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  • 00:00:00,000 --> 00:00:00,000 Hey, guys.

  • It's Chelsea from The Financial Diet.

  • And this week's video was brought to you

  • by Credit Repair.

  • And this week, I wanted to do something big,

  • both for the people who might be new to this channel

  • and for the people who know TFD very well, because we

  • can always use a refresher.

  • Many of you are just starting out in your adult lives

  • and are asking us constantly for big, comprehensive checklists

  • of what you really need to be doing on a daily, weekly,

  • or even yearly basis to get good with money.

  • And while it's impossible to condense everything

  • that you should be doing down into one video,

  • we've done our best to try and give

  • a really comprehensive overview that explains everything

  • in the rough order that you should be doing it.

  • Because frankly, when it comes to money,

  • millennials could use some help.

  • And if you feel like you're very behind when it comes to money,

  • you are not alone.

  • We're dealing with lower and stagnating incomes, higher

  • debt, lower net worth, lower rates of homeownership,

  • underemployment.

  • Compared with previous generations,

  • millennials are in a tough financial position,

  • in large part because we came of age during the Great Recession.

  • And while we can advocate for greater systemic change

  • so that more people do not have to put themselves

  • into hundreds of thousands of debt for a basic education,

  • we can do our best on the day-to-day

  • to get good with the money situation that we have.

  • And while it's great to do these 20 steps in your 20s,

  • keep in mind that nothing is too late.

  • And you could easily do them in your 30s or beyond.

  • But if you're just starting out into adulthood

  • and want to know how to get good with money,

  • this is a great place to start and fight back

  • against some of those big picture

  • factors we have working against us.

  • So without further ado, here is your 20 point checklist

  • for getting good with money in your 20s.

  • Number one, and this is the most important, crucial, first thing

  • everyone needs to do if you have not touched your money,

  • is go through all of your bank and card statements

  • and just analyze every purchase.

  • Get to understand your money on an intimate level.

  • You should know what's coming in and what's going out.

  • This will allow you to get a bird's-eye perspective

  • of your net worth, which is basically your assets

  • and your debts.

  • And the nitty gritty view of your accounts

  • will allow you to really see the daily flow of your money, which

  • will give you some context as to how you've gotten

  • to that current net worth.

  • Even if you don't decrease your spending,

  • increase your earnings, or change a thing,

  • just looking at your money situation in the face

  • and getting to know it intimately

  • is a crucial first step.

  • Use that analysis of your starting budget

  • to create a current budget.

  • Now, this does not mean it is where you want to be.

  • It is understanding where you are.

  • You should know roughly what percentage

  • of all of your income is going to what.

  • Particularly if you've never given yourself a budget before,

  • coming to the understanding that, yes, you

  • do have a budget whether or not you realize it,

  • you just maybe haven't had control over it,

  • is very important.

  • And even if you only have $10, you

  • should know where 2, 3, and 5 of those dollars are going.

  • Now, number three is to pick out a few key goals for your life.

  • Now, I want to be clear that everyone

  • is going to have different goals, and not all of them

  • are going to be the same cost-wise.

  • But you should have a rough picture

  • of the life that you want to live

  • and a few key components that you know you will need

  • to save in order to get to.

  • This could be anything from owning a home,

  • to quitting your job to go freelance,

  • to traveling the world, to starting a family.

  • The point is you want to have a rough sketch

  • in your mind of the goals you are working toward.

  • Because the more we understand money

  • as a means to getting to those goals rather than just

  • something you accumulate, the more

  • you will be able to stay on track,

  • stay motivated, and understand why you're making the choices

  • that you are.

  • So once you have those goals and a rough financial understanding

  • of what your life will need to look like in order

  • to reach those goals, you must create a goal budget.

  • This means roughly what do you want to be saving every month,

  • how much perhaps more will you need

  • to earn or less will you need to spend it in order to get there,

  • and where you are in terms of distance

  • from how you're living today from that ideal budget.

