In this episode, Chelsea talks about a few specific adulthood tasks that no one prepares you for. From navigating the overpriced world of quality home items to selecting the right health insurance plan, these are tips everyone needs to know.
Hey guys it’s chelsea from the financial diet and this video is sponsored by united healthcare and today i want to talk to you about a few of the realities of growing up that no one prepares you for and if you’re someone who actually happened to have been prepared for these things good for you but for most of us we kind of had to stumble through them on our own
And not having been prepared for them ultimately in many cases led us to either missing out on opportunities or putting ourselves at a disadvantage but the good news is mama tfd is here to take care of you hold you by the hand and guide you through some of these adult choices because growing up is kind of scary but we all got to do it so we might as well prepare
Ourselves number one is getting started with investing now the thing that really kills me about investing and particularly when it comes to young people in investing is that there is such a sense of mystery and scariness and confusion around the concept of investing and ironically once you get started with investing it’s actually one of the easiest things you’ll
Ever do and in fact rewards being lazy the less you mess with it the more consistent you are the more you automate the less you pay attention to every dip in the market the better off you are the thing that is most important ultimately is getting started as early as possible because long-term investment involves something called compound interest starting early is
Probably the biggest advantage you can give yourself there’s a massive difference between starting your investment portfolio at 20 and 30. the later you start the fewer chances you get to earn passive income and grow your investments imagine you’re planning to put away 500 monthly until turning 65. look at the difference between starting an investment account at
20 compared to starting at 30 if we assume a 7 rate of return commencing the investment journey at 20 will accumulate to 1 587 117 by retirement age while starting at 30 will only earn you 679 567. the cost of not investing young in this case is over 900 000 that’s compound interest for you baby if we were all being put on a great path we would all take a class
In high school that explains all the concepts we need to know about investing the market compound interest all of the different types of accounts and we’d all set up our account to start right out of high school and just accrue that sweet sweet compound interest for the rest of our lives unfortunately most of us don’t receive any of this education and tend to
Think of the whole concept as something that’s only really available for rich people when you can literally get started investing for dollars and it can be disheartening to say oh well i already missed out on x amount of valuable years why even start now but the truth is that every day sooner that you start investing is better off in the long term starting at
30 verse 31 28 verse 29 even 39 40 is a huge difference in the long term most of us unfortunately were never prepared to tap into the massive benefits of long-term investing but tft is here to change that baby so we’ll link you in the description to a primer by tfd friend and investing expert amanda that will tell you everything you need to know to get started
Number two is choosing a health insurance plan many people in the us don’t really think about health insurance coverage until they have to enroll in it themselves especially when many of us are on our parents coverage until our mid-20s so when you take your first look at your employer’s insurance packet or start doing your own research for individual enrollment
It can feel really overwhelming thankfully the process doesn’t have to be that difficult simply setting aside a few dedicated hours to review your different options balance your needs with your finances you can easily decide the package that’s most appropriate for you and your family for instance you’ll want to think about the cost of different plans but remember
That the costs associated with health insurance don’t just boil down to your monthly premium remember to take other costs into consideration like deductibles co-pays co-insurance and out-of-pocket maximums also keep in mind that many people may save on healthcare costs by selecting in-network care providers and facilities the best plan for you and your family will
Depend on your specific circumstances like your age and current medical conditions click the link in our description for guidance from united healthcare on common mistakes to avoid when choosing your health care plan number three is the cost of being in a wedding i think in general the way we understand weddings growing up is like super not realistic or attuned to
How weddings actually are in practice obviously since mama rona’s stopped by for a little visit weddings have sort of naturally been quite a bit different than they usually are and for most people either non-existent or drastically less expensive than they otherwise would have been but assuming we will eventually return back to a more normal wedding environment
The costs of not just having a wedding but being in someone else’s wedding are something that most of us simply aren’t prepared for even if you’ve set aside a special sinking fund for planning your own wedding it’s likely that you don’t embark on your 20s thinking oh over the course of the next 15 years i will have to spend tens of thousands of dollars being part
