This is my advice for everyone between the ages of 18 – 35 on how to manage their money, what to save, and how to invest – enjoy! Add me on Instagram: GPStephan
What’s up you guys it’s graham here so for those who have not seen my second channel the graham stefan show i regularly review a series by cnbc which covers the common everyday financial habits and financial mistakes of millennials which is appropriately called wait for it millennial money and for those who are already familiar with the series and my reviews you
Understand that i’ve poured hours of my time reviewing and sifting through each and every episode and critiquing them and then giving my unsolicited investing advice on how people could better optimize their spending and build up their net worth and it’s really from those videos that i was able to create this one which is really meant to be more like a millennial
Money guide of the most common financial mistakes that millennials are making how to avoid them and then also how to build up your net worth which all starts by the way with smashing the like button for the youtube algorithm don’t worry i’m not going to ask a bajillion times in this video i know some people are getting upset now but i’m just going to mention it once in
The very beginning and if you do it great thank you but anyway with that said here’s my millennial money guide to finances and it all begins with this now let’s start with one of the most common and obvious mistakes that i see throughout all of the money videos both millennial money and money tours is that a very large percentage of them cannot afford their current
Lifestyle on their current income basically it just means that they’re spending way too much money and honestly it’s very easy to see why this is happening you know financial literacy is not something that’s really taught in schools so a lot of people just enter the adult world just expected to figure it out as they go along and by doing so they’re obviously going
To have a lot of mistakes along the way if people aren’t taught to budget to track their spending to invest and to think long term then it’s no wonder why we see people spending 71 dollars on sprinkles cupcakes making 15 000 a year in new york city until eventually it just reaches the tipping point where they realize that that spending is not sustainable and from
That they either just make drastic lifestyle changes way too late or they just accept that they’ll never be ahead financially which is not going to happen on my watch that’s why my number one piece of advice for anyone between the ages of 18 and 35 is just to spend less money than you make i know this one might sound common sense to you and i but believe me it’s
Not common sense to most people out there especially when you consider that forty percent of americans don’t have enough in savings to cover a one thousand dollar emergency so the easiest way to get out of that trap is to cut back on your spending and get rid of any discretionary expenses that you might have also websites like mint.com and personalcapital.com are
Completely free and incredibly easy to use and believe me trust me when i say this the hardest part about doing all of this is just starting and just starting to turn this into a habit and a routine but once you start doing this the benefits are going to become monumental you’re going to have extra money left over at the end of every single week and you’re going to
Have disposable income left over that you can now go and invest with this step is really just about seeing the long term and realizing the opportunity that you have right now to begin investing as soon as possible these are really your prime savings years because you have the power of compound interest behind you so you may as well just take advantage of that while
You still can i’m not sure if you can see ramsay here by the way but in the last video a lot of people were complaining that i wasn’t giving ramsay enough pets so i’m going to give ramsay some pets here here you go and one of the tricks i often do when it comes to spending and saving money is i just think to myself if i don’t go and buy something it’s like i almost
Got paid not to buy it like for instance because i didn’t go out and spend ten dollars on a hamburger on my drive home from work i just saved ten dollars which is kind of like i got paid an extra ten dollars not to spend it if that makes sense this way your brain almost starts to rewire itself and rewards you for not spending money because you act as though that
Is just money you got paid not to spend i don’t know if that makes sense let me know if that hopefully makes sense now given that statistic about 40 of americans not being able to afford a thousand dollar emergency that has been fairly consistent among all the money related videos that i’ve seen where the subjects of the videos have gotten themselves into horrible
Credit card or student loan debt i’ve seen everything from tens of thousands of dollars in outstanding credit card bills to egregious student loan balances and otherwise just a lack of consideration for trying to pay those down as soon as possible and here’s the thing i really believe that having any amount of unpaid consumer debt will grossly hinder your ability
To build wealth in the future it’s almost as though you’re borrowing from tomorrow and the day after to go and pay for today if that makes sense so if at all possible avoid consumer debt at all costs use it only as a last case resort if something terrible happens and you just you need it to put food on the table or there’s just no other option to turn to except
For a credit card but do not make that a substitute for i can’t afford to eating out with my friends every single night at nobu and malibu so i’m just gonna go and put it on my credit card so i can worry about it later the proper way to handle debt is really just as simple as this it’s okay and even encouraged to use credit cards for your normal everyday spending
To then rack up the points get cash back get free stuff and build your credit score that’s cool but under no circumstances should you ever carry an unpaid balance and pay any amount of interest on the credit card ever always just pay it off in full by the time it’s due with money you already have in your bank account it’s also okay and even encouraged to use debt
As a way to maximize your return on leveraged income producing assets like having a mortgage on a rental property could be a good thing going and getting a low interest rate loan so you could just not type your money and invest your money elsewhere at a higher return is a good thing but the big differentiation here is that if the debt isn’t helping you make more
Money don’t do it and avoid it and if you happen to find yourself in any sort of bad debt whether it be credit card debt student loan debt or any sort of personal loan make it your new priority to pay off that loan as soon as you possibly can take on a second job work overtime cut back on all of your expenses don’t go out to nobu and malibu with your friends just