  • Now, obviously, as you live the course of a lifetime,

  • your goal budgets are going to change.

  • And we will talk about that later.

  • But the point is you should take time to separate yourself

  • from how you're handling money today to how

  • you should be handling money.

  • A common frame that a lot of people

  • use to making an ideal budget is something

  • like the 50-30-20 rule.

  • And this means that about 50% of your money

  • is going to needs, like bills; 30% is going to wants,

  • things like dining, traveling, et

  • cetera; and 20% is going to savings.

  • This may not be achievable for you today

  • or you may find that a different system works better for you.

  • But the point is you need to be basing your target

  • budget on meeting those goals that you've set for yourself.

  • Number five is get to know your credit score.

  • Now, I am someone who used to have decimated credit

  • and who as of yesterday was approved

  • for a very fancy credit card all by myself with no cosigner,

  • which was amazing.

  • And to some of you, that may seem like, whatever,

  • I've always had a great score.

  • But for those of us who had to work to get a credit score,

  • it's fucking amazing.

  • But it took a lot of hard work to get there.

  • And in fact, for a period of my life,

  • I had to use what is often referred to as rehab credit

  • card, where basically you prepay a credit card, which you then

  • pay back on time to show that you can make bill payments.

  • When it comes to rebuilding my credit, I've done it all.

  • And everyone's path to good credit

  • is going to be different.

  • So it is incredibly important to get to know your credit score--

  • what it is, why it got there, and how you can get

  • it to be the best it can be.

  • And that can be everything from having higher credit limits

  • but spending less-- so you're widening that credit

  • utilization ratio--

  • to making timely bill payments, to keeping

  • cards open for longer so you have that longer credit

  • history, to disputing dings on your credit report,

  • which I have done successfully as recently as this year.

  • The point is, as much as you should intimately

  • know the state of your accounts, you

  • should also know the state of your credit score.

  • Number six is find a financial buddy

  • to help you on your journey.

  • Now, we have done an entire video

  • about the financial buddy system,

  • which we will link you to.

  • But it boils down to this.

  • All of the hard decisions you are going to have to make,

  • and the savings journeys you're going to have to go on,

  • and the things you might have to say no to because they're

  • really expensive are infinitely easier

  • to do when you have someone who just gets it, who's also trying

  • to better themselves financially, who's not going

  • to judge you for being on a budget,

  • and to whom you can rant slash potentially even share good

  • ideas.

  • Get thee a financial buddy, and all of this list

  • will be infinitely easier.

  • Number seven is to start working on your emergency fund.

  • We have talked about this so many times.

  • And I will link you to the video on how to specifically save up

  • your emergency fund.

  • But the long and short of it is this,

  • before you work on your retirement

  • savings, aggressive debt repayment, investments,

  • et cetera, you need to have about three months of living

  • expenses set aside, so that if anything

  • were to happen from an unexpected injury,

  • to your car breaking down, to losing a job that is not

  • putting you in financial ruin.

  • Without an emergency fund, basically anything unexpected

  • happening could totally derail your financial progress

  • and potentially leave you on the street.

  • Obviously, if you're doing things like repaying debt,

  • you're going to want to not go into default on anything

  • in order to get your emergency fund together.

  • But everything else needs to be bare minimum,

  • including your spending, until you have that emergency

  • fund socked away.

  • Otherwise, you are living life on a razor's edge

  • and essentially playing Russian roulette

  • with your own financial future.

  • Number eight is do a one-month financial cleanse.

  • Now, when you're getting into the swing

  • of going toward your ideal budget

  • and learning how you can save more, one of the biggest

  • helps will be to go on a radical budget for a month,

  • whether that's a cash-only diet, or trying

  • to save 50% of your income, or reducing absolutely

  • every expense that's not essential,

  • in order to really get a better picture of your life.

  • So much of what we've come to expect and spend on in life

  • is a result of what we call lifestyle inflation.

