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10 Financial Steps for Young Adults & Recent College Grads - YouTube
Channel: Sean Lei on Investing
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what's good thing my favorite
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gender-neutral wait is just a crowd and
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today I'm gonna help new college grads
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dominate the personal finances and life
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I'm Sean a data scientist who's
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passionate about all things investing
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personal finance and lifestyle and be
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sure to watch the very end of this video
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for my number one and most crucial tip I
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have for you you may have just graduated
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graduated a year ago or soon to graduate
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and you're realizing how much [ __ ] you
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need to figure out transitioning into
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adult life poses many challenges but
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it's also a very exciting time maybe
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you're moving to a new city are eager to
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start a new job and I bet you're excited
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in making that bread you know that
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sourdough bread I graduated university
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two years ago and made my fair share of
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mistakes so you don't have to tip number
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ten use every advantage that you can
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everyone is at a different starting
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point coming out of college some
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graduate debt-free many graduate with
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student loans some grads are working
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near their parents's house and some
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grads are working across the coast in a
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new city if you're willing take
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advantage of your unique opportunities
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some examples include staying on your
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family you plan for your phone plan to
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reduce your costs of your film bill
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another is to stay on your parents's
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health care insurance until you're age
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26 and potentially even returning home
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to your parents's house to save money
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for a year or two it's become much more
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common for recent college grads to
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return home in fact approximately half
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of graduates return home to save money
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but also because of the whole student
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loan debt crisis but be careful which
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leads to tip number 9 avoid lifestyle
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creep lifestyle creep is the phenomenon
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where if your salary increases your
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spending increases with that as well
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alright it's not a phenomenon it's just
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the normal thing moving back home will
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save you a lot of money and with the new
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income coming
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you probably feel on top of the world or
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at least the richest you've ever been in
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your entire life but keep in mind you're
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living at home to save money and pay
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down debt and the whole living situation
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is rendered financially useless if you
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spend all that money on expensive cars
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luxurious vacations endless drinks at
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the bar you get the idea now I'm all for
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living in the present but you need to
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realistically be conscious of your
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spending and determine if it's worth it
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for me I lived at home with my parents
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for the first year after college I
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bought an old but reliable car and
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limited my impulse buying as much as I
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could by saving money through those
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efforts I was able to get lessly spend
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on the things I care about like travel
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my camera equipment and computer just be
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conscious of your spending and don't
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fall into a spending trap tip number
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eight get a credit card but use it like
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a debit card getting a credit card is
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one of the best and easiest ways to
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start building credit your credit score
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is almost like your lifeline companies
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and other people use it to determine how
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responsible you are with money the
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longer you have your credit card open
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and paying it off every single month
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will result in a higher credit score
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however the trap that a lot of people
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fall when having credit cards is they're
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basically loaning money to themselves
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they're swiping their credit card and
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purchasing things that they don't
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actually have the money for this is why
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it's super important to only use that
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credit card like a debit card and buy
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things that you already can purchase for
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in cash make sure you have enough money
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in your bank account before you swipe
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your credit card and be sure to pay it
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off in full every single month tip
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number seven is to figure out your
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student loan payment plan you should be
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making the minimum payments and all of
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your debt and if you want to tackle it
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even further I would actually tackle the
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credit card debt before the student loan
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debt this because the credit card
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interest rates are way higher than
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student loans I believe it's important
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to know exactly how you plan on top
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the dead and your debt payoff date if
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you don't know exactly when you will be
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debt-free from student loans or credit
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card debt then it's very easy to feel
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trapped and feel like you're never going
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to be debt-free so knowing your exact
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debt payment plan and your debt-free day
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is huge and it's a goal you could be
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working towards tip number six is to
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build an emergency fund personal finance
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professional is always harp on this tip
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and I could not emphasize it any more
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but I'll try build up to $1,000 then
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$2,000 and eventually build up to 3
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months worth of living expenses it's
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important to have an emergency fund
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because [ __ ] happens in life takes a
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detour for me having an emergency fund
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was huge when I had my ACL and meniscus
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injury the surgery doctor visits and
