Where should a young adult go to be advised about budgeting, housing, etc? My older daughter is making plans to go out on her own and I think it's critical for her to get some professional advice.
OT: Advise about financial planning for a young adult
- Thread starter LionJim
- Start date
I happen to love Dave Ramsey and his advice.
He helped set me straight. He has some books out there
And classes. He is faith based and I am not at all religious
But he really does t push that stuff
Just solid advice in my opinion
He helped set me straight. He has some books out there
And classes. He is faith based and I am not at all religious
But he really does t push that stuff
Just solid advice in my opinion
Last edited:
Usually in 56% of households parents do it. Schools only sometimes do it and never consistently. Then they turn to friends and media not always good choices.
Somebody mentioned Ramsey and he is one of the better ones out there, and for general financial money saving stuff Clark Howard has decent information.
Somebody mentioned Ramsey and he is one of the better ones out there, and for general financial money saving stuff Clark Howard has decent information.
I'd have to agree on the Dave Ramsey comments. It is best to start off early in life using his teachings. It is more difficult to implement when you are older and accustomed to certain things in your life. I wish I would have known when I was 'younger'.
Anybody who is so dumb he needs Dave Ramsey is going to piss away his money anyway.
I would pick out a good book on investing. This is one of the critical areas where I believe the schools have failed. (At least this is true of my education in the 60s and 70s.)
I would also suggest getting her educated on macroeconomics. That is what eventually drives the economic cycles, which can impact employment and (household) decisions if one does not plan an adequate "cushion."
An advisor will expect personal details that she may not even be thinking about just yet. Projecting things out is tough for even people (like me) who are entering retirement.
It's probably not good to bury her with worry just yet, but I kind of wish that I had done more reading when I was in my twenties. For example, I just finished the book "All the Presidents Bankers," which is a well-researched history going back more than one-hundred years on the way bankers have been in control of our destiny. It isn't pretty. You might get pissed about being exploited to make the 1% wealthy, but then you might have to temper that under the realization that we have been exploiting (cheap labor) in the global marketplace.
The thing that disturbs me the most is our government indebtedness, which generates a false expectation of standard-of-living. Debt will continue to grow, worsening each time the markets dip. We flush the economy with money (to prevent deflation, but raising prices long term) which stimulates job growth (somewhere in the world) but the true effect is that the money essentially goes right back to those who are able to save (e.g., the wealthy). The borrowed money can go anywhere, a Taiwan foundry, for example. Those on the hook for the money printing -- U.S. tax payers (the middle class).
You seem to know everything but refuse to offer any ideas or solutions. Thanks for all your help in this thread. Smh
Good post. It is a burden to read "self help" books, especially ones that would bore the bejeezus out of a young person.
Instead of paying full price for a set of DVD's from Dave Ramsey, Suzie Orman or that guy on PBS ...go find a used set on eBay. Incredibly cheap..
Watch them together....Have a glass of wine and jointly discuss what you just heard. You'll both learn something new.
Instead of paying full price for a set of DVD's from Dave Ramsey, Suzie Orman or that guy on PBS ...go find a used set on eBay. Incredibly cheap..
Watch them together....Have a glass of wine and jointly discuss what you just heard. You'll both learn something new.
psu_83_drummer
Well-Known Member
As a CPA, I advise young people all the time. I tell them to live by a few simple rules.
1) Always live below your means. In other words, don't buy a big house out of college and get into big debt. Always have positive cash flow, so you can save and invest.
2) Stay out of debt..Especially credit card debt etc..
3) Save money while you are young and invest in the stock market at a young age. Most rich people are rich (not thru work), but through investments.You have to change your mental outlook to do this. Most people do not know how to save and invest.
4) Drive your car til it drops. cars are the biggest waste of money in your life.
5) Limit your large wastful expenses like expensive vacations. If you start to save young you will be able to take vacations later.
6) And perhaps most important....Marry someone with these same values and hopefully a good wage earner. One spender in a marraige will ruin it for the other person.
Live by these simple rules and almost anyone can be a millionaire.
Last edited:
Fantastic advice. Save, no matter how insignificant it may seem. Payroll deductions are your friend and forget cars. They are tools, like a hammer or a lawn mower. I drive an 18 year old truck and my wife's car is almost 8 years old. Maintain them and forget about buying cars every few years. Use the same logic when it's time to buy a house. Nobody gives a bucket of .... what car you drive. Not having a car payment is the nuts. Stay out of debt, etc....these are the same things that guys like Dave Ramsey preach. It's not brain surgery but many ignore such advice.
Above all (here's my two cents...)
Your greatest asset is your ability and willingness to work. If you work and start saving young, you should be ok.
I respectfully disagree with your #5 and #6. Vacations are an important part of a healthy family /marriage dynamic. Go on those that you can afford.
