It's Chelsea from The Financial Diet.

And this week's video was brought to you

by Credit Repair.

And this week, I wanted to do something big,

both for the people who might be new to this channel

and for the people who know TFD very well, because we

can always use a refresher.

Many of you are just starting out in your adult lives

and are asking us constantly for big, comprehensive checklists

of what you really need to be doing on a daily, weekly,

or even yearly basis to get good with money.

And while it's impossible to condense everything

that you should be doing down into one video,

we've done our best to try and give

a really comprehensive overview that explains everything

in the rough order that you should be doing it.

Because frankly, when it comes to money,

millennials could use some help.

And if you feel like you're very behind when it comes to money,

you are not alone.

We're dealing with lower and stagnating incomes, higher

debt, lower net worth, lower rates of homeownership,

underemployment.

Compared with previous generations,

millennials are in a tough financial position,

in large part because we came of age during the Great Recession.

And while we can advocate for greater systemic change

so that more people do not have to put themselves

into hundreds of thousands of debt for a basic education,

we can do our best on the day-to-day

to get good with the money situation that we have.

And while it's great to do these 20 steps in your 20s,

keep in mind that nothing is too late.

And you could easily do them in your 30s or beyond.

But if you're just starting out into adulthood

and want to know how to get good with money,

this is a great place to start and fight back

against some of those big picture

factors we have working against us.

So without further ado, here is your 20 point checklist

for getting good with money in your 20s.

Number one, and this is the most important, crucial, first thing

everyone needs to do if you have not touched your money,

is go through all of your bank and card statements

and just analyze every purchase.

Get to understand your money on an intimate level.

You should know what's coming in and what's going out.

This will allow you to get a bird's-eye perspective

of your net worth, which is basically your assets

and your debts.

And the nitty gritty view of your accounts

will allow you to really see the daily flow of your money, which

will give you some context as to how you've gotten

to that current net worth.

Even if you don't decrease your spending,

increase your earnings, or change a thing,

just looking at your money situation in the face

and getting to know it intimately

is a crucial first step.

Use that analysis of your starting budget

to create a current budget.

Now, this does not mean it is where you want to be.

It is understanding where you are.

You should know roughly what percentage

of all of your income is going to what.

Particularly if you've never given yourself a budget before,

coming to the understanding that, yes, you

do have a budget whether or not you realize it,

you just maybe haven't had control over it,

is very important.

And even if you only have $10, you

should know where 2, 3, and 5 of those dollars are going.

Now, number three is to pick out a few key goals for your life.

Now, I want to be clear that everyone

is going to have different goals, and not all of them

are going to be the same cost-wise.

But you should have a rough picture

of the life that you want to live

and a few key components that you know you will need

to save in order to get to.

This could be anything from owning a home,

to quitting your job to go freelance,

to traveling the world, to starting a family.

The point is you want to have a rough sketch

in your mind of the goals you are working toward.

Because the more we understand money

as a means to getting to those goals rather than just

something you accumulate, the more

you will be able to stay on track,

stay motivated, and understand why you're making the choices

that you are.

So once you have those goals and a rough financial understanding

of what your life will need to look like in order

to reach those goals, you must create a goal budget.

This means roughly what do you want to be saving every month,

how much perhaps more will you need

to earn or less will you need to spend it in order to get there,

and where you are in terms of distance

from how you're living today from that ideal budget.

Now, obviously, as you live the course of a lifetime,

your goal budgets are going to change.

And we will talk about that later.

But the point is you should take time to separate yourself

from how you're handling money today to how

you should be handling money.

A common frame that a lot of people

use to making an ideal budget is something

like the 50-30-20 rule.

And this means that about 50% of your money

is going to needs, like bills; 30% is going to wants,

things like dining, traveling, et

cetera; and 20% is going to savings.

This may not be achievable for you today

or you may find that a different system works better for you.

But the point is you need to be basing your target

budget on meeting those goals that you've set for yourself.

Number five is get to know your credit score.

