Over the past couple of years, I’ve been consuming a lot of financial information. I read articles, watch YouTube videos, and listen to podcasts on the topic. Names like Dave Ramsey, Kevin O’Leary, and Graham Stephan have become engrained in my search algorithms, plus I’ve listened to many smaller creators. Add this to the fact that I work in finance with young adults, and I can’t escape the topic.
During the pandemic, I became more interested than ever. Many topics are discussed in the finance world, but eventually you’ll hear a lot of repetition. Clearly, these are topics that are central to the final world, but opinions vary. If you want to be financially successful, you need to learn about certain topics: investing, retirement, education, real estate, and income sources. The fact that experts don’t always agree indicates that there are multiple paths to financial success.
Many people seek out this information, meaning people don’t always cater to their best financial interests. Consuming a lot of content has helped me to pull out a few financial truths, especially as they pertain to young adults. There are certain ways to build wealth, but there’s also a lot of nonsense serving as a distraction. When you get rid of the fluff, you’re left with a few hard financial facts.
College Degrees Aren’t For Everyone
Whether or not you pursue education after high school is highly debated among financial experts. If you browse through YouTube you’ll find a lot of finance personalities who never went to college. It’s possible they’d advocate for others to follow the same path.
We no longer live in a time where higher education guarantees a better standard of living. Many graduates work low-wage jobs or work in fields that don’t require college degrees. Yet many young adults go straight to college after high school because they don’t have any clear direction. Unless your family has a lot of money saved, college equates to debt and the median student loan debt keeps rising each year.
On average, college degrees still have more value than high school degrees. Keep in mind, these numbers use past data to predict future outcomes. There are also many variables to consider such as the course of study, alternate career paths, and ability to afford the costs associated with school. Some young adults are putting higher education on hold to try other paths. This can allow for more time to explore career options without accruing debt. Remember, college will always be there, and there’s no need to go to school just to conform to the ideals of others.
Debt Is the Enemy
To build financial security, you need to have some money. Early into adulthood, you’re not going to have a lot of money; simply staying afloat will put you in a better position than most people. However, it’s impossible to build your net worth if you’re actively accumulating more debt.
You never want debt, but there are some cases when you can manage debt. Student loans and mortgage payments aren’t fun, but they’re not going to destroy you if you never miss your monthly payments. Other types of debt can be more crippling. Once you start relying on credit cards and personal loans for instant gratification you’re entering a dangerous cycle that can have permanent ramifications.
Credit cards can make you look rich, but they can’t make you feel rich. Interest accrues quickly, and those bills can spiral out of control. It’s never a good idea to lease a life you can’t afford. When you find yourself starting to fall into debt, it’s critical to monitor your spending. There’s no denying this can be difficult in the short-term, but it will prevent future problems down the road.
Starbucks, Avacado Toast, and Netflix Aren’t Making You Broke
Many financial analysts look down on young adults for any type of luxury spending. It’s true that you don’t need a $5 cup of coffee, but if you can’t afford this you have greater problems. If you’re looking to get wealthy, you need bigger ambitions than skipping your Starbucks runs.
These claims aren’t entirely baseless. Starbucks is a luxury, you should cancel unused subscriptions, and a bunch of small transactions can add up over time. However, you should be able to enjoy some things in life when you earn money. If you like Starbucks, get a coffee so long as you’re not digging yourself into a pit of debt. If you don’t enjoy coffee, then it’s wise not to buy Starbucks just to look cool.
Forgoing the simple joys in life would only be advisable if you’re trying to dig yourself out of debt. Otherwise, you should focus your efforts on more impactful endeavors. People who advise you not to subscribe to Netflix are only trying to shame you. There’s no need to dwell on such a small purchase when there are so many better ways to add $10 to your bank account.
Money Is Important; It’s Not Everything
When you consume financial content you’re choosing to immerse yourself in a world where money means everything. All of the advice you receive is finance-related and places your finances at the front of your mind. Of course, this is by design, but it’s not a reflection of the real world. Your finances are just a part of your life.
