Your parents love you and they want the best for you. This means at some point they have given you financial advice. I’ve been doing a podcast for IU Money Smarts with my former intern Alex for the last few months, and this week we covered all the times your parents are wrong about money. So much of our financial lives are shaped by what we learned about money from our parents. At no other time is this more apparent than when you are in college or you’ve just graduated. So here is my advice, respectfully disagree with them when they tell you any of the following.
Renting is a waste of money. I’ve talked about this one before, but it keeps popping up again, especially with an older generation. Renting is common for young adults, but there will come a point when many parents will put the pressure on you to “settle down” and buy a place. Don’t give into this pressure. Renting is not throwing away your money. Renting offers the flexibility necessary for a young adult, and it can also keep you in a good financial situation. In order to buy a house you need to save 10% for a downpayment and be able to fit a mortgage, insurance, and taxes into 25% of your take-home pay. Can you do both of those things? If not, then don’t give into the pressure.
Student loans are a part of life, just pay the minimum. Chances are if you have student loans your parents encouraged you to get them. Having student loans isn’t necessarily the worst thing to do (although there are alternatives), it’s the belief that they are a part of life and you’ll be paying them forever. Don’t give into this complacent attitude. Get angry. If you had $20,000 on a credit card you would be really upset about it. You would make extreme plans to pay it off as fast as possible. Treat your student loans like they are a credit card payment. Work hard, pay it off early, and live the rest of your life free from debt.
To hear more from me and Alex about your parents and money, listen to the IU Money Smarts podcast below.
Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.