What major financial milestones have you gone through in your life so far? Did you get a promotion? Take out a mortgage? Pay off your student loan? Maybe, started investing? <\/p>\n\n\n\n
There are a few financial milestones that most people in their twenties and thirties need to consider\u2014like paying for a wedding, negotiating a salary at a new job, and buying a house. Knowing how to navigate them is crucial for financial stability. <\/p>\n\n\n\n
In this article, you\u2019ll learn the best way to approach those milestones, starting with paying down your student loan. <\/p>\n\n\n\n\n\n\n\n
Most people who graduate from college do so with a hefty amount of student loan debt. That debt can feel demoralizing, but don\u2019t worry: Studies show that investing in your education is a solid financial decision because it significantly increases your earning potential over a lifetime. Beyond that, student loan debt tends to have a much lower interest rate than credit card debt<\/a>, which means you can (and should) start investing even before fully paying off your student loans. <\/strong><\/p>\n\n\n\n If you have student loan debt, there are three ways you can approach investing: invest aggressively, pay off your debt aggressively, or combine the two. <\/p>\n\n\n\n As you work through the advice in this book, you might be tempted to share your financial wins with your loved ones. If you do, keep in mind that money is a fraught subject, and you might notice some uncomfortable or negative reactions from your friends and family. Try not to take any negative comments<\/a> personally\u2014remember, people tend to react based on their own invisible scripts around money<\/strong>, which aren\u2019t always logical. <\/p>\n\n\n\n At some point, you may also need to have tough conversations with your family about their <\/em>finances\u2014especially if your parents are in debt. This can be a particularly difficult conversation to have because it reverses the typical parent-child roles; parents are used to helping their children with money, so the idea of their kids helping them<\/em> can be tough to swallow. <\/p>\n\n\n\n If you suspect your parents are in debt and you want to help, it\u2019s important to approach the subject carefully and compassionately. Start by asking questions about money in general<\/strong> (not about their debt specifically), like how they learned about personal finance or what their ideal financial situation would be. Starting with general topics like these often helps parents warm up to talking about their finances with their children at all. If that goes well, you can move onto more specific questions about their investments, credit cards, and savings. <\/p>\n\n\n\n As you approach these conversations with your parents, keep in mind that they may not be willing to talk about money at all\u2014and even if they are, they may not be ready to accept your help with their finances. If that\u2019s the case, don\u2019t force it. As difficult as it might be, whether they take control of their finances is ultimately their decision. <\/p>\n\n\n\n How much you choose to talk about money with your family is up to you\u2014but if you have a serious romantic partner, conversations about money will be impossible to avoid. In this section, you\u2019ll find advice for three common sticking points when it comes to love and money<\/a>: talking about money with your partner, paying for a wedding, and prenuptial agreements. <\/p>\n\n\n\n Before you can dig into the nitty gritty of your personal financial situations, you and your partner need to get comfortable with talking about money at all. That might be especially difficult if you\u2019re not used to being open about your finances, or if you know that you and your partner have very different financial situations (for example, if one of you makes more money or has more debt than the other). However, if you approach the conversation with an open, humble, and nonjudgmental attitude, discussing money doesn\u2019t have to be a scary thing.<\/strong><\/p>\n\n\n\n To make these conversations easier, start with general questions\u2014like how your partner thinks about money in general, how their parents talked about money, or what their ideal financial situation would be. Put them at ease by being vulnerable<\/a> and sharing something about your own finances (for example, if you know you tend to overspend in a certain area, or if you\u2019re stressed about your credit card debt). That vulnerability will encourage them to share openly in return. This conversation doesn\u2019t have to happen all at once\u2014it might take place over the span of several weeks. Either way, remember that the goal is for both of you to get comfortable talking about money and helping each other prioritize your financial health. <\/p>\n\n\n\n Once you and your partner are comfortable talking about money in general, it\u2019s time to dig down into specifics. Sit down with your partner and openly discuss your salaries, savings, spending habits, debt, and financial goals<\/a>. Here\u2019s an example of how you could approach this conversation.