Millennial Money Makeover

0:05 Hello everyone and welcome to ideas for living better I' m gigenio fence ruiz, heavy reader and lover of personal development. In today' s episode we ' re going to talk about a book on personal finance that' s addressed to the millennials, it' s called Millennial Monima and Cover. It is published in English only and is written by Connor Richardson. But first as always, remind yourself that you have at your disposal a compilation of the best ideas and tips on personal development. In my own four books. You already know them free, healthy and happy, thirty- one days to improve your life, minimalism for normal people and seven steps for a purposeful life. You know you have them available on Amazon and I leave you their link in the episode notes and now we will talk about the four steps the book gives us to start being financially free. Managing personal finances is complicated for everyone, not just the millennials, but it is true that for this generation born between the early 1980s and the mid- 1990s, it is perhaps a little more complicated.

1:34 Why. Because generations before these millennials, especially from the decade of nine hundred and fifty, enjoyed relative economic stability For much of their professional career, their lives followed a fairly predictable sequence. It all began with a stable job that, moreover, was for a lifetime. The purchase of a house, of a flat, continued with the acquisition of assets once that mortgage was out. And lastly, a retirement was achieved, because with a good patrimony, more or less with a pension or with enough savings. But after the global recession of the year two thousand and eight, the economic landscape changed dramatically. Finding a stable job, which is that first step in the conventional sequence of things, became a challenge. In addition, the cost of living increased at a faster rate than the salaries did and, if that were not the case, housing prices skyrocketed. The result is that, according to official data, approximately three out of four millennials today have less than ten zero euros saved. But the most worrying thing is not the earliest occupants that many millennials lack the necessary knowledge to overcome these obstacles. In fact, according to recent statistics, approximately

3:10 three out of four millennia are declared financial illiterates themselves. What does this mean that they are not familiar with even the most basic concepts of personal finance. Three out of four. This lack of financial education leaves them in a very vulnerable position. There are many challenges, as we have seen, and these people are in a vulnerable position. Of course, from that point of view, it is not surprising what the book tells us, which basically claims that most millennials feel stressed. From the financial point of view. The traditional sequence that worked for previous generations without having to have financial acquaintances already serves us in today' s world. So financial education is no longer optional. Now it ' s a basic you have to know. And the problem is that the system teaches us absolutely nothing about money, when it' s something we use every day. It' s quite surprising. Maybe this lack of financial education favors someone I don' t know. What I do know is that banks, for example, are interested in charging the more fees the better. Banks are interested in people being defied I do know that. I also know that the media constantly bombards us to buy things. I don' t care whether

4:44 they' re bags, whether they' re smartphons, whatever they are, and that keeps us even further away from financial freedom. So, this lack of knowledge, coupled with the constant external influence, explains why many people fall into deu or make compulsive purchases that, in the long term, will harm their financial situation. And it all starts because many of us have an inaccurate idea of what it means to have financial success. Still today we imagine the richness in terms of material possessions, car houses, designer clothing, expensive meals in a luxury restaurant or luxury vacation. But real financial success is not about accumulating material things, but about achieving financial freedom, having the flexibility to take time off at work or to travel or to dedicate yourself to a project that passions you without constantly worrying about your finances. In fact, for me financial freedom could be considered as the ultimate form of self- care, simply because it gives you the peace of mind necessary to be able to focus 100% on your well- being or your personal growth. So, this book gives us the first four steps to achieve that financial freedom. The first step,

6:15 though difficult, is to free you from the debts. Financial freedom and debts are absolutely incompatible and about half of the millennials admit to having debts distributed on more than three credit cards. And you know the problem with credit cards is that they make it incredibly easy to live above our possibilities and, besides, they can become a snowball for those interests they generate. So, what I recommend is that you make a list of all your debts in ascending order.

6:55 Why not ascending order, because it is advisable to start paying smaller debts first, for a reason of basic psychology. I don' t know how the book explains that it has been seen that people who pay their smaller debts first are more able to pay them all in time. That' s the first step. The second is to create a budget. You have to have a budget, like all companies have, and the secret to budgeting is not to live an ascetic life. It' s just that you prioritize purchases that really give you satisfaction. Take all your expenses. It puts aside fixed expenses rent bills debts and what you have left are variable expenses, i e non- essential purchases. And from there he uses the rule of eighty- twenties.

