Let’s face it, your mil­len­nial is still really a fi­nan­cial rookie

The Washington Post Sunday - - BUSINESS - Michelle Sin­gle­tary

Per­haps you’re a good money man­ager and you taught your chil­dren well.

Or maybe you strug­gle roy­ally with your fi­nances and haven’t passed on good habits.

Ei­ther way, we par­ents of young adults tend to think that when our chil­dren turn 18, our job is nearly done. They hit 21, and we’re like, “It’s party time.”

After that point, you might think that if they make a money mis­take, it’s on them, right? Wrong. They will en­ter a com­pli­cated world and face fi­nan­cial chal­lenges harder to solve than a Ru­bik’s Cube.

There are so many ways they can get this money thing wrong. So be pre­pared to stay on par­ent­ing duty. You’ll still be


With this in mind — and with graduation sea­son upon us — many par­ents, grand­par­ents, aunts and un­cles of­ten ask me for a rec­om­men­da­tion on a fi­nan­cial book for their newly minted young adult.

This year, I have a new sug­ges­tion, which will dou­ble as this month’s Color of Money Book Club pick. It’s “Get a Fi­nan­cial Life: Per­sonal Fi­nance in Your Twen­ties and Thir­ties” (Touch­stone, $16.99) by Beth Kobliner.

The au­thor is a fi­nan­cial jour­nal­ist who first pub­lished this book 20 years ago. She has just re­leased an up­dated ver­sion that is an all-in-one guide for mil­len­ni­als.

In 2016, there were about 80 mil­lion mil­len­ni­als, ac­cord­ing to the Pew Re­search Cen­ter. I won­der how many are truly pre­pared to tackle to­day’s fi­nan­cial is­sues.

If we go by the many sur­veys about this gen­er­a­tion’s money habits, a lot aren’t ready.

Mil­len­ni­als want what most Amer­i­cans want — a home, debt-free liv­ing and, even­tu­ally, a com­fort­able re­tire­ment. Yet, when asked, only 49 per­cent said they have a plan to live out that dream, ac­cord­ing to Bank of the West. The sur­vey also found that, in prac­tice, mil­len­ni­als pri­or­i­tize sav­ing for travel over put­ting away money for re­tire­ment or a home.

This makes sense. They aren’t be­ing ir­re­spon­si­ble. They’re act­ing their age. They want new ex­pe­ri­ences and, in their minds, they have plenty of time to save.

Kobliner knows her au­di­ence. She starts with a crib-note chap­ter for read­ers who may be in­tim­i­dated by a whole book about fi­nan­cial stuff.

If you do give this as a graduation gift, tuck a card and some cash in the first chap­ter. In it, your mil­len­nial will find eight fi­nan­cial strate­gies that Kobliner says will put him or her on a solid path. They are:

Get health in­sur­ance. “It’ll help pro­tect you if you have an ac­ci­dent or ill­ness, and guar­an­tee that you don’t bank­rupt your­self,” she writes.

Pay off debt sooner rather than later. “You can usu­ally ‘earn’ more by pay­ing off a loan than you can by sav­ing and in­vest­ing.”

Ig­nore the feel­ing that you’re too young to start sav­ing for re­tire­ment. “Sav­ing money in a re­tire­ment plan is one of the smartest (and eas­i­est) things you can do when you’re young.”

Main­tain an emer­gency fund. “Have money au­to­mat­i­cally with­drawn from each pay­check and fun­neled into an old-school sav­ings ac­count.”

In­vest in low-cost stock and bond in­dex funds out­side a work­place re­tire­ment plan. Don’t know what th­ese are? Chap­ter 5 ex­plains in­vest­ing fun­da­men­tals.

Man­age your credit score. “Think of your credit score as the GPA of your fi­nan­cial abil­i­ties, a nu­mer­i­cal rep­re­sen­ta­tion of how ap­peal­ing you are to lenders. Un­like your GPA, how­ever, your credit score is be­ing re­cal­cu­lated all the time.”

Don’t rush to buy a home. “The de­ci­sion about whether to switch from renter to owner in­volves more than sim­ply com­par­ing your monthly rent to the mort­gage pay­ment.”

Pay at­ten­tion to your taxes. There are things you can do dur­ing the year to op­ti­mize your tax situation.

Also en­cour­age your child to read the chap­ter on tak­ing fi­nan­cial stock of their life. As we know, many young adults are start­ing off with record amounts of stu­dent loan debt.

“The good news is that if you start pay­ing at­ten­tion to your fi­nances to­day, you can set in mo­tion habits that will pay off for the rest of your life,” Kobliner coaches.

This is the kind of book that needs an ad­vo­cate. It’s got all the right in­for­ma­tion and tools, but with­out some en­cour­age­ment, it might just be set aside.

“Get a Fi­nan­cial Life” helps take the bur­den off you. Kobliner pro­vides the need-to­know stuff. And if your mil­len­nial fol­lows even some of the ad­vice, you can worry less about his or her fi­nan­cial suc­cess.

I’m host­ing an on­line dis­cus­sion about the book at noon Eastern on May 25 at wash­ing­ton­post.com/ dis­cus­sions. Kobliner will join me to take your ques­tions.

Write Sin­gle­tary at The Washington Post, 1301 K St. NW, Washington, D.C. 20071 or sin­gle­tarym@wash­post.com. To read more, go to http://wapo.st/ michelle-sin­gle­tary.

“Get A Fi­nan­cial Life” by Beth Kobliner fo­cuses on strate­gies for peo­ple in their 20s and 30s.

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