Start Early and Stay Ahead

July 9, 2010

Money-Guy 07-09-2010

We have received a number of emails lately asking what steps can young people take to start getting their financial houses in order from the very beginning. In today’s show, Bo addresses what decisions can be made early on to begin on the right track to financial independence.

The first  thing Bo recommends is to build up your cash reserves. You want to make sure you have enough in a rainy-day fund to cover 100% of your health insurance deductible plus about 6 months of expenses. He notes that the first step to becoming financially independent is to truly step away from your caretakers and become individually independent.

The next thing you want to make sure you are doing is maxing out any employer match you may be entitled to. We have said it over and over… this is FREE money! It is an automatic 100% return on your investment. If you aren’t sure how much this will affect your cash flow, track your spending for a few months. It is amazing how much information you can collect about your spending habits if you just keep track of everything you spend.

This is also beneficial because it gives you an idea of how much additional money you have to work with. Once you have begun building up your cash reserves and then maxed out your employer match, you may want to consider contributing to a Roth IRA. For young people, Roths are very attractive because of the amount of time you have for that money to grow tax deferred and then even become tax free in retirement! Remember, as you are beginning to build assets, accumulation matters more than return! If you’ve saved $1,000 dollars and earn 8%, that’s only $80. If you’ve saved $1M and you earn 8%, that’s quite a different story ($80k).

Bo goes on in the show to mention what a young person should be thinking about when it comes to health insurance and even briefly touches on life insurance. If you are young and you haven’t yet begun to establish a credit history, Bo suggests going out and getting a credit card (to use responsibly) and begin establishing a record of credit. This will make big purchases such as homes and automobiles much easier down the road!

To close out the show, Bo addresses some out of the box issues that young people may want to begin thinking about now. As you listen, he touches on:

  • Not getting too ahead of yourself
  • Improving/adding to your skill sets
  • Setting Goals
  • Investing in your future health
  • Enjoying your youth (you can’t get it back)

You may want to use some of these on-line resources as you begin to implement these steps:

Credit Card and Savings Account Research – www.Bankrate.com
Budgeting – www.mint.com
Free Credit Reports – www.AnnualCreditReport.com
Health Insurance Quotes – www.ehealthinsurance.com

Most Recent Episodes

Financial Advisors Share What They WISH They Knew About Money Earlier!

Have you ever felt like if you just knew this one thing about money earlier your finances would be in a better spot? In this episode, we’ll share the five biggest things we wish we knew about money earlier!   In this episode, you'll learn: What we wish we knew earlier...

Dave Ramsey vs. The Money Guy: Which Strategy is The Best?

Dave Ramsey has an incredible legacy of helping folks get out of debt and take control of their financial lives. We agree on a lot of things, but there are a few points of contrast. In this episode, we’ll discuss differences between The Money Guy Show and Dave Ramsey...

Top 4 Financial Mistakes We Saw This Year! (2022)

We saw some wild financial mistakes this year during the bear market. From making extreme changes to portfolio allocation, chasing the hot dot, and using too much leverage, we’ll talk about some of the biggest financial mistakes we saw in 2022 in this episode.   In...

How Millionaires Build Wealth! (With Dave Ramsey)

Join us for a very special episode as we welcome personal finance radio host and influencer Dave Ramsey to The Money Guy Show! There’s so much misinformation out there about building wealth. We had the pleasure of having a great conversation about how millionaires...

Do These 4 Things with Your Finances BEFORE 2023!

There are unique financial opportunities available at the end of the year - especially this year with the market down. In this episode, we’ll talk about what you need to do with your money BEFORE 2023! In this episode, you'll learn: What you need to do with your money...

How to Win When the Financial World is Burning!

Lately it’s felt like the financial world is in chaos, with rising interest rates, a falling stock market, and high inflation. Let’s talk about how to focus on what you can control and how to minimize the time spent worrying about what you can’t control. In this...

Financial Advisors React to RIDICULOUS Money Advice on TikTok!

The most powerful time to get serious about building wealth is when you’re young. So, what is the younger generation learning? Financial Advice (good and bad) is being produced in massive rates across online platforms and TikTok is the new frontier. Is there good...

Loss Harvesting: Why Wealthy People Love It (And You Should Too!)

Tax-loss harvesting: what is it and should you be doing it? In this episode, we’ll cover everything you need to know about tax-loss harvesting, including whether it makes sense for you, how much it could save you in taxes, and how to eliminate the downside of loss...

The Market is Crashing! (Where Should You Put Your Money?)

The stock market has not had a great year so far. You might be asking yourself, “Since the market is crashing, where should I put my money now?” In this episode, we’ll discuss how to invest when the market is dropping and how to make the most of your money. In this...

Will Rising Interest Rates Tank the Economy?!

The Federal Reserve is raising interest rates to combat inflation, and many are concerned about how it will affect the economy. In this episode, we’ll discuss what rising interest rates means for your wallet and how to make the best of it. In this episode, you'll...