How To Talk To Twenty-Somethings About Money

September 22, 2015

I recently was having a conversation with my niece and nephew about their future again. Have you ever tried to have a meaningful conversation with a 20 and 22 year old about finances? After about 5 minutes into the conversation, I could still see their physical bodies but I knew their minds were on another planet. So after what was a 5 minute conversation to me but probably felt like a 3 hour lecture to them, I stopped. Then I asked what it is that I was saying that rendered them brain dead.

Their responses surprised me. They said it is hard for them to think of a future when they have only been an adult for such a short period. They both saw money management as no fun. They could not see a balance between enjoying life today and still preparing for the future. However, when I described preparing for the future as living life on your own terms—doing the things that matter to you rather than doing things for a paycheck to take care of your family—they were all ears. So we mapped out a strategy around their top three worst money habits, striking a balance between saving and them having “fun”:

Entertainment. This could be eating out, the movies, etc. I told them that I do not want them to be hermits but to think of ways to cut the cost of entertainment. Going to a matinee and not eating at the movie theater cut the costs in half.

Then I heard, “but my friends want to go to the movies at night.” I challenged them to search on websites like Groupon and LivingSocial for discounts and much to their surprise (not mine), they found discounts on movie tickets and restaurants. They set up both sites to send them emails of restaurant discounts and they planned social activities around the restaurants with the discounts. We determined that the savings from this was about $25 a month.

Clothes. This was a tough one. Between the latest Nike sneakers and Michael Kors bags, I knew I had an uphill battle. I introduced them to the world of online outlet store and consignment shops, which once they gave them a shot, are now their #1 place to shop. Savings were about $25.

Phones. I was blown away at how much they spent on cell phones and cell phone services. I suggested they look into Tier 2 carriers (Metro PCS, Boost, Cricket, etc) that run off of Tier 1 networks (AT&T, Sprint, Tmobile, etc). This cut the cost of their cell phone bills from $100 a month to $50.

Since they both were working, we decided to use half of their newfound savings to open a Roth IRA. Since they were unfamiliar with investing, we started with a target date fund. They agreed to take free online classes in investing from websites like Morningstar and Investopedia to learn more about investments.

Why not the entire savings? Because I knew I needed to start small. Since I could not cure them entirely of their new cell phone addictions, we agreed to save $50 a month so they can outright purchase their cell phone. I hope to teach them the habit of saving instead of getting into debt through this experience. The most important lesson I learned as a parent or aunt is to really work with your kids based on what they consider important and finding a middle ground as a starting point to teach them good financial habits.