RPF0431-FI_Plan_for_a_22-Year-Old_College_Grad
00:00:00.000 | Today on Radical Personal Finance, a 22-year-old new college graduate writes in asking for
00:00:05.940 | advice on how she can set up a plan for financial independence.
00:00:10.780 | Keelan writes in and says, "I'm a 22-year-old recent college graduate.
00:00:13.940 | I've since landed a job and have been working for about four months now.
00:00:18.180 | Here's my current situation.
00:00:19.660 | I live at home with my parents, rent-free.
00:00:21.980 | I am extremely fortunate to have no debt from college.
00:00:24.420 | In fact, I have no debt at all.
00:00:26.340 | I work a full-time job and save virtually all of that money.
00:00:30.540 | I work a part-time job and use that money as my spending money.
00:00:34.700 | Essentially, I am blessed to have a blank slate coming out of college.
00:00:38.460 | The downside of my equation is that my full-time job does not pay particularly well, perhaps
00:00:42.940 | about $31,000 a year, and I live in an area with a high cost of living, northern Virginia.
00:00:49.020 | Do you have any advice for someone like me who is just getting started in the real world
00:00:53.620 | and wants to begin a path to financial independence?"
00:00:56.980 | I do realize that a huge step would be to find a better paying job.
00:01:00.660 | I'm working on that.
00:01:01.820 | However, what would you suggest that I do in the meantime to add additional income and
00:01:05.900 | begin my journey to financial independence?
00:01:08.660 | My goal is not to make this all about making more money, but rather to position myself
00:01:13.460 | in such a way that I can live the life the way that I want.
00:01:17.300 | Also, I want to be in a position where I can easily provide advice and assistance to those
00:01:22.100 | who are less well-off than I am.
00:01:24.980 | Thanks in advance for any advice that you can provide.
00:01:27.060 | Keelan.
00:01:28.060 | Well, Keelan, let's start with the fact that you are in a position already to provide advice
00:01:33.460 | and assistance to those who are less well-off, which is probably about 98, 95 plus percent
00:01:39.140 | of the world's population.
00:01:41.340 | And I want you to approach your life recognizing that.
00:01:44.180 | You are in a remarkable situation and you've done a remarkable job of establishing yourself
00:01:49.980 | for a very bright future.
00:01:53.500 | So let's talk about some ideas and suggestions that I think will help you.
00:01:58.100 | First we need to begin with financial independence.
00:02:00.300 | I'll give you some ideas about how to integrate goals for financial independence with other
00:02:04.580 | life goals.
00:02:05.580 | And then I'll give you some at the end of the show, some specific suggestions for steps
00:02:11.260 | that you can take to move you toward financial independence.
00:02:14.060 | First, why do you want to be financially independent?
00:02:18.620 | It's a big question and many people jump into it without actually thinking about it.
00:02:26.620 | Why do you want to be financially independent?
00:02:32.500 | What is it about the concept of financial independence that you find attractive?
00:02:37.380 | What are you working for?
00:02:38.660 | Why do you want to be financially independent?
00:02:42.580 | You say right here, my goal is not to make this all about making more money.
00:02:45.900 | Well, if the goal is not about making more money, that's pretty much what financial independence
00:02:50.500 | means.
00:02:51.500 | It means making and accumulating more money.
00:02:52.500 | So if it's not all about making and accumulating more money, then why do you want to be financially
00:02:57.860 | independent?
00:03:00.900 | My guess is if you spend some time thinking about this, there will be a few things that
00:03:06.460 | come to your mind.
00:03:09.380 | One reason would be a sense of control, a sense of autonomy, a sense of personal direction
00:03:16.400 | and personal freedom.
00:03:18.900 | Another aspect would be the meaning of your day-to-day existence, the ability to do things
00:03:24.440 | that you think are important because you think they're important.
00:03:29.180 | These are the common themes of why people want to be financially independent.
00:03:33.220 | So it's important to recognize that financial independence is not going to make you happy.
