Hi, my name is Bob Brooks and welcome to the prudent money challenge. So appreciate you taking the time to view this teaching video, I want to suggest to you that the millennial generation is a extremely important generation to our society. Now, the millennial generation of births between this is generally accepted time periods between 1980 to 2000. And I think Generation Z, which is 2009. It's going to be important, as well as for one simple reason. It's about breaking the dangerous cycle.

We have a cycle of financial illiteracy in this country, and it's a big problem. People don't understand how money works. I talk about this a lot on the teaching videos that we spend all this time getting an education in school, some go to college, and there's no education, no education at all on money and how money works. So you go out to the workplace, you start your professional career, you start getting paid more money than you've ever made, and you don't know what to do. With it, you make mistakes, you make poor decisions, you form poor habits. And what's interesting about this millennial generation, and I've studied this in studied a lot of surveys that have come out is that first of all, I think they're very misunderstood.

If you look in the media, the media portrays the millennial generation as a generation of entitled people as lazy. And I gotta tell you, it's far from the truth. The truth is that and in my and in my research would suggest that the millennial generation might be the most financially responsible generation that is there. They're definitely more responsible than my generation. And one of the reasons they are is because of their characteristics. Surveys would show that they put a value and a priority on financial education.

And this is why I think this this generation is so very important, because it's going to take a generation of people to us to be invested into financial education and start to break that cycle. So they have kids and they start teaching their Kids, you know, I remember growing up, and my parents taught me a lot of great values like Christian values, and and was very significant in my life, not so much about money. And so we've got to be able to break that cycle and start to start talking to future generations and bringing up a financial literate type of population. Because it is a big problem. You know, I was talking to this, I was talking to someone the other day, and I was we were talking about that. The mullet I was telling you this statistic that the millennial generation saves more money than any other generation.

They're the best savers. And he said to me, and this is once again, I think I miss the fact they're misunderstood, is uh, yeah, they're all living with their parents. And they're there, they have that money to save. And I gotta tell you, when I was 20, something if I was living with my parents, and I had an extra thousand dollars a month I'd spend it. I mean, it takes discipline to save money. And so once again, I think they have the opportunity to break this dangerous cycle.

Now let's talk about some advice that I would get this is advice I would have loved to have had when I was 20 something because when I was 20 something I was extremely financially irresponsible, I spent everything that I would make, I didn't mind you know, taking out credit card debt because of the fact that when I was in college, you know, back back in the days when I was in college, you would get credit card applications and just tons of them in the mail, fill them out, you get these credit cards, they just give them to you charge them up. And it's it's a bad bad habits. Now fortunately, a lot of that is changing with the with new laws and that type of thing as far as how credit card companies can go after college students, but you start to develop those bad habits and took those bad habits into my professional life.

And you know, the thing about it is, as you get into your professional life, you make more and more money, the habits just become worse and worse. And we're going to talk about some of these things. These are some of the things that I wish I would have known. First use credit card, not debit or cash. You might, you might say right off the bat kind of lost me here, Bob, why would you encourage people to use a credit card, and it's simply this i'm not saying carry a balance. I'm just saying use the credit card as your chief mode of payment versus a debit card, or versus cash.

And there's a couple of big reasons why First of all, credit card is going to help you with your credit score. a debit card, even though it says visa even though it says MasterCard on it does nothing for your credit score. With a credit card, you can charge it up during the month, pay it off, charge it up, pay it off, it's positive credit activity. And that's great for your credit score, you're missing out on that. If you just use a debit card. Second thing comes down to the seriousness of identity theft.

Identity theft is rampant. And you got to think of it this way. It's we'll talk about this here in just a second. If you if someone were to get ahold of your debit card, you've given them direct access to your bank account. So think of it this way. Would you rather give a thief direct access to your Back account or to a credit limit?

Would you rather give a thief direct access to an account would they take money out if you don't report it in time you lose it or a credit limit where you can always report it anytime and get reimbursed. So to me there's a there's a level of risk that you take by using a debit card and giving a you know, identity theft, access to your bank account. So use a credit card not debit or cash number two, and this is what I was referring to have an identity theft strategy, not if but when, you know, the statistics year after year get worse and worse. These these identity thieves get smarter and smarter ways of hacking and getting in breaking into databases. And I would suggest with the the sheer numbers of the millions upon millions of people that are affected, and I did a whole teaching video on this and some of the ways that you can protect yourself.

It's not a question of if it's gonna happen to you. It's a question of when it's good happened to you. That's why we have to take this very seriously. Now there, you know, the problem with identity theft is the identity theft business. You got a lot of companies out there, they're acting as if they can protect, protect you and they and all aspects of identity theft. In fact, some of them have gotten in trouble with the, with the regulators for actually saying what their marketing is.