  • Basically as you get more money, you

  • have a tendency to spend more money

  • and feel like you need to.

  • It becomes more and more normal to take a car,

  • to order takeout, to pay extra for things,

  • to not wait for things that go on sale,

  • basically to live a life that is more luxurious than you

  • need, even just to be happy.

  • So doing one month where you're really reducing all of those

  • "want" expenses as much as possible really

  • puts into sharp relief what is worth

  • it to spend that extra money on and what you really don't need.

  • Number nine is get more comfortable with understanding

  • your own professional industry and how you can advance in it.

  • An interesting fact is that despite our reputation for job

  • hopping, millennial workers are actually

  • just as likely to stick with their employers

  • as Gen Xers were.

  • And while it's not inherently wrong to stay

  • at the same employer-- although it can depress your earning

  • potential, because often you have

  • to move out of your company to get a big salary jump--

  • it does mean that you might not have

  • a very good understanding of what's going on

  • around you in your industry.

  • And one of the best ways to advocate for yourself

  • professionally is to have a view of not just your own company

  • but of the industry at large.

  • Perhaps you're making substantially less at your job

  • than you would be at other comparable companies.

  • And even if you never leave your company,

  • you may be able to use that for leverage.

  • Getting comfortable with sites like LinkedIn,

  • Glassdoor for salaries, or even private forums and groups

  • for specific industries can give you huge networking potential,

  • insights into what's fair or common,

  • and perhaps even next steps.

  • And even just a half hour of staying on top of this

  • every week can have huge, long term benefits.

  • Now, number 10 is outside of your main industry,

  • where you're obviously going to be making your longer

  • term moves, you want to set up at least one stream

  • of additional income outside your normal job.

  • And this could be something as small as babysitting or dog

  • walking once a week.

  • And as life goes on, this could go all the way

  • up to creating tons of passive income streams

  • through things like investments or real estate.

  • But the point is not just adding additional cash flow,

  • which is in itself very helpful when

  • doing things like meeting savings goals

  • or building an emergency fund, it's also very important

  • to diversify your skill set and to create a situation where

  • your entire livelihood is not completely dependent on one

  • job.

  • Even if you do everything perfectly,

  • you could get laid off or the company could go under.

  • You never want to feel as though one employer holds

  • your entire financial future in their hands.

  • Even if you just use that extra income for your fund money,

  • it's still worth it.

  • Number 11 is get over your fear of credit cards

  • and start using them to your advantage.

  • Now, if you are someone who really doesn't trust themselves

  • quite yet with a credit card, starting very

  • small with low limit cards and leaving them at home

  • slash using them only to pay for specific bills can just

  • be a good, fairly low impact way to build your credit history.

  • As you get more trustworthy with your ability

  • to use credit cards, making sure you're

  • getting the most point advantages,

  • churning bills through them so you can build up that cash back

  • rewards, and raising the limit so you

  • can get that good credit utilization

  • ratio are all awesome ways to use credit cards.

  • Once you start little by little by using credit cards in pretty

  • low risk ways, they can open up a whole new world

  • of financial extras to you that you

  • can get just by spending the money you were already

  • spending.

  • A good golden rule of credit cards

  • though is to never ever use them to buy something

  • that you wouldn't have bought otherwise

  • with the cash in your bank account.

  • Number 12 is go in and make all of your bank accounts

  • as smart as possible.

  • Now, we have a whole video on the different ways

  • to utilize multiple savings accounts, which

  • we will link you to.

  • But a brief overview is you want to separate your checking

  • and savings accounts to two different banks,

  • so you are never tempted to transfer over

  • some quick savings money.

  • You also want to make multiple savings accounts

  • for different goals and label them

  • by the goals rather than just random account numbers.

  • You want to set up automatic transfers to savings,

  • so that you never have to worry about manually going

  • in and moving that money over, a.k.a.

  • taking it and using it to spend on something stupid.