00:03:40.300 | Financial independence is not really going to do much to change your life unless you're
00:03:45.940 | doing something before financial independence that you don't want to be doing and you're
00:03:51.960 | trying to work towards something after financial independence that you do.
00:03:55.240 | In which case, why wait for financial independence to do that?
00:04:01.500 | How is financial independence and the quality of your life, how do these things work together?
00:04:07.900 | How are they integrated?
00:04:11.320 | So first let's talk about what you can do that's outside of financial independence and
00:04:17.420 | then I'll give you some specific steps that will move you toward financial independence.
00:04:24.100 | But let's put this in the right order because you don't need to be financially independent
00:04:27.540 | to be happy.
00:04:28.900 | You don't need to have a million dollars in the bank to be able to do what you want.
00:04:32.840 | In fact, there are some very simple steps that you can make that will start to build
00:04:39.100 | a life that will give you these things while you also work on higher pay, saving money,
00:04:47.740 | becoming rich, etc.
00:04:49.700 | Number one, the biggest thing that will determine your level of happiness is the quality of
00:04:56.380 | the relationships in your life.
00:04:59.500 | These are also at a young age some of the most important decisions that you'll make.
00:05:05.460 | The first obvious example is the relationship with your immediate family, you're living
00:05:08.780 | with your parents.
00:05:09.940 | The quality of that relationship will have a big impact on the quality of your life.
00:05:17.300 | So give time and attention to it.
00:05:20.720 | The biggest relationship that will chart the course for the happiness that you experience
00:05:25.380 | in life and for your freedom and for your independence is who you choose to marry, your
00:05:31.620 | marriage relationship.
00:05:33.460 | The person that you choose to marry will make a bigger impact on your happiness than almost
00:05:42.180 | any other factor in your life.
00:05:45.420 | So before you start thinking about money, you should spend a significant amount of time
00:05:51.500 | thinking about how will you meet and marry the husband of your dreams.
00:05:58.780 | Married people are richer than non-married people and married people are happier than
00:06:02.460 | non-married people.
00:06:04.860 | So you should be spending time thinking about how to become happily married.
00:06:12.420 | There are two things that you have to consider in order to be able to do this.
00:06:15.920 | The first most important thing is to become the kind of person that would attract the
00:06:22.540 | type of man that you'll marry.
00:06:26.380 | That's the fundamental way that you'll be able to attract to yourself an appropriate
00:06:33.120 | husband who will enhance your happiness.
00:06:36.160 | You have to become the kind of person that will attract the type of man that you want
00:06:39.720 | to marry and then you have to be in the types of places that that man would be so that you
00:06:44.600 | can meet.
00:06:47.200 | Now most people don't start giving financial advice by giving marriage advice and that's
00:06:50.400 | where I think most of financial advice is pretty wrong headed.
00:06:54.980 | If you have done like I did and you've worked in the context of financial planning, you'll
00:06:59.360 | quickly realize that money is often not at the core of many problems.
00:07:08.120 | Relationship problems are often at the core of life problems.
00:07:12.660 | And so don't start with focusing on money, start by focusing on quality relationships.
00:07:20.120 | If you want to set out a plan for financial independence, make sure that you don't run
00:07:25.960 | past the importance of relationships too quickly.
00:07:30.600 | One thing that should be obvious for you is if you are going to become the kind of person
00:07:34.960 | that would attract the type of man that you would want to marry, if you're going to do
00:07:39.120 | it, you have to be able to identify the type of man that you would want to marry.
00:07:45.780 | And so you should spend time thinking about that now.
00:07:49.320 | You should spend time making a list of the character qualities and the attributes of
00:07:53.400 | that person that are important to you.
00:07:58.400 | That's an important place to start.
00:08:01.480 | Unfortunately the way that most people, especially most 22-year-olds, approach this problem is
00:08:06.160 | completely wrong headed.
00:08:07.280 | They don't give any time to it.