Many financial analysts will tell you to purchase a used car, spend less on technology, or to buy less clothing. Objectively, these are a smart choices, but they ignore personal differences and preferences. Some people are really invested in their cars or pursue fashion as a hobby. These people ought to allow themselves to buy things they enjoy with the money they’ve earned. If you’re making money, you have permission to experience some of the immediate benefits.
Further, there are bigger priorities than just building savings. Sometimes health or family emergencies occur and they should take priority. Nobody is telling you to ignore these situations, but nobody should be ashamed of their decision to address unpredictable events. The best you can do is build an emergency fund and move forward. You can’t dwell too much in the past; all you can do is work toward a better future.
Investing is a Longterm Game
By the time you’ve started to study personal finance, the best time to start investing has likely passed. When it comes to investing, compound interest is the key to growth. Simply put, this is when the interest you’ve accrued becomes part of your principle. So, you’re accruing interest on your interest. More time means you earn more in the long run.
Usually, people invest to prepare for retirement. When you’re young, retirement is decades away. This is why many people are discouraged from investing, but that distance is filled with time your investments could be growing.
When you listen to finance professionals, you’ll hear advice for people in all stages of their financial journey. Often, this advice focuses on what you should have done rather than what you can do. This makes certain advice discouraging, you can’t turn back time. In this case, it’s optimal to start investing in your 20’s, but it’s still beneficial to invest in your 40’s.
Times Are Changing, But Generations Mean Nothing
In terms of finance, there’s a big emphasis placed on generations. Often, you’ll hear people say “baby boomers are never going to retire,” “millennials are getting screwed again,” or “gen Z is about to take over!” A lot of financial content likes to divide people into groups based on their perceived generations, but everyone is impacted by the economy.
When you talk to young adults, they only have a few years of experience. Financial content for these people will mimick that mentality. Older people have been working for decades and are more likely to view changes without a sense of permanency. So, financial content for an older generation is more longterm and places a bigger emphasis on retirement.
The problems impacting millennials in 2021 also impact baby boomers. While millennials are worried they can’t find jobs because nobody is retiring, baby boomers are worried they’ll never get to retire. Everyone has their own problems, and blaming generational differences trivializes the experiences and only serves to create divisions.
Clickbait Is Interesting, Finance Can Be Boring
Many people talk about money like it’s a lottery. They dream about how they’d spend it if they had it, but this mentality is unlikely to make you any richer. In actuality, money is nothing like the lottery. Once you understand how to grow it, very little luck is involved. The process of building money is slow, boring, and quite dry a times.
Anyone producing content about money knows how most people view the topic. Many of these people are financially literate, but they also want to get views. So, they make their content sound more interesting than it really is.
As the consumer, you need to understand that people want you to click. There’s a lot of buzzwords thrown around, but the important information is buried under embellished stories. As you consume more, you’ll become more exposed to topics in finance. This will make you more financially savvy, but you’ll need to look past the clickbait that makes content compelling.
The Truth About Financial Content Creators
The people who produce financial content aren’t just trying to educate others. They’ve built channels and they’re trying to get engagement. This doesn’t mean their advice is useless, but they’re also trying to reel in an audience. When you listen to enough of this content you’ll start to see the recurring themes. With enough exposure, I’ve begun to identify the topics that are important in the finance world.
I’ve come to realize a lot of topics are discussed over and over. This isn’t necessarily bad, but it also means there’s a lot of content designed for a general audience but better-suited for a niche audience. If you’re not looking to change your investment plans, you don’t need to watch investing videos. Likewise, if you’re not planning on returning to school that advice should be ignored. Consuming financial content unrelated to your personal goals won’t make you smarter, it will just frustrate you.
If you’re watching videos, listening to podcasts, or reading articles you’re likely heading in the right direction to make some changes. Nobody should only listen to one single person. Finance experts exist, but they’re still people. They’re opinionated, and their suggestions don’t apply to everyone. Nobody is going to tell you it’s a bad idea to prepare for retirement, but it might not be the smartest decision for your unique circumstance. Take all information with a grain of salt, because consuming too much financial content can do more damage than good.
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