  • And you want to be using high yield savings

  • accounts when possible.

  • Number 13 is learn to speak the language of money.

  • Now, once you've mastered kind of your day-to-day use

  • of things like credit cards, savings accounts, budgets,

  • et cetera, you want to get a little bit more

  • advanced in your understanding of the money world around you.

  • This is actually a topic that dear TFD friend Erin

  • Lowry, a.k.a.

  • Broke Millennial, goes into deeply in her new book,

  • which is all about investing.

  • And we'll link you to that in the description.

  • But you want to learn to become very familiar with the meanings

  • of concepts, so that when you read something,

  • you're able to understand it quickly.

  • You want to learn about things like compound

  • versus simple interest-- simple interest, of course,

  • being when the interest only builds

  • on your initial principle investment.

  • Whereas compound interest is when your interest gets

  • calculated based on the principal plus the interest

  • that's already grown on it, the money compounding on itself

  • as it grows.

  • And while there are so many terms

  • like this it can feel a little overwhelming,

  • you start to realize that once you

  • learn a few of the basic concepts,

  • it's a lot easier to think about money long term,

  • and not everything feels quite as confusing.

  • With a few key concepts in mind, it's

  • easy to contextualize new information

  • and make better decisions.

  • So if you want to learn more about speaking

  • the language of long term money, grab Erin's book.

  • Number 14, and once you've learned

  • a few of those basic long term money terms,

  • you want to set up at least one retirement account,

  • but ideally more than that.

  • And for those who don't know, a retirement account is a special

  • kind of investing account, where you put money into this account

  • that you cannot touch until retirement.

  • And if you take the money out before retirement,

  • you get lots of penalties and fees for doing so.

  • But if you leave the money in your retirement account

  • like you're supposed to, these accounts

  • have a lot of tax benefits that your average investment account

  • doesn't have.

  • For most people the first stop will

  • be a 401(k), which is an employer-provided retirement

  • account.

  • And in some cases, your employer even

  • provides a match, which means for every dollar you put in,

  • they also put in a certain amount.

  • And if your employer offers a match,

  • you better freaking be taking advantage of it.

  • It's free money.

  • And for those of us who don't have access to a 401(k),

  • there are plenty of different kinds

  • of IRAs, or Individual Retirement Accounts,

  • which provide many of the same benefits

  • without being part of an employer.

  • And to answer the question, yes, you

  • can have both a 401(k) and an IRA.

  • We'll link you guys to more information

  • on the different types of retirement accounts available

  • and how to most use them to your advantage.

  • But the point is, after your emergency fund,

  • your next first stop on the savings train

  • should be a retirement account, because, yes, you

  • will be old one day and, yes, you will want money to live on.

  • Actually write out your five year strategy

  • for getting what you are worth at work.

  • This means things like how you're

  • going to negotiate for a raise when the time comes.

  • It means, are there any particular promotions

  • you're angling for?

  • Are you perhaps going to have to move

  • to a new company in your field in order to get that big pay

  • raise, or are you going to have to switch

  • to a different industry entirely?

  • The point is making these big moves

  • in terms of how you're compensated

  • at your job are never just going to magically happen.

  • They have to be things that you plan for strategically

  • and figure out how they fit into your broader life.

  • Thinking about your career and how

  • you are going to get what you are most worth in the most

  • proactive way possible will enable

  • you to have the most control in a situation

  • where things can often be unpredictable.

  • For example, if you know there's a specific promotion

  • you really want to go for, planning

  • to get there should ideally start at least a year

  • in advance.

  • Number 16 is work on at least one money hang-up

  • that is holding you back emotionally.

  • About 72% of Americans identify as stressed

  • because of money with 22% identifying as extremely

  • stressed.

  • And people who struggle with debt

  • are more than twice as likely to suffer from depression.

  • And when you consider how many 20-somethings

  • are in serious debt, you do the math.

  • And some of this is going to be out of our control, right?