00:08:08.480 | They don't give any thought to it.
00:08:10.320 | They approach their life and say, "Well, I'll just fall in love at some point in time."
00:08:15.920 | What they do is they experience an intense feeling of emotional attraction to another
00:08:21.720 | person, but there's no underlying substance to the relationship.
00:08:26.600 | There's no thought.
00:08:27.600 | There's no planning.
00:08:29.280 | And yes, in every sociological study I've ever seen, married people are happier than
00:08:35.220 | unmarried people, but common life experience would indicate that there are a lot of people
00:08:40.520 | who are unhappily married.
00:08:43.320 | And so the way that you avoid being unhappily married is, one way, is by being very clear
00:08:50.240 | on the type of person that you would like to be married to.
00:08:55.320 | That will then drive you to say, "What type of person do I need to be in order to be attractive
00:09:02.520 | to the type of person that I want to be married to?"
00:09:07.320 | Much more important than saving money, much more important than putting money in a Roth
00:09:10.520 | IRA, and much more valuable to your financial independence.
00:09:13.440 | Now you ask the question, "I'm 22 years old.
00:09:16.320 | Should I do this now or should I do this later?"
00:09:19.080 | The answer is you should do it now.
00:09:22.920 | Don't get married too soon, but when you find the person that you want to marry, marry right
00:09:28.920 | away.
00:09:31.800 | You definitely don't want to run into a relationship that will affect the rest of your life very
00:09:37.160 | quickly, without forethought, without planning, without consideration.
00:09:41.680 | But on the flip side, there's no reason to defer for many years down the road.
00:09:47.800 | Especially there's no financial reason to defer for many years down the road.
00:09:51.560 | Married people are much better off financially for many reasons.
00:09:55.680 | They earn more money and they have more money, but just the simplest obvious reason is they
00:10:00.040 | can pool their talents and their resources and their incomes and their expenses can go
00:10:05.240 | down.
00:10:06.240 | It's cheaper.
00:10:07.240 | It's not double to put two people together in a household.
00:10:11.200 | And so you have measurably better economic potential as a married couple than you do
00:10:17.360 | as an individual.
00:10:19.180 | So you want to make sure that you're prepared for that.
00:10:23.080 | So ask yourself how you can build and develop and maintain quality relationships, starting
00:10:28.960 | first with your family members that are nearby already, and then also thinking very carefully
00:10:35.000 | about how you will meet and marry the husband of your dreams.
00:10:39.640 | Number two, you should carefully and intentionally choose your geography.
00:10:47.040 | Before you think about saving money, choose where you're going to live.
00:10:51.560 | Before you think about becoming financially independent, choose where you want to be.
00:10:56.600 | Because your decisions surrounding geography will drive the lifestyle that you live.
00:11:07.680 | If you want to be in a big city, go to a big city now.
00:11:11.980 | If you want to be in a country, in the country, consider going to the country now.
00:11:15.040 | If you want to be in the mountains, go to the mountains now.
00:11:17.720 | If you want to go to the ocean, go to the ocean now.
00:11:21.120 | This is the time in which it will be cheaper and easier and simpler for you to establish
00:11:26.700 | yourself in a geographic location than ever it will be in the future.
00:11:31.520 | So carefully consider your geography.
00:11:34.840 | This will have to do with your career, which we'll talk about in a moment.
00:11:37.480 | It'll also have to do with simple things like the tax system under which you live, the economic
00:11:42.060 | future of the location that you're in.
00:11:44.960 | And it will relate heavily to thing number one, who are you going to marry and how are
00:11:49.440 | you going to meet them?
00:11:50.980 | If you marry and meet and marry somebody in the town that you're in now and you want to
00:11:53.920 | be in a different town, that could very quickly bring in a source of stress.
00:11:59.480 | If you want to live in a different town, you might consider going to a different town before
00:12:03.960 | establishing your social circle.
