The Life-Changing Class You Haven’t Tried Yet

We’ve all struggled with money at one time or another, and Alexa von Tobel knows that more than anyone, her whole business model is based on the fact that many of us are completely clueless when it comes to personal finance. She’s the founder and CEO of LearnVest.com, a personal finance site, which she has been developing and growing since 2006.

In this TED talk, she explains why learning about money is the life-changing class that is not on the curriculum. Breaking it down, she says 84% of college graduates need more help with personal finance, 61% of the country is living paycheck to paycheck. More than 50% aren’t sure how they’re going to pay their bills next month. Which means, all of their lives could be made happier and healthier if they weren’t living with the stress of debts and bad financial decisions.

“How on earth did we get here?” she asks. 

How is it that money, the most important thing to us all, is something that’s not taught in school, but through trial and error?

Her words are powerful, and what she says actually makes sense! Money makes the world go round, so why are we all okay with making mistakes with it. She even breaks down those mistakes we all make with money that cause us to be in the 61% living paycheck to paycheck.

1. Not budgeting

Budgeting is seriously important, but the average college graduate doesn’t think they make enough to draw up a detailed budget. The 50-20-30 rule is seriously life-saving, it will ensure you have enough for any situation. Even if you don’t have enough for those cute shoes this month, you can always save!

2. Paying the minimum on your debts

“Everyone in America is in debt!” Is what we tell ourselves to justify the debts we amass, Alexa knows because she sees it time and time again. In her case study, the average 22-year-old doesn’t understand the importance of a credit score and therefore only pays the minimum, even missing a few payments when short on money.

3. Not amassing emergency savings 

Having nothing in your savings means that those little emergencies, broken down car, house issues, or anything else, have to be paid with a credit card or a loan. Which, yep, puts you in more debt and makes you more unprepared to deal with the financial situation you’ve got yourself in.

4. Not negotiating salary

In Alexa’s case study, the typical 22-year-old will wait for her boss to tell her when her salary is due, meaning in 5 years time she is still on the same pay she started with. Negotiating is a skill, and dialogue about your salary should be open and honest.

5. Not saving for retirement

Why do we have to think of retirement? We’re young, we’re never going to get old and have tired bones or grandchildren. But yes, one day we will. In Alexa’s case study, the average 22-year-old has under 10,000 in a retirement fund by the time she’s 37. Not much, and she doesn’t have enough to put away for her kids, either.

But she has a solution, her 5 money principles to live by will change the education around money. And she hopes, lessen debt and bad financial decisions from being passed down through generations of family members who have no real education about money. If you do one thing today, watch this video, and get serious about your money!

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Featured photo: @michelletakeaim

 

 

4 Comments
  1. This is a great post but I genuinely don’t understand how this company charges nearly $300 upfront for advice on how to save money….? If you’re broke, how can you afford their advice?

  2. The first thing is to live below your means. That starts with your housing expense, which is the biggest part of most people’s budgets. Get the cheapest, smallest place you can tolerate. Less space means less stuff, less heating/cooling, etc. You don’t need to have a hovel, but don’t try to compete with friends and family for the fanciest home. Don’t buy things for a hedonistic lift. Stuff can’t make you happy. If you don’t get into a rat race of having the latest stuff and FOMO then the rest–budgeting, saving for emergencies and retirement, not having debt–aren’t hard. It’s like with food: a diet can help you lose weight, but the only way to stay thin is to eat like a thin person–forever. Same with money. It’s about a mindset, not a fix.

  3. I remember my friend’s mum made her save loads of waitressing income when we were 16 and I was so grateful that my parents let me do what I want…. what would I say to my 16 year old self? ‘Learn the importance of saving’. I’m not talking hoarding, not enjoying yourself and depriving yourself of a new coat when needed, but having some money tucked away for a crisis is the most important thing I’ve learnt over the last 6 months! Moving to NYC is expensive and I had savings… had we not had any, we’d have had to move back home! This is a great post, I’m always keen to learn tips on my finances.

    http://www.englishgirlinnewyork.org

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