We were reading recently that 85% of new college graduates are moving back in with their parents. And there was this item on “The Huffington Post” …..just a few tips on how to manage your money, and STOP mooching off your mom and dad. They’re from a new book called “How to Be Richer, Smarter, and Better-Looking Than Your Parents”. Obviously, you have to find a good job first . . . which isn’t easy. But once you do, here’s some good advice.
#1.) Realize That You Shouldn’t Be Driving a Really Nice Car Yet. One survey found that half of car owners think their cars are a reflection of who they are. And that’s fine . . . as long as you can afford what you’re driving. Studies show that buying a new car can boost your happiness level, but the effect wears off after about two weeks. So stick with something you can afford, not something that makes you feel good.
#2.) Have Money Directly Deposited into a 401K. The BEST way to control how much you spend is by creating a budget, and tracking all your expenses. The problem is, nobody does it . . . especially young people. So the easier way to make sure you save enough is to automatically have 15% of your paycheck go straight into a 401K or an IRA.
You should also build up some emergency money in your savings account. But once you do, just live off the remainder of each paycheck. And don’t use your credit card.
#3.) Stop Taking Your Cues from the People on TV. Most of the people you see on TV are rich. And research has shown that watching a lot of television makes you overestimate how many NORMAL people own luxury items. In other words, watching too much TV makes you think that buying expensive things is something EVERYONE does.
#4.) Buy a House Once You Have Enough for a Down Payment. There have been a lot of stories recently about how renting can sometimes be better than buying. But in the long run, that’s almost never true . . . especially right now, because houses are cheap compared to a few years ago.
Just avoid the same mistakes that got so many people kicked out of their homes: Get a FIXED rate mortgage, and find a house you can afford . . . not something you’ll be able to afford IF you get that big raise you’re hoping for.