals and work hard to achieve them. However in school, I never remember being asked to think about let alone set any type of financial goals. The goals I was always guided to create were career and education based.  I’m a teacher so I’ve been drilled in the art of creating and helping others create S.M.A.R.T goals (specific, measurable, attainable, realistic, and time bound). So I thinking tackling all goals (financial as well as personal, career, romantic…etc) should be done in a S.M.A.R.T manner. However as of late I’ve been reading a book called the 10X Rule by Grant Cardone, that has helped me think about goal setting in a slightly different way.  Both routes are almost the exact opposite of each other yet still align with the fact that you have to take action to achieve your goals.

I think both ways can help you create financial goals that you can achieve, so let me briefly explain what each one details so you can choose what works best for you.

The S.M.A.R.T way: S.M.A.R.T goals are really easy to create once you’ve gotten the hang of the acronym. What’s not easy, as with everything, is the action part. In order for you to create a S.M.A.R.T goal you need to make it realistic. Something you can attain realistically in a given amount of time. You also need to state how you will achieve this goal when you are creating it in order for you stay on track For example: “I will save 500 extra dollars by the end of March 2018 by saving 1 extra dollar a day. ” would be a simple S.M.A.RT goal.

The 10X Way: Grant Cardone however doesn’t see goals in this manner. He says instead, you should set goals high. Make them 10Xs bigger than what you initially thought of, because if you stick to “realistic” or small goals then you will stay small. The 10X way of setting goals requires you to set large goals, take active over the top action to reach those goals constantly, and to create the goal in a manner that speaks into existence so to speak. For example: “I have saved 100,000 dollars in my savings account.”. By saying your goal in this manner you will tiredllessy (though you’ll definitely get tired) to achieve that goal. Speaking it as though you have it already is a key motivator.

Both have their pros and cons depending on the type of person you are and the level of motivation you need. However, which ever route you take you need to set financial goals, and work to achieve them just as hard as you work to achieve all other goals.

3. Budget Efficiently & Aggressively: People think that saving money or paying your bills is the way to creating an efficient budget. And they would be wrong. I also thought this. If you pay off your bills every month and save some money also, that doesn’t mean you have an effective budget. It means that you have been pretty lucky for the most part. In order to budget efficiently and aggressively you need to understand how money operates in your life. You need to understand how you use money as a tool in achieving your goals successfully.

You also need to visually see where your money is going, and figure out if you are okay with the way you are spending it. When I start to actually properly budget, I had more money to save for things that I really wanted (travel, paying off debt, and buying property). When you see where your money is going you’ll think twice before spending because you want to “treat your self”. You can also get apps on your phone to help you out.

things you never learned about money

4. Identify and understand your net worth: This is still one of the most difficult tasks for me to understand myself but it is absolutely crucial when it comes to understanding money and its affect on your life. Your net worth is the value of all of your assets (savings, stocks, investments…etc), minus all of your liabilities (debt that you owe). Whatever number is left is your net worth.

Now before you get all depressed that your number is low and or in the negatives (I know mine is) this is just the first stop. Identifying your net worth. But understanding your net worth takes your understanding of money (most importantly your money) even better. Understanding your net worth helps you understand where you are in the grand scheme of things, and what you need to do to make that number grow in a positive direction.

5. Monday Mindset: Stop seeing money as something you work to get and then you spend. I know that sounds weird, and can be really difficult to do however money is essentially a tool. If you allow your feelings to control this tool too often then you are in for a lifetime of financial struggle. Take it from me, I sent my account into over draft for a pair of Coach sneakers when I was 18 years old. From there I would go on to make a slew of other poor monetary decisions because my money mindset was trash.

You have to learn how to use this tool, master this tool, and use it efficiently to improve parts of your life that you feel need improving. Without a clear cut money mindset you are going to be wasting this tool consistently. A strong positive mindset will allow you to reach monetary success. That means don’t go on a spending binge because you had a bad day or a bad week. The “treat your self” mentality is cute in theory, but in reality will set  you back many many times.

6. Pay off your mother fucking debts: I wish someone would have told me to pay my student loans while I was still in college. Especially because I had way more expendable cash, less financial responsibility, and unsubsidized loans. Don’t think that your loans are going to disappear because you don’t pay them or acknowledge them. When Sallie Mae is hounding after you they are serious and want their money. This counts for any type of debt really. You want your credit score to be a positive contirbutor on your path to financial freedom, not a detraction.

Point blank period: PAY OFF YOUR DEBT in anyway you can. Make extra payments if you can (interest only student loan payments are a waste of your time so if you can avoid it… AVOID it).

7. Investing: I didn’t start investing until late in my 20’s and I’ve made many many investing mistakes that has cost me money. I wish I had learned about the stock market, and investing earlier this way I would’ve made better monetary decisions and been prepared. I can’t tell you how many times I’ve kicked myself for not investing in companies like Google and Amazon when I deemed them as “too expensive” only to see their stock value double in less than three years.

I do recommend you learn as much as you can about investing before you throw the big bucks in. Once you’ve learned the market to the best of your ability (keep learning past that) you can invest wisely and make large amounts of money. The market can also cost you money too… so you have to be willing to play the game and play it smart. PS: I’d say find a professional to speak to about investing. Financial advisors and planners are definitely helpful.

8. Retirement: If you had asked me before (and still sometimes if you catch me in a mood) am I thinking about retirement or planning fo retire I’d say hell no. I’m young, I’m a millennial and I think in the now. Five years from now I’ll probably be looking for a career change (shit… I’m thinking about one now). However, the smarter, wiser version of myself understands the need to not only prepare for retirement, but prepare well. Retirement preparation can be a type of investing if done correctly. I won’t pretend to understand all the details of a 401K and all that jazz, but I do know that whenever I get a raise at work I raise the percentage of my income that goes into my retirement.

You also want to know if your employer matches your contribution, because that my friends, that is GOLD! When you start investing in your retirement fund early you have time on your side. Also when you are younger you can invest more rigorously without fear of losing all you have when you are ready to retire.

9. Insurance: Today… I feel like insurance is a scam… but again the smarter, wiser, and calmer version of myself understands the importance of insurance. Not just regular degular insurance, but good insurance. When I say “good insurance” I mean insurance that suits your situation. You will need different types of insurance, and they all will vary as you grow and your life changes. From health insurance, car insurance, life insurance you need to understand how each works, how much money they are taking from you, and how much money they will provide for you when you need them to. There is nothing worse than having a crisis only to find out that our insurance does not cover what you need it to.

People at younger ages (including myself) often feel indestructible, and go for the cheaper or cheapest insurance because that is what they can afford. And I have been guilty of that. We don’t want to pay high premiums for health insurance especially if we are rarely sick. We don’t want to pay high amounts of car insurance because we “never” get into car accidents. Look into your insurance coverages and make sure they can cover you for the worst of your situations at any time.

10. Estate Planning: I saved the least interesting for last I suppose, but this is one of the most important things you need to know about money. Just like with insurance and retirement, estate planning isn’t interesting. It isn’t sexy, and it can be very sad to think about the future in that manner. We never want to plan for terrible things… but if we did they would be less terrible. You’ve been paying for all sorts of insurance and retirement however haven’t set up a will or designated beneficiaries. That is just as important or crucial as having insurance and a retirement fund. Planning your money allows for you to put it where you want it to be when you need it there.

And that’s that! These are the 10 things that I’ve learned over the course of my failed adulting attempts with money. Now that I know more, I want to know even more and share it further with you! You can sign up for our Millennial In Debt Mailing list here to get more deets on money managing, financial freedom and getting out of student loan debt!

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