Opposites do attract and make for a stronger healthier Union than two "like-minded" mates, provided each partner is willing the listen and learn from the other.
I'm not a CPA, but your advice is good common sense for a young non-fiscal type to understand. I generally followed these rules all my adulthood without reading any books. Most young people have to start off on the right foot by avoiding debt and saving money. Avoid the lure of too many material things. Not all young people have the income levels to get very serious about investing in the market, etc., for a while.
Your daughter may want to read Financially Fearless by Alexa Von Tobel. She's the CEO of Learnvest offering sound advice for saving and being fiscally responsible while you are young.
What is the going rate on thongs? I figured I wouldn't waste the cash on something my wife was going to throw at me anyway. But I would be interested to know.
Have her read "Rich Dad Poor Dad". It is quick and painless read and will challenge her on many of the common myths that people pick up about money. She should be able to finish it over a weekend.
PPB I would only offer this caveat, which you seem to espouse anyway...don't borrow money to go on a vacation. A vacation at its bare bones is a luxury. I agree it is nice to have a vacation but not at the expense of going into hock. Be creative. If there's a few hundred available for a vacation, go camping or something, but avoid putting a big vacation on a card. Along those same lines...
I think it was a PSU kid who wrote an article some years ago about that latte you are putting on your card and how it is going to haunt you. It is true. That pitcher at the 210 or that round of shots that you ignore and stack up on your card balance and make minimum payments is going to haunt you. Pay cash wherever you can, you will never regret it unless you are getting a free float for x-period of time. Then pay the whole wad when it's due.
Budgeting software like quicken. Do a monthly budget for the year. Each month should include line items for expected rent, car payments, insurance, phone, internet, utilities, food, personal allowances for fun, clothing, etc. and when they are due. Have her add in her expected pay checks and when. As the actual expenses and income come in she can see where her money is going. Physically seeing what you spend money on is very powerful. Then have her add in accounts for things she wants to get, like vacations, new car, house down payment, investment, etc. Whether she physically opens up new savings accounts is not important. Each month she can make a designated set 'transfer' amount to the accounts. Then she can see how she is achieving her goals and how to make them happen. I'm a big believer that how you do your budgeting is even more important than the individual investments options. Finally, include individual investment options like 401k, IRA's, property, etc. Build investment spreadsheets in excel on what a house value looks like vs. renting, costs of various cars and how it takes away from other investments, etc. Finally consider a money market account you can invest from instead of a checking account.
Put something, anything, into a vanguard index fund. Vfinx is good. Lowest expenses and historically good, safe, predictable returns. I started at 18, and at 33 now, it's the best thing I've done financially, besides getting very lucky with eBay at 12 bucks and ford at 2.90
#4, #4, #4. People in all life phases use all sorts of excuses to spend too much on cars and gas. Buy a used Honda, etc that is easy on gas, and drive it a good 10 years before repeating.
Mike, you're a man after my own heart. And I can't add anything more to dmd's other points. Very excellent advice, and from my own experience (imparted to me by my parents) it works. LionJim, this is all she needs to know, trust me
Tell her it's just as easy to fall in love with a rich man as it is poor man. Then hire a good attorney when you divorce him.
Like many have said on here
Dave Ramsey gives a lot of good advice...I don't agree with him 100%, but his philosophy is sound an very good. His book the total money makeover is very good. My biggest hangup is he is totally against credit cards completely and for most people this is probably a good thing, but for me its convenient to have one and then payoff every month, in fact I pay my entire balance 2 times a month to ensure I never encur interest charges, but it does take discipline to handle those things.
I also agree with
Live below your means
ALWAYS save out of every check and invest in good growth stock mutual funds...many can beat index funds and they are not hard to find
DON'T EVER buy a NEW car...buy good used car..pay with cash and drive til it dies!
you can find a good finiacial guy in your area by going to Dave Ramsey's website and look up his ELP...these are guys he recommends and they have to have the heart of a teacher, which would be real good for someone just starting out. They will teach her abou the different invesment options and make her confiden in what choices she can and will make.
Good Luck!
Dave Ramsey gives a lot of good advice...I don't agree with him 100%, but his philosophy is sound an very good. His book the total money makeover is very good. My biggest hangup is he is totally against credit cards completely and for most people this is probably a good thing, but for me its convenient to have one and then payoff every month, in fact I pay my entire balance 2 times a month to ensure I never encur interest charges, but it does take discipline to handle those things.
I also agree with
Live below your means
ALWAYS save out of every check and invest in good growth stock mutual funds...many can beat index funds and they are not hard to find
DON'T EVER buy a NEW car...buy good used car..pay with cash and drive til it dies!
you can find a good finiacial guy in your area by going to Dave Ramsey's website and look up his ELP...these are guys he recommends and they have to have the heart of a teacher, which would be real good for someone just starting out. They will teach her abou the different invesment options and make her confiden in what choices she can and will make.
