Real FINANCIAL ADVICE for 18 year olds & Young Adults (the stuff school didn't teach you)

hi there welcome back to lux minds my name is irini and today we're going to be talking about financial advice so the premise of this video is i wanted to put something together where it'd be myself at 25 years old giving advice to my 18 year old self the decisions i would have made with my money what to start looking into what a roth is and so forth we're just gonna hop right in and get started but as always make sure to subscribe if you like this content and check out the other videos on my channel i release new videos every wednesday and if you find this video to be useful give me a thumbs up for the youtube algorithm the first step you want to do is actually open a bank account now there's two types of bank account there's a checkings account and a savings account so the checking is going to be useful for everyday things once you get a full-time job they're going to want to be sending you money through direct deposit straight to your checkings account so you open your checkings account and then you can also open up a savings account saving money that you want to put away to pay for college pay for big expenses in life or just have that emergency fund set aside and a savings account will have limits that help make sure you don't you know indulge in that money when you need some you know purse or gucci belt that money has restrictions on it so it limits you from using it now i wouldn't recommend doing a normal savings account because while your money will make some money it's mainly going to be pennies there are high yield interest savings account that will offer you a little bit more for the money that just sits locked in the bank and the best thing you can do is just google what the best interest rates are for that month and look up what banks you should you know have a high-yield interest savings account with now the numbers are always going to be changing they were a lot higher in march than they are now but just pick a bank and your money will end up making more money in that high-yield savings account than it would have made just sitting in a normal savings account so after you've opened your bank account with the bank of your choice my next piece of advice is to get a credit card now this is important because this is what's going to help build your credit score and we'll get into that a little bit later but when it comes to opening up a credit card whether you're just getting out of high school or you're starting your college or you're already in college it's really important that you open up that credit card right away now you have some options when it comes to getting a credit card you can try and get one out on your own which is going to be a little bit difficult if you don't have work history or any reason for a bank to give you a credit card so your best options would be to either become an authorized user under someone else's credit card and that's what i did when i graduated from high school my mother added my name to her credit card so i got my own credit card under her profile and we used it to pay like the phone bill and some utilities at home just so it can start growing up my profile of being you know a responsible borrower and this is a great option so if you have a parent or a legal guardian or someone that can add you to their credit card go ahead and do that if not you can get a secured credit card so this essentially means that you want a credit card with a limit all the way to a thousand you would put down a thousand dollars as a secured method for that bank to know that if anything happens and you don't pay your credit card back they'll take that one thousand dollars or however amount you have outstanding with them to cover those costs and this is a great option and i know uh quite a few students that did this coming out of high school and going into college so highly recommend and then banks also offer you a student credit card which is a great option but just note that your spending limit is going to be a lot lower and your interest rate is going to be a lot higher so the interest rate is going to be the fee that they'll charge you if you don't pay back the money on time and this is how a lot of people end up in major major debt in america so my number one piece of advice in life is always pay your bills on time and so as you pay these bills this is going to impact your credit score your credit score is you know a rating that you have as a consumer that allows banks and other financial institutions to be able to rate you and figure out okay how trustworthy is irani or how trustworthy is sarah mike or whatever like depending on how high your credit score is that will show the outcome of if you get a loan how much that loan is and you know the rates that come with it a credit score ranges from 300 to 850 and i'm going to get into another video in the details of how to improve your credit score what exactly impacts your credit score but it's a really important number in life and it will follow you throughout life but for those of you just starting out a credit score is going to be important when you try and run your first department i used to be a leasing agent right after college and i would see so many young fresh college students coming out and not being able to rent an apartment because their credit score would be completely awful and they would talk about all the mistakes they made with their credit cards and failing to pay things back on time so it's really really important that you make sure you have a strong credit score and that you work to improve it okay next on the list we have opening a roth ira an ira is an individual retirement account i know you might be thinking retirement now i'm only 18 what are you talking about but i completely disagree now is the time for you guys to start thinking about retirement i remember when i was 17 i had an economics teacher and one day in class he sat us all down and he was like everyone go home and open a roth ira account do you know how many of us went and opened that account none of us do you know how many of us regret not opening that account all of us why it's simple the earlier you start putting money away into the market the more money you will have by the time that you retire so if you start while you're 18 you're gonna have way more money than if you start in your mid-20s or late 30s the sooner the better now the difference between a roth ira and a traditional account is simply when your money gets taxed with the roth ira that as you put money into your account it will be taxed and you'll be taxed at your current tax bracket which if you're in high school or simply in college you're not going to be making that much money so your tax bracket is going to be probably really low probably the lowest will be in your career so if you start taxing it now when you go to pull out your money in retirement that money is not going to be taxed again which means that the money that you made in profit while it was in the market that's free money you guys it's not gonna be tax you don't have to pay for that money and then if you do a traditional ira when you go to pull that money out when you retire you're gonna have to pay taxes on all of it and if you're retiring at like 65 as a top ceo you're gonna be