<\/p>\n\n\n\n First, start by talking about your short- and long-term financial goals.<\/strong> This could be anything from taking a vacation next year to going back to school or supporting your aging parents. You should also get clear on the kind of lifestyle you\u2019re hoping to live\u2014will you spend thousands every year at bars and restaurants, buckle down to save as much as possible and reach FIRE at 35, or something in between?<\/p>\n\n\n\n Once you\u2019ve both had a chance to share your goals, discuss your spending habits.<\/strong> Again, you can put your partner at ease by going first. Show them your plan for spending, including any areas where you feel you could improve, and ask for their feedback. Talking about your plan will naturally open the door to discussing your debt, savings, and investments (since you\u2019re making automatic payments to all those accounts each month). At this point, you can also talk about how you\u2019ll handle joint expenses if one person makes more money than the other (for example, if you make more than your partner, you might split the rent payment 60\/40 instead of 50\/50 so that you\u2019re both putting the same percentage of your monthly income toward rent). <\/p>\n\n\n\n Finally, when you\u2019ve worked through all the details together, end the conversation on a positive note by setting up a few savings goals together<\/strong>, like a tropical honeymoon or a bigger apartment. As you continue having conversations about money, you can get more specific about these goals. <\/p>\n\n\n\n Studies show that the average American wedding costs somewhere around $35,000\u2014and that the average American thinks their <\/em>wedding won\u2019t cost nearly that much. But when it comes time for the big day, most people end up paying far more than they planned on all the details that go into a wedding. Those costs can add up quickly, and they can even put you into debt if you don\u2019t plan ahead. <\/p>\n\n\n\n Instead of assuming that you will somehow beat the average and have a truly simple, low-budget wedding, take those statistics to heart and start saving for your wedding now<\/em>\u2014even if you\u2019re not engaged<\/strong>. You may feel silly doing it, but you\u2019ll be far better off than if you just assume you\u2019ll somehow have an extra $35,000 on hand when the time comes. Plus, if you don\u2019t <\/em>end up spending that money on a wedding, you can always put it towards a different savings goal.<\/p>\n\n\n\n To figure out how much you should be saving for your future wedding, start by estimating when you want to get married (for reference, the average age at marriage is 27 for women and 29 for men). Then, use that estimate to figure out how long you have to save, and divide the total wedding cost by that number. <\/p>\n\n\n\n Prenuptial agreements (or \u201cprenups\u201d) are legal contracts that two people sign before getting married that dictate how their assets will be divided in the event they get divorced. <\/strong>Typically, people only sign prenups if one partner has a much higher net worth than the other, or if one partner owns a business. That way, if the relationship ends and things get contentious, the richer partner won\u2019t lose the wealth they accumulated prior to the marriage as part of the divorce settlement.<\/p>\n\n\n\n There is a cultural stigma against prenups: They\u2019re considered unromantic because people see them as a sign of doubt that the marriage will last. It\u2019s true that no one wants to think about the possibility of divorce before they\u2019re even married, but it\u2019s also important to keep in mind that marriage isn\u2019t just about love\u2014it\u2019s a binding legal contract. And like any other legal contract, it\u2019s important to make sure you\u2019re protected from potential losses before signing. <\/p>\n\n\n\n If you own a business or have significantly more wealth than your partner and you do decide to sign a prenup, you\u2019ll need a plan for how to bring up the subject with your partner while still reassuring them that you don\u2019t intend to ever have to use it. Before springing that conversation on them, make sure that you and your partner are comfortably talking about money on a regular basis and that you\u2019re both completely transparent about your own finances. Then, when you\u2019re ready to talk about prenups, here\u2019s how to do it:<\/p>\n\n\n\n Now that we\u2019ve talked about money and relationships, let\u2019s talk about how to handle money issues at work\u2014specifically, how to negotiate<\/a> a higher salary at a new job. Technically, you