Good Luck!
LionJim, thanks for starting this thread with some great advice as my daughter is also just entering the work force. I have always (half jokingly) told my daughters if they aren't going to make money then they better marry money. Like Victor E Bell I drive an 18 year old car with 210,000 miles and my wife drives a 12 year old car with 160,000 miles. I really don't care what people think of my car. We have taken very nice family vacations (cruises, trips out west, camping trips up and down the east coast), but nothing extravagant.
Due to some of these basic steps and saving early we paid cash for our older daughter's PSU degree and have over a million in retirement savings with about ten years to go for that milestone. Now paying for the college education of my other daughter (current senior) may need some assistance, but we have enough saved to make it until the mortgage is paid off next year.
I'm not saying this to brag and am by no means a financial expert, but to point out that basic knowledge and common sense can ease a lot of financial worries. Plus thanks to this board I just got Ramsey's "Financial University" book for my daughter. She has always been good with her money and hopefully this book will help give her a great start.
Mint.com for the younger generation. That was my sobering wake up call in January 2009. As 2008 grads, my wife and I both thought we lived below our means and were doing fine. After finally entering everything into mint and seeing a negative net worth and all the garbage we were wasting our money on, we realized that continuing the cycle and paying the monthly minimum on student loans wasn't going to cut it and we got serious.
Spend less than you make, contribute religiously to your 401k (increase savings rate with yearly raises), save up an emergency fund, pay down loans aggressively, and then save for goals (house fund, car fund, 529s later once kids come into the picture). It was sobering to see that we weren't going to have it all right away, but with dedication and some surprisingly good fortune on the income stream (I agree with the poster who said your greatest asset is your ability and willingness to work), We were able to pay off all debt and accomplish all goals which then gave my wife the option to stay at home raising the 2 kids we now have without the stress of feeling like she needed to work simply to make the finances work.
There is something special about watching your assets exceed your liabilities. I'm a firm believer that most people are fully capable and able to make the right financial decisions. What many lack is the budget that presents the info in a nice clean fashion. Once you have that you're 90% there. I had a professor once tell us that most new businesses fail because of poor accounting, and not because they weren't viable.
Jim my apologies, that was supposed to be 'how much things cost', I fat fingered something!! It was not my intent.
For a young adult, just out of school I think the #1 thing is to save at least 10% of your pay and do this for a lifetime. All the other advice as given, such as dmdpsu's is great as well, but starting the "save" mentality is crucial. Use the savings sparingly for discretionary items as it needs to accumulate. I saved and did not touch it until I made my 1st down payment on a house which was large enough to get a lower interest rate, avoid a 'point', and avoid the mortgage insurance premium.
Other more specific advice:
- do not escrow your taxes and insurance with your lender. This is forced savings and they don't give you interest on it. Granted rates are near zero, but it's your money so treat it like savings. Put it in your savings account until you need to make the payments.
- if you get a tax refund, change your withholdings so that you owe a small amount. This is also forced savings. Just like the escrow on your house, keep your own money in front of you.
The real point of these two suggestions is to learn to manage your own money. It's a process, start early.
- 401k matches: if your employer offers this, do not pass up the match. Most employers match around 50% up to a certain amount. Think about it! Where are you going to invest and get a guaranteed 50% return on your money the first year? That's free money, simply for saving.
I have a couple more, but unfortunately not the time right now.
Other more specific advice:
- do not escrow your taxes and insurance with your lender. This is forced savings and they don't give you interest on it. Granted rates are near zero, but it's your money so treat it like savings. Put it in your savings account until you need to make the payments.
- if you get a tax refund, change your withholdings so that you owe a small amount. This is also forced savings. Just like the escrow on your house, keep your own money in front of you.
The real point of these two suggestions is to learn to manage your own money. It's a process, start early.
- 401k matches: if your employer offers this, do not pass up the match. Most employers match around 50% up to a certain amount. Think about it! Where are you going to invest and get a guaranteed 50% return on your money the first year? That's free money, simply for saving.
I have a couple more, but unfortunately not the time right now.
Last edited:
Ramsey's advice on saving and spending is good but just simple common sense that anyone should have. His investment advice is horrible and will cost you in commissions.
Ramsey's ELP guys are VERY BAD choices. He gets a kick-back from them and they are on commission. NEVER EVER take investing advice from brokers or other salesmen. The ELP guys will sell you investments with stiff front end commissions, which every knowledegable advisor will tell you is a bad choice.
Susie Ormand is smarter and more honest. But again her investment advice is not very good.