00:12:08.240 | Choose the geography that you're going to live in and design it around the lifestyle
00:12:12.320 | that you want.
00:12:15.320 | If you know anything that's important to you in the lifestyle that you desire to live,
00:12:22.540 | choose it now and move there because the place that you live will make a big impact on your
00:12:32.820 | life.
00:12:36.400 | Design it now and go intentionally.
00:12:39.580 | First career choice, your careful choosing, selection and design of an appropriate career
00:12:48.420 | will make a huge impact on your level of happiness.
00:12:53.500 | I don't know which of these three things is more important than another.
00:12:56.980 | I don't know if your career makes a bigger difference in your level of happiness and
00:13:03.100 | your level of satisfaction than does the person that you're married to.
00:13:06.420 | I don't know if your geography makes a bigger difference than your career.
00:13:10.100 | I really don't.
00:13:11.100 | I just know that all three of these are very important factors.
00:13:14.800 | If I were to rank them, I would say that probably the number one most important thing is the
00:13:19.520 | quality of your relationship, especially your marriage relationship.
00:13:24.020 | Number two is the appropriateness of your career for yourself and number three would
00:13:29.820 | be geography.
00:13:31.160 | That would be my guess on the ordering.
00:13:33.140 | But I think that you should choose geography in some ways before you choose career because
00:13:37.540 | there are many careers that you can do in certain types of geography that are related.
00:13:44.180 | But if you choose a career first and then you try to choose geography, that career may
00:13:47.420 | or may not transfer over.
00:13:50.280 | So consider your career choice.
00:13:52.540 | Here you should spend time very carefully reviewing your skills, your talents.
00:13:58.660 | Look at what your college degree is in.
00:14:00.260 | Consider if that is something that you want to continue working in.
00:14:04.540 | Look at your areas of interest.
00:14:05.860 | Do some personality profiles, etc. and carefully design a career choice that you think will
00:14:12.380 | be helpful for you, that will be appropriate to you in the long term based upon the lifestyle
00:14:17.540 | that you desire to live.
00:14:20.900 | Now when you're doing this, think about a few things.
00:14:23.380 | Think about the economic future of the geography that you've chosen.
00:14:27.960 | Some places are in decline.
00:14:30.340 | It doesn't mean you can't live a great life there.
00:14:32.700 | It just means that you might not choose a local place, a local career, a career that
00:14:38.100 | is tied to geography.
00:14:39.900 | I personally would be very happy to live in a place that had a declining economy because
00:14:44.460 | my income can be earned from a place that doesn't have a declining economy.
00:14:49.020 | And so I could get a very great value on my money by earning money from a place where
00:14:54.020 | there's lots of people to send it to me and spending it in a place where my dollars go
00:14:57.100 | farther I can set up a really nice arbitrage situation for myself.
00:15:02.700 | On the flip side, if you're in a location that has a growing economy, look at the local
00:15:07.820 | economic trends and try to understand how those will impact your potential career choices.
00:15:12.480 | There's not just one career choice that's appropriate for you.
00:15:15.300 | Rather, you have skills, talents, and abilities that could be translated and applied to various
00:15:20.420 | careers and various applications.
00:15:23.340 | So think carefully and study carefully your career choice.
00:15:27.540 | Think carefully and study carefully how your career choice will integrate with your future,
00:15:33.980 | with your future plans, with your future goals, with your future dreams.
00:15:39.260 | Think carefully about how the work that you've chosen to do will integrate into your future
00:15:43.980 | family life.
00:15:45.980 | Don't spend time building a career that you'll want to leave or change in the future if you
00:15:54.220 | could take that time building a career that you won't want to leave or change in the future
00:15:58.940 | as your family circumstances change.
00:16:02.840 | So think carefully and design your career.
00:16:07.000 | Those are some of the most important things that you can do to really build a life that
00:16:15.360 | will develop a system of independence, that will build a life that will be happy, that
00:16:20.740 | will build a life that will give you the feelings of financial independence and will cause everything
00:16:25.340 | else to flow from there.
