Hi, I’m Conor Richardson. I write about Personal Finance for Millennials: paying off debt, saving cash and designing your financial freedom. Thousands of people read my material to learn how to pay off debt, save more and find the financial freedom to design their life. This means eliminating credit card debt, paying off student loans, saving serious cash, funding your retirement etc.
I am very excited to announce that I have officially signed a book deal with Career Press (@CareerPressInc), an imprint of Red Wheel/Weiser Books (@WeiserBooks), for a book release in late 2018. The last couple of months have been very busy putting the final touches on this deal, and I am extremely thankful to have it finalized.
There will be more information to follow in the coming months, but I thought it was important for my readers to get the news first. Thank you for your continued readership! This would not have been possible without you.
As a medium, high-quality books contain incredible amounts of curated information. And for some reason, even though access is universal, books continue to remain consistently undervalued investments. A good book has the power to change a life or build a fortune.
Consider the example of The Millionaire Next Door, which you can buy with an investment of $16.95. This book is a handcrafted collection of countless research studies, data analysis, and reflection by two highly educated college professors. These professors present the reader with their life’s work in a distilled, easy-to-read and inspiring format. This book highlights the best of what they know. And the research presented pulls back the curtain on the operating system of real-world Millionaires. You can purchase all of that information for less than twenty dollars. The value is enormous.
Any life hacker or investor looks for tremendous value at a discounted price. Today, books offer multiples of value relative to their purchase price. Many books, if followed correctly, have the capacity to change your thoughts, your actions, and your beliefs. These are the books with the special sauce. They are the immediate moneymakers, new frameworks of thought, or pathways to success laid right out in the open, for anyone to consume.
My belief is that books will continue to thrive as a dominant medium. This is why I consistently give a list of recommended books to read. Well today, I want to add a couple more to the list. Here are some new thought-provoking, inspiring, and potentially life-changing books that I have enjoyed over the past several months.
When you start writing a blog about money, people want to know your thoughts on all sorts of finance related topics. For those new and old to mastering money, the question of what books to consume always seems to make its way to the top of the list.
Douglas is a Certified Financial Planner (CFP) with his own boutique wealth management firm, and his wife, Heather, is a lawyer. The Millennial Money Fix seems to be their creative outlet for telling their story about dealing with what many Millennials face today – massive student loans. The Millennial Money Fix is a cathartic work that aims to help Millennials win the battle over their debt.
One of the main themes the Boneparth’s highlight early in the book is how Millennials face a different work environment than their predecessors, which requires a change in attitude and outlook. There seems to be a different playing field and rulebook needed for success.
Millennials never had an institution to begin with. We don’t need to reinvent ourselves to survive – we need to invent ourselves to thrive. No templates. No pathways to partner.
My favorite point of the book, as a self-proclaimed debt eagle (read the book), is that you must accomplish the basics of personal finance before you begin investing.
You need to earn the right to start investing.
In other words, have you done the work necessary – through setting goals, paying off credit cards or students loans – to begin investing? Have you truly earned the right? The process by which you build your financial bedrock will define your progress. Savings and building up an investment portfolio is only part of personal finance, albeit an important one.
Lastly, the Boneparth’s tackle the idea of financial independence.
Maybe our retirement is not retirement at all. Maybe it’s called financial independence: the pinnacle of our ability to do what we want.
They highlight a fear among many Millennials, that traditional retirement may be a fleeting concept. The Boneparth’s argue that financial independence should be the new goal and the idea of stopping work altogether may be outdated, or unachievable, for many people.
Overall, The Millennial Money Fix is written in a quick-to-read conversational style. I would recommend this book to anyone who is entering college, seriously contemplating graduate school, or financing any type of continued education. It will serve as a cautionary tale and hopefully encourage you to pause and reflect on what could be the biggest financial decision of your life.
Thank you, Douglas (@dougboneparth) and Heather (@averagejoelle) for highlighting such an important topic and for being part of the solution.
As humans, we thrive on expressing our individuality. But somehow, when it comes to banking and saving, the bank system has found the perfect way to dehumanize the entire process and strip out the very thing people crave. Banks assigns us a nine-digit number, and the amount of money in that account tells a hidden story.
If you want to save more and better, get rid of those bank account numbers and turn them into something meaningful. Assign them a name and a purpose. Make them tangible and emotional.
Account#798949409 = Honeymoon Fund to Paris
Account#352484737 = Surprise Trip to Ireland
Account #839481319 = Graduate School Fund
Remove the drag of the unambiguous and assign purpose to your bank accounts. This will help link emotions and visual images to your accounts and help expedite your savings habits.
Over the past decade, there has been a shift in the way older generations view Millennials. Initially cast as egocentric, spoiled, and over trophied, it seems the matriculation of Millennials into the workforce has assuaged these initial fears. Plus, academic research shows that Millennials are not that different from their older baby boomer parents. However, there is one element that sets Millennials apart from older generations. Money. While Millennials don’t have a ton of money right now, a historical shift is about to occur. The shift will leave Millennials as the global guardians of capital. This places Millennials at the helm of controlling global wealth. With this control, will come a change in how money is managed. Here are five reasons that Millennials stand to control the future of money.
1. Millennials are about to receive a massive transfer of wealth.
This transfer of capital will take place in various forms – gifts, changes in business control, inheritance, investment transfers and more. Millennials will soon be responsible for a significant piece of global wealth and that means a change to how wealth is managed.
