Lesson 1: From The Financial News

Now for the first official financial lesson. I’m already more excited for Lesson 2 and we’re just getting started with Lesson 1.

housing crisis

Data suggests that homeownership among millennials is down, but it doesn’t mean they’ren’t interested in purchasing a house.

In the past two decades, homeownership in the U.S. has decreased across the board and particularly so for young Americans. The speed of homeownership below the age of 35 has dropped 9.8 percent since 1996.

So where’s America that is youthful currently dwelling?

For the very first time on record, 18-to-34 year olds tend to be much more prone to reside than another living arrangement with their parents.

Yet, that doesn’t mean they’ren’t interested in having a house.

Another survey from Rent.com said almost 80% of young renters don’t intend to purchase a house anytime soon.

Thus, millennials would like to purchase a house at some point. There’s plenty of conjecture regarding why, after seeing the crash in 2008 to the theory that millennials favor city life, ranging from their jaded approach toward the home market.

They’ren’t market that is rich enough in now’s, or old enough to be making important, long term purchases just like a property.

Add in the fact they settling down after than preceding generations and are beginning families. The average age a lady gives birth to her first kid increased to 26.3 in 2014 or almost two years old than it was in 1994. That’s one important instance of that says when having a home makes sense millennials have to get to the stage in life.

While they need to be saving, student loans are being repaid by more than 70% of recent college grads. The typical 2016 school grad owes student loan debt, making in $37,172 it hard to save up for the gold standard 20% down

The nice news is that we now have approaches to save lots of cash for a deposit.

Living using a roommate is one strategy to conserve cash. Dividing the price of home supplies and rent, utilities with two, three or four individuals saves a huge number of dollars annually. The roommates you’ve got, the less it costs to live.

In addition, you could get an additional job and give the pay check only to the payment account that is down. In case you are one of the millennials surviving in a large city, benefit from public transportation, walk or ride a bike to work. Give up your auto and save thousands on gasoline, insurance and car payments.

Then place right into a bank account and do it touchs! Although you have sufficient cash for a deposit, begin buying a residence, but don’t forget that you simply also must ensure your own monthly mortgage payment is less than 30% of your own monthly income.

Possessing Still Less Expensive Than Renting
The truth is it is more economical to own a home than it’s to lease house or an apartment.

A study found that it’s 23 percent more affordable for millennials to possess, rather than lease national.

Interest paid on your second and first mortgage is tax deductible, meaning more cash in your own pocket.

Obviously should you be on the move, cities that are shifting every other year, it might seem sensible to lease. That’s consistently been an issue for young folks. The info suggests millennials are deciding to delay investing in a house until later in life when things are somewhat more secure and recognize this.

Lesson 0

It’s important to start off with a baseline before venturing into an entire lesson plan. This is the beginning of many lessons to help set the average Joe out on the right foot for financial freedom. The idea is to reach retirement and not be worries about how to pay the bills.

Understanding Money

Money is exactly what we agree it is as a society. That $20 bill in your pocket – who says it is worth money? Who says it can buy goods and services? Everyone. The government sets it, and we’ve all agreed on it as a society. It gets a bit more complex than this when you look at the central bank’s definition. There are different types of “Money” and what people have in cash, what banks have, what’s out there in investments, etc. It’s complex. But it provides value. In fact it does three important things:

Medium of Exchange: You can trade money for stuff!

Unit of Account: You can use it to determine value – $10 for something is twice as valuable as something else you can get for $5.00

Store of value: It is still worth something later if you save it, it holds its value (inflation burns this a little bit).

If you find this stuff interesting, you can watch this Macro-Economic video:

Understanding Debt

Debt is simply borrowed money. So you can do more now and leverage your earning potential to pay it back later. You want more now for less later, that is the trade off.

Understanding Investments

Your investing (and evening your saving) is someone else’s spending. Instead of borrowing it, the other person is giving you a certain percentage of their project, company, etc.