7:46 Use the law of pareto that we have talked about so many times here, identify which groups of variable expenses are the ones that give you the most satisfaction. And you' re gonna be surprised because you' re gonna realize how many stupid purchases we make every month. Those are the expenses you must try to eliminate and that is the money you must use for that first step, which is to pay your debts. Yeah, but I' m considering buying a car or a house is fine, but it also gives us the book a concept to do it intelligently. Come on. Let' s go first with the car. First, we have to understand that a car is not technically an investment, because a car depreciates loses value over time. In fact, a new car can lose up to ten percent of its value as soon as you get it out of the dealership. So, if you' re thinking about buying a car, the smart thing is to consider the option of buying a second hand car and if you also pay for it in cash, it' s already ideal. Second hand paid in cash is the best of options. Sure, in the case of a house, that is an investment, but buying a house too soon can be a bad investment. Especially for those for the millennials, who are the ones who go and talk about the book. Why, because millennials change jobs more often, they move many more

9:18 times than previous generations. So, if you decide to buy a house, make sure all your debts are settled first. Also make sure you have a ten or twenty percent deposit ready for purchase. That' s fundamental Now, once you' ve freed yourself from the debts. The second step the book gives us is to start saving, and the book proposes savings on three levels. The first level is to create an emergency fund in which you have enough money to cover unexpected expenses that, otherwise you could be indebted then, as a general rule, it is recommended to have saved the equivalent of a month of income. This is in case you break your washing machine one day or your car gets ruined and you need to change a piece that costs a lot of money. It is important that this money is not invested, that it is easily accessible in case of emergency. It doesn' t matter whether I give you interest or not, but you have to have a month' s salary set aside. Just in case. The second level of savings is a mattress. At this level you have to have saved the equivalent of six months of expenses. Having this financial mattress will give you peace of mind in case you lose your job or other unexpected situations occur. Think of the pandemic, for example. Make sure that this fund is in an account that offers an

10:52 annual percentage return, i e you get paid an interest rate for having that money in that account. And the third and final level of savings is getting ready for your retirement. The good thing about being a millennial in this case is that time is on your side. Then look for products that offer you tax advantages and start building this level of savings. Today, these are the first two steps. The third step after freeing you from debt and starting to save on these three levels. The third step is to invest. When you invest, you' re putting your money to work for yourself when the money is in your account. When you don' t use it, you' re not accessing its potential utility. However, if you lend your money to a third party, a bank or an investment fund. They use it for profit and, in return, offer you a rate of return, that is, a percentage of the profits they generate with your money. When it comes to investing. You know there are several options. There are many people who choose to invest by buying shares. Buying shares implies acquiring a stake in the ownership of a company. Shares represent a small fraction of a company and as a shareholder you are entitled to receive part of the profits that company generates.

12:20 You can buy stock through the stock market is public and you can buy stock alternative to stock. You can invest in bonds, for example, government bonds or corporate bonds. In this case, instead of buying a stake in the company. What you' re doing is lending money to that company and it ' s going to pay you back that money with interest within the time frame you' ve agreed. This happens with companies, with states, and so on. And then you can also consider investing in an investment fund, which is funding two collectively by several investors who decide to participate in it and there is a fund manager who is responsible for investing those joint contributions. You can also invest in real estate, you can invest in many, many things, but it' s about that once you have the savings, then don' t keep saving more. Then go on to invest And the last step that the book gives us, after paying off your debts, after saving, after investing is putting your finances on autopilot. You have to find what the book calls the financial flow, that is, that every month when your salary is entered into the current account automatically goes to different games, for example, ten percent to an indexed fund, ten percent to savings twenty percent to turn off this debt, because if you do it automatically, first you don' t have to think about it and second, you know from the beginning the money

13:54 you actually count on. And to do this, by the way, it ' s better to have all your accounts, all your products in the same bank. You save time, you save commissions, you save yourself trouble and you have a better track of your money. So you know, many millennials feel that they can' t make financial progress, that they don' t know about finance that they' ll never be free. And actually, it all starts with four steps. First, eliminate debts, second, start saving on three levels, third invest and fourth, put your finances in automatic mode.

14:37 If you are millennial and start doing this, now you are going to be able to reap the fruits that allow you to live a better life very soon. If you liked this episode, please subscribe to the channel share it on social networks or visit three WWS. Point ideas to live better. Period. There you can download for free a copy of my last book. Seven steps to a life with purpose and without more. Thank you very much, as always and until the next