YOUNG adults face a number of challenges when taking ownership of their finances, and there are several myths millennials need to be aware of.
To help, personal finance expert Erin Lowry debunked them and offered tips for young adults to take their financial lives to the next level.
Erin, 32, and a current New York resident, told The Sun about one of her first experiences with money.
He was only seven years old and wanted to earn some money.
So, Erin decided to sell Crunchy Cream donuts at her mother’s garage sale.
His father agreed to be his sponsor and cover the initial cost of the donuts.
Erin then hired her four-year-old sister and the two of them sold glazed donuts for the marked price of $0.50.
Erin always had the drive to earn her own money, even as a child.
His parents also taught him financial lessons growing up and they talked about money regularly.
She said: “I remember my dad telling us at home how important we were to me and my sister when we were quite young.”
He even jokingly described his childhood as the financial “School of Hard Knocks.”
However, thanks to her garage sales experience and regular dinner talks about money, Erin already had an understanding of value-based spending, saving, and budgeting as she entered her adult life.
But when Erin graduated from college, she realized that not everyone had this knowledge, even people from privileged backgrounds.
Because of this, he was inspired to write broke millennial to share this information and help young people take control of their finances.
I also wanted to make conversations about budgeting, financing, and investing easier to have with other people.
Erin has noticed that one of the biggest problems young people have when trying to be financially independent is that they don’t ask questions.
Erin explained: “Young people don’t want to be vulnerable and [be intuitive] because they are afraid of being perceived as less than.
“If young people don’t ask questions, there is no way to learn.”
So to help, Erin has decided to debunk some financial myths.
Myth #1: Investing takes a long time
The first myth that Erin has decided to debunk is that investing takes a lot of time. She really doesn’t have to.
There are different types of investment that require different types of action.
For example, long-term investing generally requires minimal action.
Sometimes people don’t check their accounts for months, but automate contributions regularly, even when they’re not looking.
However, it is important to build a well-diversified portfolio.
Investment strategies like day trading will require more action and time commitment from account holders.
It is important to note that investment returns are never guaranteed, so it is particularly important to only invest what you can afford to lose, especially when it comes to speculative asset classes such as cryptocurrencies.
Myth #2: If you’re not good at math, you can’t control your own finances.
Many people think that you have to be good at math to do your own finances, but that is not the case.
There are plenty of people who aren’t math wizards who manage their own finances, including Erin.
What happens is that many people who are not good at math close their minds when something involves numbers.
Erin said, “Psychology is much more of a factor.”
Myth #3: Just because your family didn’t invest, it means you shouldn’t.
You don’t have to follow everything your family does. You can create a new path on your own.
So, if investing wasn’t something your family did but you’re interested in it, you should learn how to do it.
Myths like these can be particularly damaging to anyone trying to take control of their finances.
That’s why Erin really encourages young people to read about what they’re trying to do.
It also recommends that people hire a certified financial planner (CFP) to help them achieve their financial goals.
However, when you hire a financial planner, she emphasizes that you choose a CFP who speaks to you fairly and objectively.
If you’re in a relationship, you’ll want the financial planner to talk to both of you this way, too.
The reasoning behind this is that both parties in the relationship feel involved in the money-making decisions and know what is going on with their money.
The last thing Erin recommends is that young people ask questions.
She said: “Don’t be afraid to ask how much money someone makes or what brokerage a person uses.
“This is how you grow and expand your knowledge in finance.”
The Sun also spoke to Vivian Tu, a former Wall Street trader turned educator, about ways to earn more money.
In addition, we explain a budgeting strategy that can help you move out of your parents’ house.
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