00:16:26.980 | If you're in a career that's well-suited for you, it won't be hard for you to be really
00:16:30.020 | good at it, which means that your income will automatically go up.
00:16:34.140 | And because your income is automatically going up, you can save a lot more money and become
00:16:39.340 | financially independent much more quickly.
00:16:41.820 | If you've chosen your husband very, very carefully and you've figured out what values and attributes
00:16:47.860 | are important to you and you meet somebody at the local investment club or in the local
00:16:53.180 | real estate club or in the local business club versus at the local bar or at the local
00:16:59.260 | place that attracts people who are not forward-thinking, the local, I don't know, video game hangout
00:17:03.900 | or whatever the version of that is in your local area, you're much more likely to meet
00:17:08.800 | somebody who will share your financial goals.
00:17:11.740 | And now when you come together, instead of looking at things and fighting against each
00:17:16.100 | other, you'll be able to build a future together.
00:17:20.700 | So do you see how these things are integrated?
00:17:24.620 | You can't approach financial problems and just say, "What's the one, two, three?
00:17:30.360 | How much money should I save?
00:17:31.360 | How much money should I put in my 401k?"
00:17:33.380 | These are secondary questions.
00:17:35.200 | They're not primary, but those things I laid out for you are primary.
00:17:42.020 | Here are some financial things to consider.
00:17:45.040 | You are in a phenomenal position of being a college graduate who is debt-free.
00:17:52.640 | Here's a suggestion for you.
00:17:54.760 | Commit yourself to never borrowing money, any time, for any reason.
00:18:03.480 | Here's why you might consider that.
00:18:05.720 | If you commit yourself to never borrowing money at any time for any reason, you will
00:18:11.040 | be able to have freedom and independence for the rest of your life, no matter the situation
00:18:17.720 | that you're in.
00:18:20.420 | Is this guaranteed to be the most optimal financial outcome?
00:18:24.600 | No, I don't think it is.
00:18:27.520 | I think you can make a compelling financial case that sometimes borrowing money will lead
00:18:34.560 | potentially to your being wealthier.
00:18:39.880 | But would this type of commitment lead to your being more financially independent?
00:18:48.400 | Here I think you can make a very strong case that by making this personal commitment to
00:18:53.720 | never borrow money, any time, for any reason, you always have your liberty.
00:19:01.440 | You can always walk away.
00:19:03.680 | You haven't mortgaged your future to pay for your present.
00:19:07.700 | And if you're interested in liberty and financial independence, I think this is a personal financial
00:19:13.480 | commitment that would go far for you.
00:19:17.560 | Here's another simple commitment that would lead to financial independence.
00:19:21.080 | Never spend more than half your income.
00:19:26.520 | Make sure that you never spend more than half your income.
00:19:31.820 | And maintain that commitment until you are financially independent.
00:19:37.880 | I think that a good target number for you to shoot for is to always make sure that 50%
00:19:43.160 | of your income is invested for your financial independence.
00:19:50.800 | You will have expenditures that you will want to make during this phase of your life.
00:19:55.460 | And you need to be careful not to try to live too frugally.
00:19:59.640 | Now, of course, I recognize that and I honor you for working a full-time job, saving all
00:20:06.000 | that money, working an extra part-time job for your spending.
00:20:09.900 | But this time of your life is not only something that should be spent on work, work, work all
00:20:17.720 | the time.
00:20:19.880 | These are experiences that will be very valuable for you to accumulate during this time of
00:20:24.360 | your life.
00:20:25.520 | And so how can you figure out how to set a budget towards those things?
00:20:30.600 | Well, I think it makes a lot of sense to just simply make sure that you never spend more
00:20:34.800 | than half your income.
00:20:36.280 | If you want to set a different number because you have different goals, if you want to say,
00:20:39.400 | "I want to spend 30% of my income or 70% of my income," that's fine.
