Broke Millennial – Book Summary
The lack of basic financial education sets you up to be sucked into the stressful black hole of the paycheck-to-paycheck cycle.
Money Gives You Choices
Money can allow you to quit a job, to be your own boss or step it up from sleeping in your childhood bed and moving into an apartment of your own.
It also helps you travel the world, upgrade to eating organic food…Money gives you the opportunity to help others in need. And with proper management and planning, it lets you retire eventually so you don’t have to continue exchanging your time and energy for a paycheck until your last breath.
The way you handle money says Broke millennial author, is primarily driven by your mental attitude toward it, which is shaped by a number of things, such as your relationship to future thinking, how your parents related to money, and your financial fears.
In order to put yourself on the road to financial success, you must be willing to take the time to understand your relationship with money and, in turn, control its impact on your life.
Your ability to think about the future—or lack thereof— completely impacts your financial situation today.
Team YOLOFOMO
Broke millennial, author Erin Lowry says that being part of Team YOLOFOMO definitely means your social media profiles are #blessed, #killinit, and #livingthedream, while your finances are probably a little more #brokemillennial.
FOMO—this lifestyle choice also means you’ll be #WorkingUntil YouDie.
YOLO” (you-only-live-once) and “FOMO” (fear-of-missing-out)
You can only save the money you have today. Don’t wait for your future higher earnings to start saving. Start now and stop procrastinating.
As you save for the retirement be sure to take the time and even spend a little money to make memories today instead of waiting until your twilight years. Broke millennial, author Erin Lowry says that saving is important but have fun in life as well.
People living at their means—are technically in a paycheck-to-paycheck cycle, possibly without realizing that’s the scenario. They may have a tiny bit saved, but not enough to really mitigate a major dilemma, such as a job loss or illness.
Emergency Fund Ratio
In Broke millennial, Erin Lowry says that an emergency fund is like creating your own insurance policy against disaster by saving up easily accessible money, which means you should put those funds in a basic savings account so you don’t have to sell stocks to get at your money. Should be three to six months of living expenses—the amount you need to cover your basic needs. The self-employed are wise to set the target even higher, with six to nine months of expenses in an emergency fund of cash and cash equivalents.
Emergency fund calculation:
Cash & Cash Equivalent divide by Amount needed to cover basic needs = 3 to 6 months of living expenses ( Your answer is the no. of months covered)
It’s important to have an emergency fund of some sort, even if you have excessive debt. Set aside $1,000 to brace yourself in case the unexpected happens.
Debt-To-Income Ratio
DTI is a key factor lenders use to determine whether to give you a loan. It also keeps you in check about how much more debt you can realistically afford to handle.
(Monthly debt payments) divide by (Gross monthly income) = DTI
It’s best for you to have a DTI of 40 percent or less.
Having a budget puts you in control of your money.