can use the tactics in this section to negotiate a raise at your current job, but the best time to negotiate your salary is the moment you get hired<\/strong> because you have more leverage. The company most likely spent thousands to recruit you, and they\u2019ve communicated that they think you\u2019re a valuable asset. Negotiation is your way of showing your new employer that you know your value and you expect to be compensated accordingly. Here are Sethi\u2019s top tips on how to negotiate a higher salary:<\/p>\n\n\n\n Another financial milestone on the horizon for many young people is buying a car or a house. These \u201cbig-ticket\u201d items are important because they\u2019re a unique opportunity to save money\u2014so much so that if you do it right, you can save so much on these purchases that you won\u2019t need to worry about saving on smaller things like groceries or clothes. In this section, you\u2019ll learn how to approach these big purchases in a way that will save you money in the long run. <\/p>\n\n\n\n The first step to buying a car is figuring out your actual budget. <\/strong>To do this, look back at your plan for expenditure to see how much you can afford to put toward the costs of owning a car every month. This isn\u2019t just a car payment: You also need to include insurance, gas, parking, and maintenance (these expenses will vary based on where you live and how you use your car). In other words, if you plan to spend around $500 total per month on your car, you can probably afford an actual car payment of roughly $200 per month\u2014or $12,000 over five years. <\/p>\n\n\n\n The next step in buying a car is choosing the right car for your lifestyle, budget, and tastes.<\/strong> To do this, start by thinking through your priorities when it comes to transportation. If you love cars and enjoy driving, you may want to push your budget to buy the fanciest model you can afford. On the other hand, if you see your car as just a tool to get from one place to another, you may be able to find a reliable car for less than your monthly budget and use the savings for something you really care about.<\/p>\n\n\n\n When you\u2019re deciding what car to buy, keep in mind that the single best way to save money on a car is to drive it for as long as possible<\/strong>\u2014ideally, over 10 years\u2014because the real savings don\u2019t start until after you\u2019ve paid off the car in full. That means that when you\u2019re looking to buy a car, you should choose one that is reliable enough to last over a decade (and since you\u2019re going to be driving it that long, make sure the car you choose is one you really like). <\/p>\n\n\n\n Other factors to keep in mind when choosing a car are insurance costs (which will vary based on whether the car is new or used), gas mileage, and resale value (you can look up the resale value of any car using Kelley Blue Book). You\u2019ll also need to consider the down payment, which is the money you pay for the car up front rather than on a monthly basis. In general, the down payment for used cars is lower than for new cars. <\/p>\n\n\n\n Once you know the exact car you want, start by doing your research. Look online to find out how much car dealerships pay for the exact car you\u2019re looking for (Sethi recommends a service called Fighting Chance for this purpose). Once you know how much they pay, you can use that knowledge to avoid being scammed by dealers. <\/p>\n\n\n\n When you\u2019re ready to buy, wait until the end of the month, when salespeople are trying to meet their quotas and are more likely to give you a good deal.<\/strong> Then, reach out to a handful of dealerships through their websites, tell them what car you\u2019re looking for, and ask them to quote you a price. Then, when you have those quotes in hand, call up each dealership and tell them the lowest offer you received from another dealership. Every salesperson you speak to wants to be the one to close this sale, so they\u2019ll bid against one another for your business, which means you get to field lower and lower offers from the comfort of home (you\u2019ll only have to visit the dealership in person at the very end to sign the paperwork). <\/p>\n\n\n\n After you drive your shiny new (or new-to-you) car off the lot, remember that you need to make it last at least a decade. That means that regular car maintenance is key to saving money on your car in the long run. <\/strong>Get in the habit of taking your car in for regular maintenance and keeping a record of each service. That way, when you eventually sell the car, you\u2019ll be able to charge more because you can prove that the car has been well-maintained. <\/p>\n\n\n\n A house is probably the biggest single purchase you\u2019ll make in your lifetime\u2014and if you come prepared, you can save over $100,000. However, before you commit to buying, think about whether home ownership makes sense for your financial situation. <\/p>\n\n\n\n If you own your home, you\u2019ll be responsible for everything a landlord covers when you rent: insurance, property taxes, general upkeep, and fixing anything that goes wrong. That means that even if your mortgage payment were the exact same as your current rent, the true cost would actually be much higher.