For investment advice hire a fee-basis CPA or CFP who is not on commission or just do the research yourself, invest up at least up to the match on your 401K, and buy indexed mutual funds. UNDER NO CIRCUMSTANCES LISTEN TO RAMSEY OR HIS "ADVISORS" ON INVESTING.
http://www.getrichslowly.org/forum/viewtopic.php?f=2&t=11141
http://yakezie.com/forums/bloggers-lair/dave-ramsey-and-elp-kickbacks-ethical/
Cruising Route 66
Well-Known Member
Fenchak Financial Services
596 Devonshire Drive
State College, PA 16803
(814) 237-3767
Give Barry a call. Considering he's a fixture in this forum, I'm sure he'd be more than happy to speak with your daughter pro bono and counsel her about all things financial.
ha ha, I meant to type 'Things' LionJim trying to help his daughter, and here I hit the wrong key at the wrong time!!
Tell her to open a Roth IRA immediately - that should be step one for all young people, and contribute the annual maximum no matter what it is.
Here's some simple advice that I have lived by:
1. Pay yourself first. This means, have a payroll deduction for investments. Have money automatically go into investments each paycheck or month. If you pay your bills first, spend on the fun things first, and only invest what is left over; you might find that there isn't anything left for investments. Pay yourself first means, reward yourself by investing before all other forms of spending. You work too hard to not take care of yourself first.
2. For beginners, invest in no load mutual funds. Fidelity is a great company that has no load funds and extremely many different types. Mutual funds are great because they give you great bang for your buck. I started in the early 1980's investing just $50 per month. Individual stocks carry more risk and should only be bought after a person understands the risks of equities. You can easily research the top funds, all that information is free and on the mutual funds' website. Check the long term performance for the funds that you are interested in. Try to use the 5 and 10 year performance returns to compare mutual funds. Many mutual funds have been averaging over 10 percent return for the life of their fund. Anything over 10% return per year is great.
3. Cars: They are just transportation. Try to get by with as inexpensive vehicle as you can. Buy used. Stay away from leases. You'll never own anything if you always lease.Try to avoid car loans.
4. Never use credit cards unless you'll have the money to pay off the total balance at the of the month. If you can, charge as much as you can and then pay the balance off at the end of the month. Credit cards offer some great perks. Take advantage of them if you can pay the balance off each month.
5. Minimize your mortgage payment. Try to get by with a 15 year loan. Never take out a 30 year mortgage. Never rent unless it's a short term arrangement. If you rent for 10-15 years, it's money that you could have used to build equity in a home. Renting is only good for the landlord. Be smart with housing expenses.
6. Never invest unless your credit card and student loans are paid off. Resist the temptation to invest until you are debt free. Pay off your debts first. A mortgage is a different situation because the house will usually appreciate in value. Credit card debt, car debt, and student loan debt won't appreciate in value. Investing in a home, taking out a mortgage, is a form of investment.
1. Pay yourself first. This means, have a payroll deduction for investments. Have money automatically go into investments each paycheck or month. If you pay your bills first, spend on the fun things first, and only invest what is left over; you might find that there isn't anything left for investments. Pay yourself first means, reward yourself by investing before all other forms of spending. You work too hard to not take care of yourself first.
2. For beginners, invest in no load mutual funds. Fidelity is a great company that has no load funds and extremely many different types. Mutual funds are great because they give you great bang for your buck. I started in the early 1980's investing just $50 per month. Individual stocks carry more risk and should only be bought after a person understands the risks of equities. You can easily research the top funds, all that information is free and on the mutual funds' website. Check the long term performance for the funds that you are interested in. Try to use the 5 and 10 year performance returns to compare mutual funds. Many mutual funds have been averaging over 10 percent return for the life of their fund. Anything over 10% return per year is great.
3. Cars: They are just transportation. Try to get by with as inexpensive vehicle as you can. Buy used. Stay away from leases. You'll never own anything if you always lease.Try to avoid car loans.
4. Never use credit cards unless you'll have the money to pay off the total balance at the of the month. If you can, charge as much as you can and then pay the balance off at the end of the month. Credit cards offer some great perks. Take advantage of them if you can pay the balance off each month.
5. Minimize your mortgage payment. Try to get by with a 15 year loan. Never take out a 30 year mortgage. Never rent unless it's a short term arrangement. If you rent for 10-15 years, it's money that you could have used to build equity in a home. Renting is only good for the landlord. Be smart with housing expenses.
6. Never invest unless your credit card and student loans are paid off. Resist the temptation to invest until you are debt free. Pay off your debts first. A mortgage is a different situation because the house will usually appreciate in value. Credit card debt, car debt, and student loan debt won't appreciate in value. Investing in a home, taking out a mortgage, is a form of investment.
Why. He is absolutely right. We, and other western nations, have been foolishly devaluing our currency for the last 40 or so years. It is about to catch up with us, and it isn't going to be pretty.
