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!
Featured photo: @michelletakeaim