in a pretty high tax bracket and that money is going to be dwindled down my friends so the smart thing here would be to open that roth ira today and start just putting ten dollars twenty dollars fifty dollars a week a month whatever you can start putting that into the market now because by the time you get to 30 or 40 who knows you may be ready to retire but all the money that you've made and it's really simple to open a roth ira just go to a bank tell them that you want to open an account they'll tell you the minimum amount that you need to put into the account to get it started and then my advice is to like i said put in some amounts weekly or monthly just consistently keep putting money in there and it'll continue to grow as well as knowing that you know these are invested in mutual funds and as the market does well your portfolio will do well you'll make money and you won't have to pay for that profit so i've mentioned stocks and bonds and the way that your money gets invested when it comes to your retirement account so my next piece of advice would be to start learning about what investing in the stock market is about how to get started and really learning about what it means to own a share of stock or be invested in a company or what a shareholder is this is going to set the foundation for your investing future and it's really easy you can just watch youtube videos i have a video on how to start investing there's so much content out there and that's how i taught myself and then it led to me then getting started and actually purchasing stocks but i think the best thing that you can do when you're getting out of high school and just entering college is just to start learning i think you should be intrigued and interested because there are people out there that are making hundreds and thousands and millions of dollars doing nothing by just putting their money in the stock market and watching it make money so this is a no-brainer that you should really look into doing this and growing that passive income i wish i had started sooner i would tell myself i'd shake myself and say now okay my next piece of advice would be to start diversifying your income now you may not have any source of income that's fine get a small job at a local cafe or a work study in college and really just start feeling out what it is like to actually work and then you'll realize wow this sucks let me get some passive income and whether it's you trying to be a tick tock famous star a youtube famous star or whatever it is there's so many ways to make money online and i'm actually going to do a side hustles video where i try a bunch of different side hustles and i show you guys which ones actually work and which ones are a waste of your time because i've seen so many videos out there on people you know suggesting all these different side hustles but i'm like what actually works like is it worth my time to try and make this happen or is this just a complete joke so stay tuned for that subscribe if you're interested alright my next one is to create a budget this is going to be really important as you grow into an adult and really you know take off in your career and you're managing a lot more money than you were managing when you were in high school so i'm going to link a few budget plans down below for you guys to create a template and get started the sooner you get into this habit the better you will be at managing your money all right my next piece of advice for you guys is to start paying for things in cash especially when you get to college and you're swinging your credit card over here over there and you're not really comprehending exactly how much money you're spending by actually seeing the money we're able to you know have a more attachment to it so when you hand over money to someone else you're like wow okay i'm giving this away to purchase this because this is actually really valuable to me or maybe it's not but this was something that i always did in college in order to just save a little bit more money i'll be like i'm gonna take twenty dollars i'm not spending more than twenty dollars and maybe leave your credit card at home so you're not even tempted i think this is a really great way to create that structure for yourself and start submitting limits because with the credit card you can get out of control and then you end up with thousands of dollars in debt and you don't know how you got here in the first place so next time just bring a 20 with you and then on the topic of spending and shopping i really think it's important that you buy things that you really need not things that you just want it's important to distinguish this and i've talked about it in my savings video my minimalist video if you know me you know that for me it's all about staying in control of the things that you put into your life and not just consuming and consuming and also when you you know give ten dollars to like a cheap shirt understanding that what you're contributing to when it comes to the environmental impact that your money is having and then the human rights impact as well so being more self-conscious of the way that you contribute to those causes i think is important as well all right guys and now my last piece of advice is of course to always live below your means when you start working your first job and you get that salary and you're making a lot of thousands right it can be very overwhelming to want to go out and just start spending money and buying all these luxury things or things that you really want because you'll enjoy them but i do think it's important that you kind of really think about what your financial outlook looks like in life and how you want to live do you want to go wild now in your 20s and then maybe struggle in the rest of your life or is now the time where you live as frugal as possible in order to acquire that wealth over time with your savings and your investing in the way that you're really putting your money to work now these are all things that i've applied to my life the only thing is that i wish i had applied them sooner i really want you to take action open that banking account open that credit card open that roth ira these are all free right these are all free things for you to open and they're going to set you apart from everyone else and set you up for that financial freedom a lot sooner in life and that's it lux minds so thank you so much for watching this video please be sure to give it a thumbs up if you found anything to be useful and check out some of my other videos on my channel i have a lot of content on personal finance and just living a smarter lifestyle so if that's of interest to you check it out and i will see you next week bye lux minds

Channel: Luxe Minds

Views: 1,508

Rating: 5 out of 5

Keywords: financial advice for 18 year olds, personal finance for high school students, personal finance for beginners, personal finance for college students, personal finance for college graduates, personal finance for 18 year olds, personal finance for young professionals, personal finance for students, how to save money, what to do when you turn 18, financial advice for teens, luxe minds, things you don't learn in school, how to grow wealth in your 20s, financial advice for 20s

Id: PvYW7-vLgdw

Length: 12min 24sec (744 seconds)

Published: Wed Aug 19 2020