<\/strong> On top of that, before you can buy, you\u2019ll have to save up at least 20% of the total cost of the house for a down payment, which is a significant chunk of money (on a $125,000 house, that\u2019s $25,000). Finally, if you decide to buy your home, you\u2019ll need a much larger emergency fund than if you\u2019re renting, which is another cost to account for.<\/p>\n\n\n\n In addition to your finances, home ownership can put a strain on your lifestyle. You\u2019ll pay a fortune in taxes and fees when it comes time to sell your home, which means you may not be able to afford to move to a new city or even a new house for many years, so you could miss out on exciting new opportunities in other places. Plus, unless you\u2019re already very rich, you likely won\u2019t be able to afford your dream home right away. Instead, you\u2019ll be buying a starter home, which may not have the same amenities or even as much space as rentals in the same price range. Before you buy, you\u2019ll have to decide whether the stability of owning your home is worth the financial and social costs. <\/p>\n\n\n\n If you do decide to buy a house, don\u2019t think of it as an investment<\/strong>. After you factor in taxes, fees, and maintenance, real estate only nets an average 0.6% annual return, which can\u2019t hold a candle to the 8% average annual return of the stock market. That doesn\u2019t mean you should never buy a house\u2014it just means you shouldn\u2019t expect to make money off of it. <\/p>\n\n\n\n If you decide that home ownership makes sense for you, here\u2019s how to avoid some common mistakes that first-time home buyers make. <\/p>\n\n\n\n First, decide on a budget. <\/strong>You shouldn\u2019t start the process of buying a house until you\u2019ve saved up 20% of the price of the home for a down payment. Once you have that saved up, total up the total monthly cost of owning a house in your price range (including maintenance, taxes, insurance, and so on). That total monthly cost should be no more than 30% of your monthly income. <\/strong><\/p>\n\n\n\n Next, improve your credit score as much as you can<\/strong>. The higher your score, the lower the interest rate on your mortgage, and the less you\u2019ll pay over the life of the mortgage (typically 30 years). <\/p>\n\n\n\n Then, do your research<\/strong> to find out the true cost of buying a house. You\u2019ll need to account for closing costs for the sale (typically 2-5% of the price of the house), insurance, property taxes, and any renovations the house needs. To make sure you\u2019re not forgetting anything, ask any homeowners you know what surprise costs they encountered when buying their house. At this point, you should check whether any associations you belong to (like credit unions or teachers\u2019 associations) offer access to special mortgage deals. If you\u2019re a first-time homebuyer, check your state and local government websites, which often have perks to encourage people to buy real estate.\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":" What major financial milestones have you gone through in your life so far? Did you get a promotion? Take out a mortgage? Pay off your student loan? Maybe, started investing? There are a few financial milestones that most people in their twenties and thirties need to consider\u2014like paying for a wedding, negotiating a salary at a new job, and buying a house. Knowing how to navigate them is crucial for financial stability. In this article, you\u2019ll learn the best way to approach those milestones, starting with paying down your student loan.<\/p>\n","protected":false},"author":7,"featured_media":11217,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[7,31],"tags":[496],"class_list":["post-49298","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-lifestyle","category-money","tag-i-will-teach-you-to-be-rich","","tg-column-two"],"yoast_head":"\nInvesting and Student Loans<\/strong><\/h4>\n\n\n\n
Money and Family<\/strong><\/h2>\n\n\n\n
Money and Marriage<\/strong><\/h2>\n\n\n\n
Talking About Money With Your Partner<\/strong><\/h4>\n\n\n\n
Paying For a Wedding<\/strong><\/h4>\n\n\n\n
Prenuptial Agreements<\/strong><\/h4>\n\n\n\n
Negotiating a Higher Salary<\/strong><\/h2>\n\n\n\n
Big-Ticket Purchases<\/strong><\/h2>\n\n\n\n
Buying a Car<\/strong><\/h4>\n\n\n\n
Choosing a Car<\/h5>\n\n\n\n
Negotiate From Home<\/h5>\n\n\n\n
Buying a House <\/strong><\/h4>\n\n\n\n
How to Buy a House<\/h5>\n\n\n\n