Now, I am someone who used to have decimated credit

and who as of yesterday was approved

for a very fancy credit card all by myself with no cosigner,

which was amazing.

And to some of you, that may seem like, whatever,

I've always had a great score.

But for those of us who had to work to get a credit score,

it's fucking amazing.

But it took a lot of hard work to get there.

And in fact, for a period of my life,

I had to use what is often referred to as rehab credit

card, where basically you prepay a credit card, which you then

pay back on time to show that you can make bill payments.

When it comes to rebuilding my credit, I've done it all.

And everyone's path to good credit

is going to be different.

So it is incredibly important to get to know your credit score--

what it is, why it got there, and how you can get

it to be the best it can be.

And that can be everything from having higher credit limits

but spending less-- so you're widening that credit

utilization ratio--

to making timely bill payments, to keeping

cards open for longer so you have that longer credit

history, to disputing dings on your credit report,

which I have done successfully as recently as this year.

The point is, as much as you should intimately

know the state of your accounts, you

should also know the state of your credit score.

Number six is find a financial buddy

to help you on your journey.

Now, we have done an entire video

about the financial buddy system,

which we will link you to.

But it boils down to this.

All of the hard decisions you are going to have to make,

and the savings journeys you're going to have to go on,

and the things you might have to say no to because they're

really expensive are infinitely easier

to do when you have someone who just gets it, who's also trying

to better themselves financially, who's not going

to judge you for being on a budget,

and to whom you can rant slash potentially even share good

ideas.

Get thee a financial buddy, and all of this list

will be infinitely easier.

Number seven is to start working on your emergency fund.

We have talked about this so many times.

And I will link you to the video on how to specifically save up

your emergency fund.

But the long and short of it is this,

before you work on your retirement

savings, aggressive debt repayment, investments,

et cetera, you need to have about three months of living

expenses set aside, so that if anything

were to happen from an unexpected injury,

to your car breaking down, to losing a job that is not

putting you in financial ruin.

Without an emergency fund, basically anything unexpected

happening could totally derail your financial progress

and potentially leave you on the street.

Obviously, if you're doing things like repaying debt,

you're going to want to not go into default on anything

in order to get your emergency fund together.

But everything else needs to be bare minimum,

including your spending, until you have that emergency

fund socked away.

Otherwise, you are living life on a razor's edge

and essentially playing Russian roulette

with your own financial future.

Number eight is do a one-month financial cleanse.

Now, when you're getting into the swing

of going toward your ideal budget

and learning how you can save more, one of the biggest

helps will be to go on a radical budget for a month,

whether that's a cash-only diet, or trying

to save 50% of your income, or reducing absolutely

every expense that's not essential,

in order to really get a better picture of your life.

So much of what we've come to expect and spend on in life

is a result of what we call lifestyle inflation.

Basically as you get more money, you

have a tendency to spend more money

and feel like you need to.

It becomes more and more normal to take a car,

to order takeout, to pay extra for things,

to not wait for things that go on sale,

basically to live a life that is more luxurious than you

need, even just to be happy.

So doing one month where you're really reducing all of those

"want" expenses as much as possible really

puts into sharp relief what is worth

it to spend that extra money on and what you really don't need.

Number nine is get more comfortable with understanding

your own professional industry and how you can advance in it.

An interesting fact is that despite our reputation for job

hopping, millennial workers are actually

just as likely to stick with their employers

as Gen Xers were.

And while it's not inherently wrong to stay

at the same employer-- although it can depress your earning

potential, because often you have

to move out of your company to get a big salary jump--

it does mean that you might not have

a very good understanding of what's going on

around you in your industry.

And one of the best ways to advocate for yourself

professionally is to have a view of not just your own company

but of the industry at large.

Perhaps you're making substantially less at your job

than you would be at other comparable companies.

And even if you never leave your company,

you may be able to use that for leverage.

Getting comfortable with sites like LinkedIn,

Glassdoor for salaries, or even private forums and groups

for specific industries can give you huge networking potential,

insights into what's fair or common,

and perhaps even next steps.