I don't personally I don't buy into a company that says, hey, I can separate one Joe Smith from the other Joe Smith. And I can tell you what, if you're getting hacked into into the system in a year, you're getting your information stolen, I don't really buy into that. But I do buy into credit monitoring, because credit monitoring is the first line of defense against credit against identity theft. And I think that everybody should own a credit. Have your your credit reports monitored. If someone is trying to open an account in your name, you're going to know right away, and you can because they're going to they're going to say hey, someone's checking your credit.

If it's not you, you need to do something about it. It allows you to be proactive to put together an identity Steff strategy, you know, and that includes being very careful with the information that you leave around. I can't tell you the number of times that I've talked to people. And I'll ask for social security number because we're filling out some paperwork. And they'll pull out a sheet, they'll pull their wallet out, and they'll pull a piece of paper out and they'll have other family members and all their social security numbers. Don't do that.

That's just that's just asking for problems. Leaving a purse leaving a computer in your car in plain sight, you're just asking for it to be stolen. So beat to have identity theft Top of Mind and make sure you have a strategy. Number three, learn how to determine if someone has your best interest. This is a very key point because in your lifetime, you're going to be in front of a salesperson. Now, this is not anything against salespeople.

Salespeople are important part of our society. There's two different types of salespeople though, and this is one thing that you got to learn up front so that you know how to identify because you want to identify with the salesperson who's active. as a consultant, the salesperson who has your best interest in mind, not his or her best interest, then there's any other type of salesperson that just wants to make the sale. And they'll do anything to do that. And there's a lot of them out there. There's a lot of people that have your best interest at heart, learn to look for that.

And understand because the thing that you'll if, if you don't understand that, and you're working with somebody that's just trying to sell something to you, it could end up being a real big mistake that you don't discover until three or four years down the road when you've wasted a bunch of time. So make sure that you can identify, hey, this person has my best interest, and the person who has your best interest, they're going to educate you. They are not going to pressure you in any possible way. And they're not going to be in a rush. And to me, if you look for the people who've got your best interests at heart, it's easy to find them. Number four, give out a foundational level of trust when dealing with people.

Beyond that it needs to be earned. I've always been in the financial services business. I've always been amazed. And how quickly people will get out trust. Now, I'm very humbled by that. And at the same time, you know, you need to make sure that the person has earned it.

Now, in dealing with a financial advisor, you're in a situation where you're going to have to give out a fundamental level of trust that just goes with it. So you try to assess the situation, learn as much as you can. And then you give out that trust, just don't give out all the trust until that person has earned the right to have that trust. It's very important because once again, this is one of those situations where you can make a huge mistake, and you don't find out until a lot of time has passed. Number five, when something is too good to be true, it typically is, I gotta tell you, this is this is an old saying, but I call it the too good to be true filter. And if you sell and this is where you know, someone's marketing something that they're going to do this for you.

They're going to do that for you to get to take care of all this. Have a health give it a healthy dose of skepticism. That what else is behind that. And if you hear something that's too good to be true, then take a step back and say, wait a minute, I want to get a little bit more information and and get a good understanding as to how this really works some of these claims that you're making, I always pointed this one example, that I had a client call me one time and this is when CD rates were paying about 4% they said, Hey, Bob, I got an opportunity to get a CD for 6% sounds like a great deal, right? So how could this bank be giving out 6% CDs when the going rates 4% After all, they don't wanna lose money. And so I said, you know, there's there's a 2% difference which is big, between what the going rate is and what you're being offered.

So there's, there's an element of risk that's here, that you're not saying, Well, unfortunately, he didn't listen to me because it was just too easy. It was too good of a deal. He felt like turned out he invested in a Ponzi scheme he lost $300,000 was stolen from him. too good to be true. It's a great filter to have. Number six live within your means this is so extremely important.

And I know just from firsthand experience, that when I got out and I talked about a second ago when I got out of school, that I had no idea what live within your means. That actually meant I spent everything, and it catches up with you. And the thing is, the more that you make, the more that you spend, it's a habit. And it's one of those destructive habits that you can form. living within your means, simply stands for looking at that you're going to cover retirement, that you're going to cover the the, the the bills that come in, month in month out. It's you're not going to overspend that you're going to have a little bit of money at the end of the month.

So if you start to figure that out with what you're making, then you start to realize that you know what, I can only spend this amount of money on a place to live. You know what I can't buy the Porsche but maybe I can buy the the less expensive car because I can really only For at this point my life to spend this amount of money and I've got I want to make sure that I'm saving and living within your means I think it's one of the most important habits that you can develop excuse me when you start out because if you don't figure it out then if you don't develop it that habit then then you carry those bad habits with you. And if you look at the statistics, people are under saved people are not ready for retirement. When people are living paycheck to paycheck they're not living within their means very important habit.

Number seven, track your money and spending from day one and learn to anticipate I know I just said living within your means a very important habit. If that's an important habit, this is the most important habit. This is the one thing that most people don't do. And I see this day in and day out when I talk to people and what not trial I did a an entire teaching video on this a couple actually, about try about developing a spending plan and really following it. They have no idea what they're spending, they have no idea what they're where their money's going I mean, if you sat down and really audited, where your money was going, you might find you're not real happy about it. It's so very important to develop this habit from day one because as you get older, it's so much more difficult to change your spending habits in start tracking.