00:20:44.080 | I just like half.
00:20:45.080 | It's simple and it's effective.
00:20:46.620 | And here's the key.
00:20:48.020 | You should save.
00:20:49.640 | 50% is what goes for long-term financial independence.
00:20:53.560 | You can still save money out of the lower 50%, but that money could be spent on experiences
00:21:01.520 | if you want to have them.
00:21:03.640 | 22 years old is a great time to set aside money and consider traveling if that's something
00:21:09.120 | that you're interested in.
00:21:10.360 | Consider investing into a hobby or skills that are valuable for you.
00:21:15.260 | You have a huge amount of personal freedom and autonomy at this stage of life.
00:21:22.080 | And it's important to make sure that you maximize that.
00:21:25.340 | Don't live a deferred life.
00:21:28.720 | Plan for the future and live in the present.
00:21:31.680 | You don't know if you have tomorrow, so live in today while also recognizing that it's
00:21:36.920 | valuable to plan to save for tomorrow.
00:21:40.720 | There are a lot of things that you can do during this phase of your life that will go
00:21:43.780 | with you for the rest of your life and you'll be very happy with them.
00:21:51.240 | Don't make the mistake of putting everything on tomorrow.
00:21:56.840 | Also don't make the mistake of spending everything today.
00:22:01.760 | There's a balance.
00:22:03.420 | And I think a really great way to approach that is always set aside 50% of your income
00:22:09.220 | for financial independence until you're financially independent.
00:22:13.740 | Spending less than 50%?
00:22:15.340 | You might choose to save, you might choose to spend.
00:22:17.940 | That's up to you.
00:22:18.940 | But I think that's a really good way to approach it and a really useful balance.
00:22:24.220 | What tactically can you do?
00:22:25.780 | First, before you participate in anything such as investing in your 401k at work or
00:22:34.620 | going on any fun trips or anything, I recommend to you that you work really hard to set aside
00:22:41.300 | $10,000 in savings before you do anything else just as a good round number.
00:22:46.300 | There's no magic to this figure.
00:22:47.980 | It's just a good round number that I think buys you a substantial amount of freedom.
00:22:51.860 | And I would love to see everybody have $10,000 sitting in a savings account before they moved
00:22:57.340 | on to any kind of investing whatsoever.
00:23:01.500 | Tactically after that, if your employer retirement accounts give you an employer match, go ahead
00:23:07.420 | and consider signing up for that and at least take advantage of the match.
00:23:11.420 | And then focus on setting aside something like $100,000 in savings.
00:23:17.260 | Now how you allocate this money and how you divvy it up, that's up to you.
00:23:24.300 | Is this all going to go for your long-term financial independence?
00:23:27.700 | Well, how much of it came from the 50%?
00:23:30.140 | You got to decide that.
00:23:31.640 | But I think it's really valuable for young people as quickly as possible to get their
00:23:36.900 | hand on at least several tens of thousands of dollars and $100,000 is a great round number.
00:23:43.520 | During this phase of your life, it's very possible, very probable that if your life
00:23:48.660 | will look anything like many of your peers, you will be in a situation to where you'll
00:23:54.320 | have many expenses that you'd like to make at an early age.
00:23:59.020 | You might find yourself wanting to buy a reliable car.
00:24:03.120 | You might find yourself wanting to make sure that you save for have a nice wedding if that's
00:24:08.280 | important to you.
00:24:09.280 | Go on a nice honeymoon with your husband.
00:24:12.320 | Set up a life that will establish you in the type of lifestyle that you want to live in.
00:24:19.520 | And money is very valuable in these early years.
00:24:23.200 | Liquid money, not money that gets wasted, not money that gets spent, but liquid money.
00:24:28.420 | And it will give you, if you can save several tens of thousands of dollars, hopefully as
00:24:31.880 | much as $100,000 in a non-retirement account, that will give you the ability to follow your
00:24:38.040 | dreams no matter what they are.