Of other people’s special days it’s worth noting that the cost of being a bridesmaid like cost of living varies widely by region bridesmaids on the west coast pay an average of one thousand three hundred and sixty dollars per wedding whereas midwest maids have a cheapest at one thousand one hundred dollars but even at the low end of that it’s still over a thousand
Dollars just to celebrate someone else’s day typically costs of things like clothing and alterations accessories transport gifts accommodations and those ludicrously ballooning and expensive bachelor and bachelorette parties and social pressure can make it very difficult to say no to or opt out of certain things for example if the dress the bride wants everyone
To wear costs 300 not even including alterations and you might not be able to afford that saying no to wearing the dress could potentially mean saying no to being a bridesmaid generally and aside from the potential alienation that that could represent for the relationship it’s also not necessarily what you want to say no to this is why it’s crucial for people who
Do choose to have a bridal party to be extremely mindful about the financial constraints that they’re imposing on people i personally opted not to have a bridal party because attending my wedding was already expensive enough and we had a very small group of people attending so it also felt weird to like select people out of already a very select group but i knew
That just getting to the wedding for many was a substantial expense and the idea of adding more cost burden to their trip really didn’t sit well with me ultimately wedding culture and all of the surrounding parties up to and including the cursed gender reveal culture are a slice of american consumer spending that has continued to balloon with social media and the
Inherent pressure that it puts on everyone to create a day that is as visually appealing as it is special to experience but by preparing yourself mentally about what this expense might look for you over the course of a decade where you may be attending a lot of weddings you can more easily set what feels like a solid budget for each individual wedding and having
The whole budget laid out will help give you a little confidence in saying no to certain things that simply don’t fit in the budget number four is how much time it takes to keep your house clean now i happen to grow up with a bit of a clean freak mother so i was always well aware of the emotional and psychological toll that maintaining a relatively neat home will
Take and jokes aside i actually do largely enjoy cleaning but many people don’t and more importantly going into adulthood we often underestimate the various domestic tasks that we must constantly be dedicating time to just to keep our lives running smoothly it’s easy to not factor this time into a schedule or to let it fall to the bottom of the priority list
Therefore leaving you with a ton of anxiety around the acts of cleaning that have inevitably snowballed and the time is substantial according to a 2015 report by the bureau of labor statistics the average person over 15 years old spends the following minutes per day engaging in different household tasks 13 minutes per day cleaning up the kitchen after meals 17
Minutes per day on laundry 29 minutes per day on interior cleaning task and 7 minutes per day maintaining the lawn garden and house plans that is 66 minutes per day dedicated just to cleaning and when you consider over an hour of time than 117 by retirement age while starting at 30 will only earn you 679 000 that can represent a serious chunk of your time and for
Most of us these tests are not just simply going to go away in fact neglecting them is often going to make the eventual task all the harder while giving us that aforementioned anxiety in the meantime so the answer is to be intentional with that time scheduling time for your domestic tasks the same way you do your professional and personal tasks is the key to making
Sure that they don’t feel like an encroachment on your time but rather a coherent use of your time like anything else no one tells you you’re gonna have to put domestic tasks into your daily agenda but you should number five is doing your taxes particularly with multiple streams of income i really do find it a bit criminal how little americans are prepared to do
Their taxes as adults like investing i think it should be one of the concepts that’s taught at school to everyone so we can all go into these choices with a lot more confidence and while yes for those of us who are just simply employed with one stream of income have relatively simple taxes there still can be a fair amount of variation within that but for people
Who have done something like add a stream of income started their own business gone freelance or really anything else that takes you out of the norm of the average american employed taxpayer doing taxes can be very complicated and the penalties for not doing them correctly can be quite steep i once heard a joke that was like the only thing rich white people go
To jail for is not paying their taxes and that’s really true unlike all of the other white collar crime your ass will actually get thrown in the clink if you don’t pay uncle sam luckily though the benefits of outsourcing to a professional if you have complicated taxes at least once will often pay for themselves in just one tax year the first year that i was a