I see it all the time. And it's the main advice that I give to people as they get closer to retirement because that's when it's critical to understand what you're spending and where the money is going. Number eight emergency fund short term versus long term, I've always thought I know this is gonna This is counter to what pop culture finances, I've always felt like people who start out in the workforce that that investing in a 401k plan is not the right idea. And the reason being is that they start putting socking money away for for for the long term, and they neglect the short term they have no emergency fund and if you don't have an emergency fund your emergency fund because Use your credit card. And then that's how you start to accumulate debt. So to me, it's very important to focus on that emergency account.

It's not exciting. It's not going to be investments. It's just pure saving, and you accomplish a couple things. Number one, you're preparing for the short term because it will happen, things do happen, you need to have funds put back for but it also strengthens that monthly saving, in that you're allocating money month in month out and you're getting used to that habit. Having that emergency fund is so very important. You could have a couple hundred thousand dollars packed away in a long term account.

If the water heater goes out in your house. You can't touch that money, so it makes no sense. Get the emergency fund make sure you have cash pullback. Number nine saving is not investing this. This is the one thing that probably drives me the craziest about pop culture finance. They write article after article stating we know if you just say 15% you'll be ready for retirement.

As if it's that easy. It goes way more in depth into the future long term success not taught About this one to the teaching videos, it talks about, yeah, you got to you got to save. But you also have to invest. You also have to manage your risk. You also have to track to make sure you're you're on point that you're on track to hit your goals. And you got to set those overall goals.

If you got to know why you're saving, it's so extremely important. It's not about just saving 15%. But if but article after article, that's what you read, goes way more in depth in that. Number 10. The importance of financial education. Obviously, we talked about this earlier that the millennial generation already puts a, a priority on financial education.

If you look at the statistics and you look at the surveys, they think it's important they want to I just got a an email this morning from a couple that's they're in their 20s. And she said to me, she said I want to come in we want to do a financial plan. We want to learn how to prepare for the future. We want to set goals and I'm seeing more and more young couples who are in that millennial generation want to do that. But it's so very important to say, to put to put in time back and invest into financial education watching these videos. And that's really why we're doing all this so that people can get a better understanding about money, you get a better understanding about money, you change your habits, you change your habits, you make better decisions, you make better decisions, you have a better outcome.

Number 11 never carry a credit balance. You know, debt is a funny thing. It starts out very innocent, you get that $10,000 credit card, you you, you buy something, you spend a couple of grand if you feel okay about it, say I'll pay that off later, I can make the minimum payment, it's no big deal. You get used to it, and then a little bit more, then you take out another credit card because you're up to 10 grand on that credit card. And then your comfort zone for debt. This is dangerous starts to expand because you're making the minimum payments and you're putting off down the road, which should be taken care of today.

And it gets worse. worse and worse in a spirals out of control that one day you wake up and you're over your head. And I've seen this happen many, many times. And it starts at a young age. For me it started when I was in high school. Like I said, My parents never really I was pretty industrious as a as a as a young teenager.

And I had two jobs in high school. And you know, earning money was not not at not a big deal for me, because I just valued work. And I and I held on those two jobs if I really wanted the new CD player. Now back when I was a teenager CD, the CD technology just came out. This CD player was $1,000 at the time, just came out. But not only did I want the CD player I wanted the stereo system was a Yamaha system had these big speakers, big floor speakers.

Never forget this. I was a senior in college, and I told my dad I said, Hey Dad, I really want the stereo system. I'm going to go buy it. And is it okay? If I, if I take it out installment payments, and they gave me the they gave me the loan, not my dad, but the company gave me a loan, I was paying some outrageous interest rate. And I thought to myself, this is no big deal, I can make the payment.

But what happens is that you get used to it. And then once again, your comfort zone for debt expense expands, then you accumulate a bunch of debt, just make make a deal with yourself, you're just not going to go there. If you don't have the cash. You just don't you just don't buy it. Or Yeah, there's also good debt, bad debt. bad debt is the debt that you accumulate that you don't have a game plan to pay it off.

Maybe it makes sense to take it out on an installment note and you know, that you can pay it off, you know, it's not going to, it's going to take away your freedom. You know, you can pay the date that you'll pay it off. That's good debt. But still, then again, just be careful if you don't have to use credit don't do so. Bye advice I would give to the millennial generation. You know, though that was just 11 I don't know why I came out with 11.

I was telling somebody earlier, I wish it would have been 10 of them sound a little bit better. But this is this is general advice. I think it's important for you to know, the millennial generation has the opportunity, I think, to really change the cycle and stop financial literacy by understanding and learning how money works. Because remember, you get the education, you form the habits, you make better decisions, you get better outcomes, and I believe we can start new generations with these good habits and get a better financial outcome.