SPEAKER_01 0:07

Welcome to Money Talk for Real. I am Nick, and this is a podcast where we talk about making money, spending money, and everything in between. In this episode, I have a caller submitted financial concern, I guess, financial question. And uh it's a and it's an audio recording that they have submitted. And so let's take a listen.

SPEAKER_00 0:28

Hey, uh, what's going on, man? So I just started listening to your podcast recently, and I figured I'd try calling in because I'm kind of at that point where I don't really know if I'm doing things right or not. Um, so I'm 24. I just started my first full-time job, like, I don't know, maybe eight or nine months ago. I make around, I think it's like $58,000 a year. And I mean, I feel like I'm doing okay, but also not really. Like I don't have any debt or anything, which is good. But I also don't really have much saved either. I've got maybe like, I don't know, probably two grand in my account. And I feel like I should have more by now, but I don't know. Um I've got rent, which is like $1,200 car payment, is like $350,000. And then just normal stuff, food, gas going out sometimes. I don't really track it super closely, to be honest. I try not to spend crazy, but I'm also not like super strict or anything. I guess where I'm kind of confused is I keep seeing stuff online about investing, saving emergency funds, all this different stuff. And I don't really know what I'm supposed to be focusing on first. Like, should I just be stacking cash right now? Should I already be investing? Am I behind? I feel like I'm behind, but I don't know if that's actually true or just like social media making me feel that way. So yeah, I guess my main question is what should I actually be doing right now at my age with my money? Like what matters most at this stage?