Get those loans paid off having that type of consumer debt could really be one of those things that’s as if you’re walking around with a ball and chain that debt is just going to be constantly holding you back and pulling you down at a time where you should really be prioritizing building your wealth and investing as much money as possible now the third mistake
That i’ve seen between pretty much every money series and something that for the most part all of us are guilty of on some level or another is getting accustomed to lifestyle inflation this is the practice in which we start making a little bit more money each and every month and then from there we start spending a little bit more money each and every month maybe
We just get a slightly nicer apartment or drive a slightly nicer car or start going out to slightly nicer places now the issue isn’t so much doing this every now and then as a special treat but instead doing it so often so that it now becomes your new baseline level of spending and what you consider normal and once you become accustomed to that new threshold it
Just becomes exceedingly difficult to ever go down from there the biggest issue that i’ve seen is that people just get used to spending all the money that they have so that anytime they have any extra money left over in their bank account it’s almost as though they don’t know what to do with it so they just go and spend it so really the only way to fight this is to
First acknowledge that lifestyle inflation is unavoidable it’s going to happen to all of us and it’s really important to work with it rather than just not acknowledge that it exists or think it doesn’t apply to us and the easiest way to begin working with this is by paying yourself first every single paycheck before you spend any amount of money put a set amount
Aside that you do not touch under any circumstances for any reason whatsoever just pretend that that money doesn’t even exist before it even hits your account and that way there’s no chance of you ever spending it i personally recommend setting aside at least 15 to 20 of your monthly paycheck each and every month if you’re able to save more than that then by all
Means that that will just make me even happier but just get in the habit of starting to do this consistently to prevent yourself from spending any excess money that you might have ramsay get down now when it comes to that another concern i see is that a lot of the millennials featured in these videos do not have any sort of emergency fund at all in fact sometimes
It seems as though their only emergency fund is just a credit card which like i said ends up costing you significantly more than you ever need to spend if you don’t have the money to pay it off immediately now for those that don’t know an emergency fund is basically money you set aside to only be used in the event of an emergency where you otherwise have no other
Option to turn to ideally the amount in this emergency fund should be equal to three to six months worth of your living expenses and kept easily accessible for emergencies and remember when it comes to this an emergency fund is not money that you set aside just to frivolously spend as you want to it’s not money that you set aside to go and invest with it’s just
Money that you have at your disposal in case she hits the fan and you need something on short notice like if you lose a job you need to pay rent you need to pay for food your car breaks down or anything like this you got your money there already and the reason you shouldn’t be investing this money is because on short notice your investments might be falling at a
Time where maybe you need it the most like for instance let’s say a recession happens and stocks drop 30 in price and then all of a sudden you lose your job and you need your emergency funds so you start selling off your stocks after they’ve already dropped 30 in price when chances are you shouldn’t really be selling those stocks instead you should always aim to
Keep your emergency fund in a high interest savings account where it’s safe and where you’re guaranteed to get a return on your money even if that just means you’re keeping pace with inflation you could go and use ally bank which pays you 1.9 percent in interest you can go and use wealthfront which pays you 2.32 in interest or a myriad of other options out there
That you have to choose from just do me one favor and make sure you get at least 1.9 in interest on a high interest savings account so that that way you can make the biggest use of your money now given all of those previous mistakes here’s a bit of a backwards mistake that some people just tend to fall into because they end up too careful with money and from that
They don’t end up getting a credit card it’s okay to err on the side of caution and make sure you don’t go into debt and only spend money that you have available in your account that is all good but i’ve also seen that there’s very much an extreme of that situation as well those are the people who always pay with cash or debit they don’t have any credit cards
And because of that they don’t have any credit score and in my opinion that could be just as equally detrimental as the type of person who can’t control their credit card spending like not getting a credit card because you’re afraid of getting into debt is a lot like carrying around a fire extinguisher everywhere just expecting what if there’s maybe a fire and
I need to use this getting a credit card and learning how to handle that responsibly is such an incredibly important part of your financial future not only will a credit card provide you with purchase protection rewards and cash back on pretty much all of your purchases but you’re also going to be continually improving your credit score which will give you the
Best and lowest rates anytime you decide to get a mortgage to finance a car to rent an apartment or to pretty much do anything that involves running your credit score and a very large part of your credit profile is built up from what’s called the length of your credit history so all things being equal the person who’s had a credit card for 10 years is going to
Have a significantly higher score than the other person who’s just had a credit card for one year and doing all of this is incredibly easy if you don’t have a credit card already just go and open up a secured credit card i recommend the discover it’s secured card go and put a few small expenses on it every single month and then just go and pay it off in full by
The time it’s due just continue doing that and then every six to eight months go and get another credit card preferably one with no annual fee and just go and do the exact same thing with that one over time you’re going to develop a really great credit score that’s going to give you the best and lowest rates on pretty much anything you’d ever want to finance which
Again just ends up saving you more money and if you’re still confused with all of this by the way i’m going to link to a video that i did a while ago down below in the description that’ll teach you exactly how to build your credit score in like under 20 minutes now another one of the mistakes that i see in those millennial money episodes is that very few of those
