Millennial Money: Financial advice that rarely fits all – more way of life

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When I hear financial tips that are unrealistic or shame-inducing, I cringe. Any advice that makes complicated money moves appear to be an easy path to profit is downright dangerous. Questionable guidance is all around, oversimplifying important decisions or claiming a one-size-fits-all approach will work. Amid the black-and-white world of advice-giving, there’s a large number of gray. Don’t disregard your unique needs and circumstances when plotting out your finances.

LACK OF WEALTH DOESN’T MEAN YOU LACK DISCIPLINE

There’s a subset of social media committed to what I call “hustle worship.” These posts will have you imagine that whether only you’d work harder, wake up earlier and eat the very same breakfast as Elon Musk does, you’d be a billionaire.

This advice glosses over larger issues that prevent millions of hardworking, disciplined people from attaining financial security — like crushing student loan debt, job uncertainty and budget-busting child care costs. According to NerdWallet’s 2019 American Household Credit Card Debt study, the average U.S. household with student loan debt owes $46,459. Average annual U.S. child care costs ranged from $18,442 to $26,102 in 2019 for two children in full-time care in a child care center, according to a outline by Child Care Aware of The united states.

Discipline is good, but it’s also OK to recognize your limitations and obligations.

Start by writing down your entire expenses for a month so you’ll be able to get a picture of where your money goes. Then, create a budget that leaves room for needs AND wants, like the 50/30/20 budget: 50% of your take-home pay covers needs like housing and groceries; 30% covers wants like dining and shuttle; 20% covers savings and debt repayment. This way, you don’t stress if in case you have a moment of weakness. You’ve built a budget that allows for fun.

AUSTERITY ISN’T ALWAYS A VIRTUE

As your income grows over the years, it’s wise to funnel the additional cash into savings and investments without in a different way changing your spending habits. But it’s OK to spend money on luxuries or conveniences that will make your life better or easier.

Jonathan Howard, a former visual effects artist who is now a financial adviser, experienced his own spend-or-save decision when he and his circle of relatives relocated from Los Angeles to Lexington, Kentucky. Howard’s salary decreased. But his wife rejoined the workforce, the price of living was once lower in Lexington, and they sold their L.A. home for a profit. His initial impulse was once to save all of the make the most of the sale, but their new home’s kitchen didn’t operate polite, and that’s the room where his circle of relatives spends much of their time.

They opted to spend around 25% of the proceeds from their old home on a kitchen renovation. “It was once a sum that, when I looked at it on paper, made me nauseous,” he said in an email. “But several months later, we could not be happier with the results.”

Melissa Lowe, who lives in St. Thomas, U.S. Virgin Islands, recently left her job to blog full time. While she’s currently not earning an income from blogging, her circle of relatives determined to retain their professional house cleaner and cut back in other areas.

“She even folds and puts absent my laundry and whether that isn’t heaven on soil, I’m not certain what is,” she said in an email. “I can eat peanut butter and pulp sandwiches before I give her up.”

Living below your means helps you save toward goals, but leave room in your budget for purchases that can make your life easier.

NOT ALL INVESTMENTS ARE ‘PASSIVE’

Some investments, like 401(k)s and IRAs, are steadily “set-it-and-forget-it.” You’ll be able to automate contributions and make a selection target-date funds that will adjust your asset allocation for you. But other investments, like real estate, require not only steady effort, but also remarkable investments of time and cash.

I briefly thought to be buying a duplex until I witnessed how much work my then-landlord had to pour into my final apartment because preceding tenants uncared for to outline some serious maintenance issues. By the second one ceiling leak, my dreams of earning rental income faded. Not each and every landlord has a horror story, but they do acknowledge that it can take time before a property starts paying for itself.

Michaelson Buchanan owns three properties in Richmond, Virginia, and spent $130,000 on fixing up the first two. “We do a large number of the work ourselves so we will be able to do these things economically,” he said. “I would say it’s the house that Google built.”

Buchanan has dealt with maintenance issues and problem tenants over time, but in the long run recommends owning a rental property as long as you have the savings to manage to pay for major issues. “Don’t have unrealistic expectations approximately what it’s essential get in rent,” he says. “You won’t get wildly more money because you’ve constant a property up.”

Making an investment is key, but it’s a space where one old adage does ring true: To make money, be prepared to spend money.

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