00:24:42.700 | I have yet to find anybody who can prove me wrong in this or who's brought evidence that's
00:24:47.420 | convinced me I'm wrong.
00:24:49.000 | When I look at almost every situation where somebody's stuck, when I look at every situation
00:24:54.600 | when somebody's unhappy and their finances are contributing to that, I can't find a situation
00:25:01.800 | that would not be solved by keeping $100,000 in the bank.
00:25:10.160 | I really can't.
00:25:12.440 | And when you recognize that the true benefit that you're trying to get is this sense of
00:25:19.720 | independence, not the money, it's what the money buys for you.
00:25:25.640 | It's the lifestyle, it's the effect.
00:25:29.040 | Money just helps you get there, it's the cause.
00:25:34.360 | I think this is well worth considering in terms of some simple financial steps.
00:25:40.840 | After that point in time, you would need more specifics to figure out your plan.
00:25:46.440 | You would need to figure out, are you tuned in an entrepreneurial bent?
00:25:51.080 | Is your career high-powered and worth pursuing further?
00:25:54.500 | Is there a particular type of investment that's well-suited for you?
00:25:58.440 | From there, you need to get much more personal.
00:26:00.000 | I can't answer it in the context of an email like this.
00:26:03.280 | But if you go through these things, I think that you will have a good foundation for financial
00:26:10.240 | independence.
00:26:11.240 | I hope you see the tension that I'm trying to bring here between life decisions and financial
00:26:17.480 | decisions.
00:26:21.240 | Start with life decisions.
00:26:24.080 | As I said in review, number one, biggest impact, relationships.
00:26:31.240 | Good relationships with your family that you live with now and a great relationship with
00:26:35.960 | a potential husband.
00:26:38.120 | Give serious time and consideration to how you're going to arrange those circumstances.
00:26:42.600 | Number two is geography.
00:26:44.260 | Number three is career choice.
00:26:46.260 | If you establish those three things well, you almost don't need the money and the money
00:26:51.080 | will flow.
00:26:53.000 | Financially, never borrow money at any time for any reason and you'll maintain your independence
00:27:00.240 | throughout your lifetime.
00:27:03.000 | Always save half your income for financial independence until you become financially
00:27:07.020 | independent.
00:27:08.160 | And any kind of spending and saving that you want to do, make it on the other half.
00:27:14.400 | Consider setting aside cash first, 10 grand in the bank, move on to fund employer retirement
00:27:19.920 | accounts, etc. with the goal of getting to $100,000 as quickly as possible to buy you
00:27:24.560 | freedom, no matter the life circumstance that comes at you.
00:27:30.560 | Don't forget to take care of basic insurance.
00:27:34.120 | As a young single woman, you should make sure that you have good comprehensive disability
00:27:38.260 | income insurance to protect your income, which next to your health is your most valuable
00:27:42.780 | asset that you have.
00:27:43.780 | And I would encourage you, continue taking advantage of the situation that you're in
00:27:49.600 | with your family.
00:27:50.600 | If you have good family relationships, enjoy the situation, enjoy those years with your
00:27:56.600 | parents until or unless you decide to move out.
00:28:00.240 | Take advantage of the financial savings and contribute to their household.
00:28:03.840 | Here's my thoughts on living with parents.
00:28:06.880 | There is this massive social stigma against living with parents.
00:28:13.080 | I think it's horrible.
00:28:14.520 | I really do.
00:28:16.900 | Now young men and women should be responsible.
00:28:20.760 | And there's a big difference between being a mooch and consuming everything from your
00:28:28.840 | parents and not contributing to the household versus being a responsible member of the household.
00:28:35.400 | I don't get the sense.
00:28:36.400 | You're obviously not a mooch.
00:28:38.920 | But your parents' great joy is to contribute to your life and to help you.
00:28:43.160 | So if that means that staying there, if they allow you to live there rent free, as long
00:28:47.040 | as you're saving and you're not squandering all of your money, that's good for your character.