  • Obviously if we are at a point where every month is a struggle

  • to just pay the bills, it's going

  • to be very, very hard to disconnect from that stress.

  • But there are elements of this which are under our control.

  • And in my opinion, one of the biggest and most important

  • things to do that is under our control

  • is to get rid of that shame.

  • I am someone who did not have much money growing up.

  • I used to feel really ashamed about that.

  • And it used to impact my day-to-day money choices

  • in ways I couldn't even describe because I wasn't even

  • fully aware of them.

  • Learning to let go and talk openly about that

  • has been incredibly liberating.

  • Same thing with my previously terrible credit score,

  • the fact that I don't have a real education, all

  • of the terrible money mistakes I made growing up,

  • the list goes on.

  • For example, if you are someone who is in serious debt

  • because you've got a degree that every adult around you

  • told you was a good idea to get, you so

  • should not be ashamed of that.

  • You did what you were told was the right thing.

  • And you're part of a system that makes

  • people go into massive debt for a public university education.

  • This is not your fault. And even if you were,

  • shame does literally nothing to repay debt.

  • It only makes your life worse.

  • Same thing with envy.

  • There are going to be people around you who get things

  • unfairly, whose parents help pay for their rent

  • when they're 32 [COUGHS] half the population of Manhattan

  • [COUGHS].

  • And you can choose to be terribly angry about that

  • and let it eat you up from inside.

  • Or you can choose to accept that the world is not fair,

  • America is particularly not fair in that regard,

  • and the best that you can do is work

  • to make your own situation better, and then advocate in

  • the ways you can to change some of these fundamental issues--

  • like, for example, in the city of New York,

  • creating more and more regulations around rent prices,

  • so that people can afford to live where they work.

  • And even if you are struggling to get ahead financially

  • and feel like maybe you've taken too long to get there,

  • the point is starting at any time

  • is already a huge step in the right direction and more

  • than most people will make.

  • Life is simply too short to feel shame around money.

  • Money is not your character.

  • It's not who you are.

  • And it's certainly not what you're

  • worth in any kind of human sense.

  • Number 17 is set up daily, weekly, and monthly check-ins

  • with your money that can just become part of your routine.

  • For example, every day, you take a quick look

  • at all of your balances to make sure nothing looks weird.

  • Every week, you quickly go through all of your statements

  • to make sure that there's nothing fraudulent or weird

  • or that you don't remember buying,

  • that all your bills are being paid on time,

  • and that you have enough money to cover

  • what you need to cover.

  • And every month, you can do a quick net worth checkup

  • to see where you are.

  • Basically, the more these ongoing routines can just

  • become part of your life and something

  • that you don't even have to think about,

  • the less of a chance they will ever

  • become scary or build up in your mind

  • or become something that you avoid.

  • Number 18 is going through once a year

  • and doing a total budget refresh.

  • As I said at the beginning of the video, as life goes on you

  • are very likely to need to adjust your budget

  • on an ongoing basis.

  • Maybe you're earning more money, maybe you're spending less,

  • or you're spending needs have changed, or you've had a child,

  • or who knows what.

  • Point is, budgets need to be flexible.

  • So at least once a year, there should be a total overhaul

  • in how you spend your money.

  • And I highly recommend doing a zero-based budget once a year.

  • It's something that, honestly, I never really

  • did until I owned a business, where each year

  • we do a zero-based budget, which essentially means

  • that the budget starts from this and every single spending

  • decision has to be justified.

  • And even if you're going through things

  • that you can't necessarily change-- for example,

  • your mortgage costs a certain amount-- you could look at it

  • and say, hey, maybe I could be renting out a room

  • once a month, or maybe it's possibly time to sell.

  • Or I don't know, just take time to think about how much

  • you're spending on that mortgage and what it is worth to you.

  • The point is the less we can take every purchase

  • for granted, the better.

  • And obviously, for zero-based budgeting,

  • you're going to have more influence over,

  • for example, how much you spend on dining out every month.