Freelancer i was completely overwhelmed when it came time to do my taxes my tax preparation cost me 350 with a cpa and in doing so ended up saving me over 3 000 in my estimated tax bill that year simply by properly doing my taxes and teaching me all about the various deductions that were available to me my taxes obviously over the years have been extremely
Complicated as a business owner who also happens to be married to someone who currently doesn’t even live in the country so i’ve had a professional do my taxes for the past decade nearly but part of them doing your taxes also is being able to sit down with them and really go through your tax return and understand what you’re looking at so if you’re someone who
Eventually aspires to be able to do your own taxes again even as a freelance or multiple stream of income person working with a professional even once can provide you a level of knowledge that you wouldn’t have otherwise had the point is though going into your taxes naively or lackadaisically can end up costing you very dearly so being prepared for it and taking
It seriously will save you a lot of headaches number six is trying to find seemingly innocuous home items i think most of us in our young adult life at one time or another were taken way by surprise when we realized how expensive certain things are like mattresses a quality mattress can be ludicrously expensive a large mirror can easily run for thousands of
Dollars solid wood furniture a decent sectional couch even rugs are way more expensive than i think most of us assumed they would be but the good news is furniture particularly things like wood furniture mirrors metal work etc are one of the best things to never ever buy full price or even new places like nextdoor facebook marketplace thrift shops flea markets all
Of these are amazing places to buy very high quality furniture at a fraction of the normal price i think a lot of us automatically opt into the cycle of buying really cheap furniture often that we end up jettisoning when we move to a different place or a roommate ends up taking with them or we just grow out of aesthetically because we bought the absolute cheapest
Item we could at the time and every other 22 year old had the same one and what’s ironic is that for the same cost as that let’s say completely bottom barrel dining chair that is brutally painful to sit on you could very likely get a solid wood high quality comfortable dining chair for the exact same price if you buy it secondhand there is obviously a slight level
Of convenience and having things like furniture brand new and delivered but then usually you do have to assemble it the point is most of us when we enter our first adult living spaces go on totally the wrong path when it comes to furnishing our homes we go for super cheap furniture most of which is like particleboard mdf and we cycle through several different
Items throughout our 20s before eventually finally coughing up a little bit more money for something that will last for years and years if only someone had warned us but luckily if you are at the beginning of your buying furniture journey you watch tfd and therefore know you should never buy the cheapest stuff that you’re gonna throw out soon just go straight
To secondhand number seven is buying or even deciding to buy a house or property beyond the cost of doing things like just saving for a down payment many young people are simply completely unprepared to go through the mental exercise of deciding whether owning a home is right for you whether it’s the right time understanding the process of getting approved for
A mortgage learning what makes a house worth buying versus not it can feel like something that we know we’re supposed to do and are in many cases heavily pressured into by people like our parents but feel wholly unprepared for on a logistical level and not just in financial terms and that can often lead to serious mistakes one of the biggest mistakes first-time
Homebuyers make is buying more than they can afford to avoid falling into that trap real estate mogul barbara corcoran and other money experts recommend spending no more than about 30 percent of your take-home pay on housing keep in mind that this 30 encompasses more than just the sticker price of the home it should include all related costs like mortgage interest
Taxes insurance maintenance and any renovations you might want to make another popular guideline is the 2836 rule which says that you should spend no more than 28 percent of your gross monthly income on housing costs and no more than 36 percent on total debt which includes housing and other debt like student loans or car loans the biggest mistake that first-time
Homeowners make is they forget they need closing costs not just the down payment of say 10 or 20 percent says corcoran closing costs may vary depending on where you live and the type of loan you choose but you can expect them to add an additional two to seven percent of the total cost of the home onto the final price that means if you’re buying something for
Two hundred and fifty thousand dollars you’ll owe anywhere between five thousand and seventeen thousand five hundred dollars in fees for the median u.s home these expenses exceed thirteen thousand dollars and thirteen thousand dollars is not just like a whoopsie i forgot to bring you know two dollars to the corner store to get a pack of gum that can be a make