People are taking advantage of their retirement accounts or investing and from the way i see it this is a huge missed opportunity with pretty much nothing but upside for example the best time to contribute to a roth ira is when you’re young and when you’re not in a high tax bracket that’s because you’re already in a low tax bracket and not losing a lot of money to
Taxes and you have more time for your money to grow into something much bigger and with the roth ira all the profit within that account becomes completely tax free after the age of 59 and a half or another one you could use a 401k which would help reduce your taxable income now and postpone it until retirement not to mention that a lot of employers will match your
Contribution dollar for dollar up to a certain amount that’s pretty much just absolutely free money that so many people are just not claiming and by doing so they’re leaving a lot of free money on the table just by not knowing about this so i highly recommend going for these retirement accounts always just always make it a priority to contribute up to the employer
Match max out the roth ira take advantage of everything at your disposal and do it consistently remember how i mentioned earlier in the video about paying yourself first well this is perfect pay yourself first into some of these retirement accounts likewise with this vanguard conducted a survey and found that one in five millennials owned no stocks whatsoever and
I mean some of that makes sense because we’ve seen the aftermath of the 2008 financial crisis and i think a lot of people are just scared to have that happen again and to lose money but that doesn’t mean that stocks are inherently bad or risky at all by investing younger you’re just able to weather those storms and come ahead much more than you could if you were
Investing in stocks let’s say right before retirement and finally from all the advice in this video this is the one that i feel like is the most important you should use your 20s as a time that you could just work your ass off save as much money as you can and use all of that to get ahead now is the time to absolutely pursue any career aspirations you might have to
Work harder than you ever thought was possible and to save more money than you ever thought was imaginable because trust me as someone who did that throughout their entire 20s i’m 29 years old now and i’ve pretty much set myself up to never have to worry about this stuff ever again for the rest of my life because of what i did between the ages of 18 and basically
Now and while sure it’s okay to relax and have fun every now and then just stay disciplined because the work that you put in right now and the money you save right now could be enough to carry you forward throughout the rest of your life because i’ll tell you from my experience it just becomes more difficult as you get older you’re probably not going to have as
Much energy as you did back when you were 18 you’re probably just going to start needing maybe just a little bit more sleep and you’re going to start wanting to try new and better things and having that money invested in the bank is going to give you the flexibility to pursue the things you really want to pursue while getting the heavy lifting out of the way early
On and also during all of that it’s just as equally as important to focus on now starting to increase your income at the exact same time as you’re focusing on decreasing your expenses and saving as much money as possible and sometimes people just can’t save enough money and it’s not a fault of budgeting or a lack of just frivolously spending a lot of times these
People just don’t make enough money and instead they need to focus on increasing their income rather than trying to scrimp and save as much as they possibly can while not earning a lot that’s why beyond a certain point it’s worth it to start switching jobs if that means you could start making a little bit more money or maybe learn new skills so that you could start
Increasing your income and working towards something that’s potentially a little bit more financially ambitious and when it comes to investing just keep it simple a broad index fund is just one of the easiest simplest and safest ways to invest your money when you hold it long term it’s really as easy as just buying a target date retirement fund or just one simple
Broad index fund continuing to buy more each month and just doing that over and over again or it could also be as simple as spending an hour a day on bigger pockets in youtube just learning how to invest in real estate and then going on weekends to check out open houses and then by the time you have your down payment ready you’ll be able to invest in real estate
And learn exactly how it’s done and if there’s any piece of millennial money investing advice that i highly recommend it’s to really focus on cutting down your living expenses as much as you possibly can while you’re young arguably housing is one of the biggest recurring monthly expenses that you’re going to have so figuring out how to reduce this while you’re
Young is going to have the biggest impact going forward long term and if you want my recommendation even though i’m very biased because i do this myself it’s to look into house hacking it’s to go and try to find a multi-unit building that you can move into one of the units and then you rent out the other units to cover your cost of ownership ideally if you do this
Correctly you should be able to be able to live there for free while still getting to own a multi-family income producing real estate deal while also building equity at the same time by paying down the loan and then eventually you should be able to go out and move into something else and maybe repeat the exact same thing and then meanwhile you’re slowly building
Up a portfolio of income producing real estate that one day will be your retirement investing doesn’t need to be something complicated and budgeting doesn’t need to be something that’s difficult it’s really all about learning the basic financial skills early on and then just making that a habit long term and if you just do that you’re going to be on your way to
Making a ton of that millennial money so with that said you guys thank you so much for watching i really appreciate it if you guys make it to the very end you haven’t already subscribed make sure to subscribe hit the notification bell so you can be a part of the notification squad because i post three videos a week every monday wednesday friday also feel free to
Add me on instagram i poster pretty much daily so if you want to be a part of it there feel free to add me there and then also go and add me on my second channel it’s called the gram stefan show i post there every single day i don’t post here so if you want to see me and new videos every single day just go and add me on that channel as well so with that said thank
You again for watching and until next time
Transcribed from video
Millionaire Financial Advice For 18-35 Year Olds | Millennial Money By Graham Stephan