As a generation, over 90% of Millennials check their mobile device within 15 minutes of waking up. It is fair to say that technology is ubiquitous in their daily lives. This means that they have become accustomed to sharing personal photos and opinions on Instagram and Facebook, and they are equally comfortable linking private information, such as bank account details, to mobile apps like Venmo or Paypal.
3. Millennials are comfortable sharing data.
Millennials feel safe sharing their personal data because as digital natives, Millennials are incredibly comfortable navigating complex technology and understand the value that technology can play in their daily lives. As a result, they show a greater propensity to share personal information such as age, location, income, or birthdates. The caveat to this exposure is that Millennials expect an advantage in sharing this data. Specifically, they expect fast, efficient, and reliable service and advice.
This means that we are entering a new era of corporate responsibility and Millennials aren’t afraid to put their money behind their beliefs, or tell their robo-advisor to do so.
5. Millennials will set a new course for money management.
Robo-advising is a relatively new way wealth managers have removed the initial hurdles of investing and mastering the basics of personal finance for the Millennial generation. Business is booming for companies like Wealthfront, Betterment, and Personal Capital who have tapped into the underserved and technological savvy Millennial wealth management market by providing an investment management experience that occurs predominately online. Armed with superior technology and proprietary algorithms, these companies have digitally streamlined the investment, portfolio allocation, and wealth management process.
It comes as no surprise that robo-advisors have become the new craze in Millennial money management. Millennials have observed the costs of the old way of managing money, face-to-face meetings and high fees, but don’t see the benefits. This has created a void, and Millennials once again looked to technology for the solution. And it delivered. With relatively low costs and leveraged technology, it looks like robo-advising is here to stay.
Millennials are in control of the future of money, whether older generations like it or not. Armed with the knowledge that a massive transfer of wealth is about to occur, Millennials need to prepare themselves for this new found responsibility by increasing their knowledge about personal finance now in order to effectively manage the tide to come. With education and practice, they will be able to rely on their digital savviness to master money in a fresh and exciting new way. By doing this, Millennials will control the future of money.
“If something is built to show, it’s built to grow.” – Jonah Berger
When a marketing professor from the Wharton Business School writes a book on making things catch on, you read it. In his New York Times best-selling book, Contagious, Jonah Berger explores why things catch on. For more than a decade, Berger has been researching why certain products sell more than others and why some products leave behavioral residue while others immediately leave our thoughts. Berger claims that “Virality isn’t born, it’s made.”
In Contagious, Berger introduces Daniel Kahneman, a Nobel Prize winner in Economics, who is famous for his research on a concept called “prospect theory”. Simply put, prospect theory is the idea that the way people actually make decisions is different from how they should make decisions. While this may seem intuitive to some, it runs juxtapose to key assumptions in economics. One of the basic assumptions of economics is that people make decisions that are rational and optimal. In contrast to this, Kahneman’s prospect theory suggests that we often do the exact opposite.
In fact, his theory becomes amplified when we are dealing with large numbers and high dollar purchases (think car or home purchase). What we know from Kahneman’s research is that people do not always evaluate things in absolute terms. Here is an example. Let’s say you are in the market to buy a new alarm clock. You walk into a store and are about to buy the perfect alarm clock for $35. Right before you swipe your card someone in line tells you that you can buy the same alarm clock for only $20 if you go to a store right down the street. What would you do? Most people would immediately head to the other store. Now, let’s say you were at Costco about to buy a $700 TV. But right before you swipe your card, someone tells you that you can buy the same TV for only $685 if you go to a store right down the street. What would you do? Most people would proceed with their check out at Costco. In other words, forego the $15 in savings. But why does our behavior differ over the same $15 in absolute savings? Because how we actually make decisions about purchases is not always economically optimal, even when the absolute dollars are the same.
One of the key messages from Kahneman’s research is that people don’t always think about purchases in absolute terms ($15) but rather we evaluate purchases by a “reference point”. In both scenarios described above, the reference point is zero dollars. But the further away we get from zero, the less inclined we are to feel the impact of absolute dollars. The $15 seems more significant savings when purchasing a $35 alarm clock. But not so much when purchasing a $700 TV.
This is why people get into trouble when it comes to big purchases. We tend to lose sight of absolute terms. For example, if you are looking to buy a house, and are mentally prepared to spend $200,000 (roughly the national average) to purchase the house, sliding several thousand dollars up in price becomes less painful. At the end of the day, what’s really the difference between $200,000 and $240,000? When signing for the mortgage, it won’t feel like that much. But in absolute terms, you are spending a difference of $40,000! As a stand-alone number, $40,000 becomes more pronounced. In order to protect yourself from your natural inclination to purchase more than you should, it is imperative to create budgets and stick to them. Decide what you are going to pay before you walk into any major purchase and use prospect theory to your advantage.
As professor Berger points out, “Practical value is about helping.” If we arm ourselves with knowledge about how we actually make purchases, perhaps we can make better decisions and spread the word along the way.
Where you live matters. Not only does it affect your daily life, where you grab a coffee or your daily commute, but it also influences your personal finances. This is especially true if you are trying to become debt free. If you are aiming to eliminate debt fast – credit card debt, student loans, or auto loans – then the city you live in can have a tremendous impact on your ability to pay it off quickly (especially for student loans).
A recent survey, by my friends over at Credible, shows the top five best and worst cities to live in for paying off student loan debt.
Top 5 Best Cities:
1) Dallas, TX
2) Jacksonville, FL
3) Houston, TX
4) Columbus, OH
5) Austin, TX
Based on the nearly 9,000 survey participants, Credible has determined these cities are the best places to live for paying off student loan debt due to their low debt to income ratio and low cost of living.