  • But the point is taking time to really justify

  • every expense from your car to your clothes

  • to everything in between, the more

  • you will be sure that you are getting real value out

  • of that spend.

  • Number 19, once you've got this stuff rolling

  • is to rotate out monthly spending challenges

  • on top of your budget.

  • That means every month you're focusing on a different thing

  • that you want to spend a little bit less on.

  • Because even though, yes, a budget is a budget,

  • the goal should always be to come in under budget,

  • not to just be scraping up against it every single month.

  • So one month perhaps you spend a bit less on food

  • than you usually do.

  • One month you don't go shopping as much.

  • One month you don't go out with your friends as much,

  • and you do stuff in the house.

  • Whatever it is, you want to make sure that each month you're

  • focusing on a different category,

  • so it doesn't become repetitive.

  • And you also want to make sure that you're really continuously

  • challenging yourself as the year goes on

  • to not just meet the budget but exceed it

  • and put some more towards savings.

  • And lastly, once you are ready to do a little leveling up,

  • you should consider working with a professional

  • or at least consulting with one.

  • Now, there are many different types

  • of financial professionals, but two

  • of the most common that you'll come across in life

  • are CFPs and accountants--

  • CFPs being Certified Financial Planners,

  • who are people who can help you really

  • plan out the holistic view of your money life.

  • We've had CFPs is on the channel before.

  • And I know many of them personally who work one on one

  • with clients to help them reach all

  • of their goals, both short and long term.

  • Especially if you've gotten to a place where you're really

  • kind of mastering the day-to-day of your financial life

  • but want to kind of level up, they can often

  • really help you do that.

  • The second, of course, is accountants,

  • who are for the average person primarily useful for things

  • like taxes.

  • I've worked with an accountant basically my entire adult

  • life to do my taxes.

  • Because since I've been 21 years old,

  • I've either had multiple streams of income,

  • I've been self-employed, or I've owned my own business.

  • And frankly, for all of those situations,

  • taxes can be a bit complicated.

  • And also, it's easy to miss the things

  • that you could be doing better or getting more money out of.

  • And although it has always cost me

  • at least a few dollars for my personal taxes every year,

  • the amount that I have saved and having someone

  • be able to walk me through the best way

  • to do my taxes and the amounts that I deserve

  • to be deducting from it has always saved me vastly more

  • than that in what I paid.

  • And if you followed this list and added

  • a few streams of income, it could definitely

  • be worth it to have a tax professional look over how

  • you're doing your taxes to make sure you're

  • getting the most out of what you're entitled to.

  • But in either case, when you're ready to level up your money

  • or do things like your taxes more intelligently,

  • it could be time to consider speaking to a professional.

  • And as I mentioned earlier in the video,

  • if you are someone who has been looking to improve your credit

  • score and feel like you don't know where to start

  • or could use some help, one of the best things to check out

  • is Credit Repair.

  • CreditRepair.com can help you work

  • to repair, build, and maintain your credit score

  • by working directly with the credit bureaus

  • to challenge any items on your credit report and teaching you

  • how to understand both your own score and the rating system.

  • To help show how it works, they gave three members

  • of our audience a free trial to work on improving their scores

  • over the next six months.

  • Each of the participants currently

  • have scores below 600.

  • And each have gone through extremely difficult life

  • circumstances that contributed to their financial struggles--

  • from divorce, to loss of a loved one, to betrayal from a parent.

  • Their stories serve as a reminder

  • that there are so many unexpected reasons we might

  • find ourselves needing help and there is no shame

  • in seeking out support.

  • You can read about their experiences

  • and learn how CreditRepair.com can

  • help you work to build or rebuild

  • good credit by checking out the links in our description.

  • As always, guys, thank you so much for watching.

  • And don't forget to hit the Subscribe button

  • and to comeback every Tuesday, Thursday, and Friday

  • for new and awesome videos.

  • Bye.

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