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physical therapy costing me thousands of
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dollars out of pocket even with health
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insurance for you it might not be a
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medical issue it could be that your car
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needs a new repair or you could lose
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your job having an emergency fund of
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three months allows you to handle those
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unexpected occurrences and gives you
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ample time to regroup keep your
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emergency fund in a high-yield savings
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account so it isn't eaten away by
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inflation tip 5 have one to two months
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of living expenses in a checking account
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having at least one month's worth of
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living expenses allows you to set up
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automatic payments typically every month
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you pay rent utilities your phone bill
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your credit cards etc so having one plus
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months worth of living expenses in your
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checking account is vital so you can set
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up automatic payments and not be charged
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with an overdraft fee a fee that banks
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charge you if you try to take out more
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money than you have in your bank account
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lots of what I call old school banks
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have very poor benefits the bank that I
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use for my checking account is Charles
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Schwab and I could not recommend it more
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Charles Schwab has unlimited ATM
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reimbursements which has been huge for
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when I travel internationally and have
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to pull cash from ATMs because I don't
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get charged at ATM fee
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tip number four contribute enough of
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your money to get the max employer match
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for your employer-sponsored tax
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advantage account there are several
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types of engines accounts you could be
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offered a 401k if your corporate for
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three B if you're a teacher a non-profit
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or in health care and a TSP or a thrift
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savings plan if you are a government
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worker and if you're outside the US I
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love having you watching my videos
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hopefully your country has a similar tax
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advantage account for you but
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essentially if you put in a percentage
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of your income your employer will match
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that percentage if your employer has a
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5% match for your salary then if you put
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in 5% your employer also puts in 5% and
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in total you were putting 10% into your
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tax advantage account this is a
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guaranteed way in doubling your money
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take advantage of it on a similar note
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you should contribute to a Roth IRA or
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an individual retirement account I'm
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like if 401k where you contribute
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pre-tax money into it you contribute
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after-tax dollars into a Roth IRA
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basically what this means is that you
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might get a direct deposit from your
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employer into a bank account and then
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you can contribute money from that bank
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account into a Roth IRA of your choosing
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the really cool thing about a Roth IRA
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is that in the future when you are
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retiring you will be able to pull all of
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your contributions in all of your gains
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tax free if you contribute six thousand
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dollars every single year your
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contributions plus your growth because
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you've invested wisely will result in a
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huge lump sum of money where you can
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pull out all of it tax-free another
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reason why Roth IRA is so powerful is
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because it allows you to take out your
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contributions at any time no penalty
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that means if you contribute $6,000 into
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a Roth IRA and eventually that $6,000
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invested properly grows into $10,000
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you're still able to take out those six
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thousand dollars you contributed free
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and clear
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I think it's powerful to have two
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different retirement accounts one where
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you contribute pre-tax money the other
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where you contribute post tax money
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because you are diversifying when you're
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being
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we don't really know what the future
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holds and how much tax will increase or
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decrease but we are taking advantage of
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both retirement accounts tip number two
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is to educate yourself about personal
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finance I am so happy to have you here
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on this channel and watching this video
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and really taking an initiative on your
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personal finances there are tons of
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topics you could dive into such as how
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to save more money the best and most
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efficient way of tackling debt and how
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to make more money through investing in
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other passive income means I myself plan
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on talking a lot more about investing in
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personal finance so be sure to subscribe
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and hit the notification bell to know
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when new content is dropped my number
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one most important tip for you is to
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shift your mindset about money money sex
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politics and religion are some of the
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most taboo topics to talk about and
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arguably money is the most to be topic
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of them all I highly encourage you to
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start conversations about money with
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your friends and family get their
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perspective learn from them and teach
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others about money as well you don't
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have to reveal all of your financial
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statements but being open to the
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conversation about money might result in
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you learning something new that could
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revolutionize your entire financial life
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pop the like button because it really
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helps bought me in this channel
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congratulations on graduating and I wish
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you the best of luck in this new chapter
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of your life peace
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