00:28:51.560 | The most important lesson if your parents were writing me an email that I would be telling
00:28:54.500 | them is to say, "Make sure that your son or daughter is responsible, that they're not
00:28:59.280 | squandering all their money."
00:29:00.400 | Well in this situation, you're not.
00:29:02.760 | You're saving.
00:29:03.840 | And so your parents can look at that and recognize that you have the character that's necessary.
00:29:09.040 | Now take advantage of those family relationships.
00:29:11.840 | Enjoy that time.
00:29:13.200 | This can be a very special time in your relationship with your parents where you can really build
00:29:19.080 | deep and enjoy those relationships.
00:29:22.720 | It won't always be this way.
00:29:24.900 | So take advantage of it.
00:29:26.560 | I'm convinced people who live with other people, I don't have any sociological data for this
00:29:30.040 | like I do for other claims, but I'm personally persuaded that people who live with other
00:29:35.340 | people are generally happier just because most of us get lonely if we live by ourself.
00:29:40.660 | Who wants to live in an empty apartment by yourself just so that you can impress the
00:29:44.440 | world that look at me?
00:29:46.940 | This is silly.
00:29:48.300 | I'd much rather live with my parents, period.
00:29:51.460 | I'd much rather do that.
00:29:52.460 | As long as I'm not being a mooch and a leech.
00:29:55.900 | That's the important thing.
00:29:57.380 | So I make that distinction.
00:29:58.380 | I encourage you, save your money, continue living with them and build those family relationships
00:30:02.940 | there and enjoy.
00:30:03.940 | Until or unless there's something compelling that takes you beyond that, I think that's
00:30:08.940 | well worth considering.
00:30:10.780 | And make sure that you use this time period to invest in some of the intellectual pursuits,
00:30:20.240 | some of the recreational pursuits, some of the deep things that will be more difficult
00:30:27.260 | later as life gets more gets complicated.
00:30:31.280 | If you I don't know what your college degree was in, but I didn't spend as much time in
00:30:35.760 | college reading the types of books I wish I'd read.
00:30:39.820 | Take the time now to work on your personal ideology.
00:30:44.420 | Think about your political philosophy.
00:30:46.800 | Think carefully about it.
00:30:48.460 | Think about your religious ideology.
00:30:50.740 | Think carefully about it.
00:30:53.740 | Consider what you believe and why so that you can be well grounded.
00:30:58.420 | That's another thing that leads to happiness.
00:30:59.980 | Religious people are happier than non-religious people.
00:31:02.900 | So consider what you believe and why.
00:31:08.620 | And those are pursuits that are hard to do at later phases of life.
00:31:13.620 | But if you really take advantage of this period of time, you can live some amazing adventures
00:31:19.020 | while also really building up and working toward financial independence.
00:31:24.820 | Final practical thought, I would be cautious about working an extra job at this point in
00:31:30.060 | time if that extra job is costing you the time that could be put into something that'll
00:31:36.180 | have bigger long-range benefit for you.
00:31:39.780 | You don't need the extra money from an extra job.
00:31:43.580 | I would work a 40-hour job for someone else, and I would invest the other time into personal
00:31:49.260 | skills, personal hobbies, personal intellectual pursuits, personal business.
00:31:55.740 | I think you'd have a much higher rate of return than just working trading hours for dollars.
00:32:01.640 | So I hope these suggestions are useful for you, Kylie.
00:32:04.260 | You've got an amazing future.
00:32:06.700 | And I think any parent listening would be proud to have you as a 22-year-old woman starting
00:32:12.020 | your life on this foundation.
00:32:13.820 | I hope these thoughts are useful as you pursue financial independence.
00:32:18.540 | Thank you so much for listening to today's show.
00:32:19.980 | If you'd like to support the work that I'm doing, please consider becoming a patron of
00:32:22.540 | the show.
00:32:23.540 | Details on that program at RadicalPersonalFinance.com/patron.
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