Or break amount of money in any kind of long-term financial decision but the good news about home buying aside from all the nuance and understanding in terms of determining what home is the right one for you to buy if and when you buy is that once you’ve decided to buy and you know what kind of home you’re looking for the rest is simply math we’ll link you guys
In the description to a really good calculator to determine whether renting or buying is right for you you have plenty of things to worry about when it comes to things like locations school zoning repairs outdoor space neighbors all of the more nuanced elements of home buying so give yourself a sense of relief by keeping the math part of it as simple as can be and
Making sure to overestimate what you’ll need in terms of finances so you’re never left unable to pay those pesky fees or not having factored them in lastly number eight is combining finances with your partner whether you are married or not being in a committed relationship with someone even if you don’t live with them will eventually mean finance is having some
Kind of impact on your relationship and if you’re married or live together that increases exponentially everything from co-signing on something like a mortgage or lease to sharing bank accounts to making big financial plans and prioritizing savings together can easily become a serious stumbling block if the couple isn’t prepared to deal with finances which is why
It’s no surprise that the leading cause of divorce is financial issues and i imagine that a huge part of this is because most people are raised to talk about a lot of things with their partner but not money and we simply don’t have many good cultural models for how to navigate finances in a relationship for example many people still think things like prenups are
Exclusively for rich people not realizing that with more than half of marriages ending in divorce it simply means deciding how to deal with your assets and protect yourself before you commit to commingling everything which is likely something that everyone could benefit from i must plug on that note the interview we did on the financial confessions with divorce
Lawyer james sexton it is very entertaining and informative on the topic generally i think there are three good things you must feel that you intimately know about your partner and vice versa before you can even think of commingling finances number one is your financial values amongst financial problems that couples have one of the biggest is simply different
Relationships to money and values behind it i.e being a spender versus a saver being someone who prioritizes long-term delayed gratification versus someone who’s a bit of an impulse spender i’m really not here to say that any one set of financial values or priorities versus another is the appropriate one but you must feel that you understand the values principles
And ideologies behind how your partner even conceives of money before you can really co-mingle them next is your financial goals do you aspire to home ownership when do you want to retire do you want to have children which is ultimately an extreme expense how much money do you want saved in the bank how often do you want a vacation each year how much money do you
Think is reasonable to spend on a mortgage these goals may not always be expressed in financial terms but ultimately each have a huge financial impact so it’s important to know that your goals if not perfectly shared are at least complementary to one another and not at total opposition lastly number three is your financial pain points do you have serious money
Shame from growing up in poverty do you have financial trauma from a formerly traumatic relationship do you have extreme emotional baggage around a heavy debt burden have you filed for bankruptcy do you have terrible money habits that you’re currently working to remedy do you even have financial compulsions or addictions most of us come to the subject of money
With at least some emotional baggage or bad habits that need to be addressed feeling that you can be totally vulnerable honest and transparent about these things is crucial particularly before you start commingling finances or enter into something as binding as a marriage because an untreated financial issue or baggage will inevitably snowball and the worst thing
You can do is realize that you only found out about someone’s enormous financial pain points once you were already entirely commingled with them financially you may not have been prepared for how to deal with money going into a relationship but that doesn’t mean you can’t change your course now and integrate healthy financial communication into the rest of your
Relationship routine and no matter how scary some of these elements of adulthood are remember that each one is just a question of thinking ahead being honest facing the stuff that might be a little scary and making the right choices now to set you up for a solid future and if you feel like you haven’t been doing some of these things perfectly it’s never too late
To course correct and if one of the things you’ve been putting off doing right is choosing the right health care plan for you don’t forget to check out the link in our description and learn more about what united healthcare has to offer as always guys thank you for watching and don’t forget to hit the subscribe button and to come back every monday tuesday and
Thursday for new and awesome videos goodbye
Transcribed from video
8 Adulthood Tasks No One Prepares You For By The Financial Diet