SPEAKER_01 1:43

Okay. Well, first of all, I appreciate you uh being a little bit vulnerable and sending that in. A little bit of rambling there, but I get it. It's uh it's intimidating when we're talking about your personal finance and your life and not feeling the stress of the financial burden. Um, I love this call, to be honest, because this is probably a more a way more common situation than what people think. And I can tell, at least I think I can, that you're probably doing better than you think you are. You just don't have a clear direction yet. I can sort of tell it in your voice and and even the structure of the way you mention stuff on that call. So let's walk through this. First of all, you're 24. You've got a full-time job, you're making around $58,000 a year. You've got no debt, at least that you mentioned. And the no debt part specifically will put you ahead of a lot of people your age. Let's just start there. You're not you're not behind, you're just kind of drifting. Um again, the no debt part, that's a big one. A lot of people your age have already gotten into car payments, have already gotten into credit card debt, potentially uh student loan debt, maybe even medical debt or house payments, whatever it is. So um you're you're doing good. You're again, you're just kind of drifting, though. And I think that's the real issue. It's not that you're bad with money, you just don't have a system. And I've said that line before. Right now, your money is basically just doing whatever happens that month. You pay your bills, you spend a little bit, you save a little bit, maybe, um, but there's no kind of intentional plan behind it. And when there's no plan, you feel like you're falling behind, even if you're not necessarily. The other thing that you said that I think is huge is that you mentioned seeing stuff online about investing, about saving, and all this different advice. And that stuff can mess with your head if you're not careful. And I get the irony here that this podcast is online, my social media accounts, my website is online. And you just have to be weary. And some people would say, be weary of me, right? I mean, you you kind of got to just do your own research, take everything into consideration, but don't fall on the sword with one online kind of content person, right? Content creator. Because online, you've you're also gonna have the people that are claiming that they're making millions. And honestly, it's probably just a claim. It's just the they want you to see, you know, see how much money I have, right? Um, you're also gonna have people online saying that you should already have a thousand dollars and a hundred thousand dolls by the age of twenty five. And that's gonna discourage you because the average 24, 25-year-old does not have $100,000 invested. That's ridiculous. Do not listen to that advice because that will discourage you. Um, and you're, of course, I mean, you're you know, you're gonna have people acting like that if you're not optimizing every single dollar, then you're failing. That's the diehard mindset that I refer to a lot on this podcast. And that's not real life. The diehard is is great to get out of debt the quickest, but that's not real life. We got to account for the human error aspect, the margin of error. Most people at 24 are either in debt or they're living paycheck to paycheck, or they're just not thinking about money at all. So the fact that you've even sent this in and even asking this question is a good sign. Let me simplify this for you. You do not need 10 different strategies. You do not need like all this overwhelming amount of information that you see online. You need like maybe three things. Um, and step one would be to build a real emergency fund. You said that you've got about $2,000 saved. That's a great start. I would recommend your first goal being to get that up to maybe around $5,000. That would be close to 10% of your yearly income. That's your buffer. That emergency fund is what keeps life from turning into a credit card problem when something does go wrong. You're 24. Maybe nothing has gone wrong yet, but it certainly will. And I'm not wishing that on you. I'm just talking reality here. That $5,000 emergency fund will keep you, again, a peace of mind, but please treat it like a legitimate emergency fund. It's in the name. It is for emergencies. It's not, well, I have $5,000. Let me, you know, I can buy that. No, it's an emergency fund. It goes in, but it does not come out unless it's an emergency. An example of an emergency is um your car has fully broke down, you cannot get to work, or you know, the air conditioning went out at your house, you have to replace it. That is an emergency, something truly not planned that will negatively impact or hinder your life if you do not address it. Number one is the emergency fund. Number two, yes, I would recommend that you start investing, but I would keep it simple. Once you've got that emergency fund, again, that's step one. Don't worry about investing until you get around $5,000 in the emergency fund. That's my personal recommendation. After you have that though, then yeah, start investing. But don't overcomplicate it. You don't necessarily need to pick stocks. Because I'm going to assume that you are not super familiar with the best stocks to invest in. I don't know the average person that is, unless you are, you know, you have some experience, been doing this a while. You don't need to be watching the market every single day. Just start putting money into something that is simple, something that is consistent, even if it's not a huge amount. The goal right now is to build the habit of simple investing. An example would be an ETF or the S P 500. The S P 500 takes all of the largest producing and best growing stocks and combines them, and you don't have to buy individual stocks. You can invest in the group, so to speak. That's the easiest way that I can explain it without diving deep into that. Again, it does not have to be big amounts. I'm not saying take $400 a paycheck. If you can, that's great. But the emergency fund needs to be in place. You still need to be able to live. Don't go into debt. Just build the habit of putting some into an investment. Slow and steady is going to win this race. Number three, the third thing that I would recommend is control the lifestyle creep early on. I think you're doing okay right now, but this is going to be the big one for you because right now you're at the stage where your income is going to start to grow. And this is where some people mess up. They start making more money. And at that age, every raise you get is going to become the most amount of money that you've ever made in your life at this stage. So you make more money and your lifestyle just quietly starts to expand with it. You don't feel about it. You don't feel it necessarily. But it's like, okay, you get a better apartment or a house, whatever it is, you get a nicer car, you start eating out more because again, you you get excited, and it is exciting to make more money. But before you know it, you're making $80,000 a year, then $100,000 a year, and you still feel broke. You feel the same way you do now, or even worse. So if you can control it, if you can, I guess, get control of that now, then you'll be setting yourself up way ahead long term. So on $58,000 a year, lock in your expenses now. Get into a habit, be a creature of habit with your finances and stay that way. Even if you get future raises, do not spend more. Easier said than done. It's human nature. You had the money. We all go to work to have money to do things we love to do. So it is going to be a temptation, but just try your best to lock in your expenses now and don't let lifestyle inflation get the best of you. So to answer your main question, what sh you asked, what should I actually be doing right now? Here it is, super simple. Number one, build the emergency fund. That comes first. Again, you're doing great. You have $2,000 saved, but maybe just bump it up a little bit. Number two, start investing consistently every week or every paycheck, whatever it is, every month even. Just something consistent, not so much on the amount, but just the habit and the consistency is what I would recommend. And then again, don't let your lifestyle inflate. That's it. That's that's what I would recommend. You don't really need to overthink this, but I will say this too. Don't feel like you're falling behind. I could tell there was a little bit of stress and anxiety and overwhelming in your voice, or at least I think I heard that. Um, but don't feel like you're falling behind. You just need to pick a direction and start moving because right now you're kind of standing still, which is where you get that feeling. Your mind starts to wonder, you feel like you're falling behind, you see all this stuff online, you're looking at 10 different paths to go down. Try and and and with those 10 paths, you're trying to pick the quote perfect one. Well, there is no perfect one. There is no perfect solution here. We're all just trying to figure it out. In fact, that's why this podcast exists, to try to help people give my opinion of how to figure it out. But at the end of the day, it is my opinion. I am not perfect. I'm not the financial expert. It's just my opinion. But then there's the one that you just actually start, the path that you actually go down, and pick one of them, though. Don't worry about the 20 things you see online. And also, when you do pick that one, stick to that one. Because if you try to, you know, you do it and you get discouraged and you go down a different path. Well, now you're trying to chase, you know, you never actually stick to anything because you're restarting essentially every time you pick a different path. Pick one, stick to it. Look, I know there's a lot of people listening right now that may be in the exact same spot. You're in your first job, you're making decent money for the first time, you're trying to figure out what the right move is. And, you know, that this is it. This is simpler than you think. Build the emergency fund, invest consistently, provided that you're in his situations or at least a similar one where you don't have any debt. And then the biggest thing you can do is just don't let your lifestyle inflate. Do not do not spend every dime that you make. If you're listening and you have a situation like this, I would love to hear about it. I'd love to walk through it just like I did here. You can submit it on my website either by typing it out or preferably in the audio version like this gentleman did. Um, I can I can help talk through it. And and uh to the gentleman that submitted this, if if you're listening and that did not fully answer your question or you have further follow-up questions, please reach out to me. I'm happy to talk about them in private. But um, again, if you're a listener and you're just not sure what you should be doing with your money, send it in. I'd love to talk about it just like this. You can absolutely stay anonymous. Just tell me what's going on and we will figure it out from there. You can submit that at money talkforreal.com slash debt help, money talkfore.com slash D E B T H E L P. Or just go to Money Talkforreal.com and click the debt help link. Again, the audio version is preferred, but you can certainly type it out and you can remain anonymous. That's all I have for today. I appreciate you listening. Please leave a five star review on your podcast player, and I will catch you on the next episode. This is Money Talk for Real.