Money can feel like a pretty daunting topic. There’s just *so much* to know and so many ways that it can affect our lives. It can be easy to look at some older peeps and think they have it *all* figured out, but they were once in our shoes and totally understand the struggle.
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So we recently asked the Gen Z’ers of the BuzzFeed Community to share the money questions they had for millennials and we got millennials to give their honest answers. Here’s what they had to say:
Again, always keep in mind that financial advice is not one-size-fits-all. Always consider your own personal circumstances before taking financial advice.
1. “How do you manage money and all of the expenses? Like, paying rent and stuff. I normally end up spending my allowance in the first week or so. How do you resist all the temptations and keep the money for stuff you actually need?” —idgafatthispoint
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“The best way is to take the money away from yourself before you can spend it. Set up auto-payments for credit cards the same day you get paid, even if it’s different from the payment due date. Set up a primary and secondary deposit to deposit part of your paycheck into an account you can’t access easily (like a savings account).
When you do want to buy fun stuff, think about it in terms of how many hours you would have to work to make back this amount, then ask yourself if it’s still worth it. And when it comes to food, splurge every so often. I avoid costs that are basically a rip-off and a money suck, like always ordering a fancy cocktail that usually costs way more than a glass of wine or dessert; the costs really add up. Instead of always buying breakfast or lunch, I’ll stock up on protein bars and canned soup. One can of soup and a PB&J sandwich costs about 1/12 of what I would spend on ordering lunch. It all adds up!”
2. “Honestly, what TF is the difference between credit cards and debit cards?” —ren
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“A debit card is spending money that you already have and comes straight out of your bank account. A credit card isn’t directly spending your money; instead, it is a bill that you will need to pay a portion of to the credit card company at the end of the month (I highly recommend paying it off in full to avoid having to pay interest).”
3. “How the hell does credit work?” —stupidho3
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“Basically, you borrow $1 from your friend and your friend gives it to you right away for free. But then next week, he wants $1.25 back. The 25 cents is an extra charge you’re paying for the convenience of having received the dollar right away. Except, your friend is the bank and interest on credit adds up. That’s why for every credit card or loan you take on, be sure to read the terms and understand how much interest you agree to pay. If you pay off what you borrowed on time (student loan payments, credit card bills, utility payments, phone bill, car payment, etc.), you get a healthy credit score and future lenders might offer you lower interest rates, which means you pay less for borrowing money in the future. If you don’t make payments or pay late, you get a lower credit score and it’s harder for you to get loan and credit approval in the future.”
4. “What’s a credit score?” —Kita_ Shinsuke
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“[Your credit score] is a way for lenders to judge how good you are with money. You gain points for [healthy] things like paying bills on time and you lose points for [unhealthy] things like missing payments or defaulting. There are lots of things that contribute to it but those are just examples. It’s also harder to build up your credit than it is to damage it. A missing payment will wipe off more points than an on-time payment will add. Don’t stress about it if it’s low now, but you can make small steps to at least stop it from getting worse. If it’s bad now, you have plenty of time to rebuild it rather than finding out later and having to start from scratch.”
We know, we know; there’s a lot to learn about credit scores. That’s why we combed through some common credit score myths with an expert and separated the truth from the lies.
5. “How do paychecks work?” —Kita_ Shinsuke
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“Paychecks depend on the company you work for. Most salaried jobs pay monthly and most hourly jobs pay every two weeks. When you get hired, they will ask how you’d like to get paid. You can have it deposited directly into your account or you can get a physical check to take to your bank. The check will be the total amount you get paid minus taxes, Social Security, and Medicare. If your job has a retirement option, you can also have a certain amount taken out beforehand to be put in your retirement account. Take-home pay is usually like 70% of your gross pay.”
6. “What the fuck is a mortgage? Nobody told us in school…” —Anonymous
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“A superexpensive loan for a house or condo that you have to pay off over a period of 10, 15, 20, or 30 years. You need to have a down payment up front that’s anywhere from 5% to 25% to buy the house. Then, you need to get approved for a loan, which gives you a mortgage that you have to pay monthly. There is an interest charge (costing anywhere from 2% to 6%) that you pay in addition to the money you borrowed. Your responsibility with money (i.e., have you paid your bills on time? What’s your credit score?) and the state of the economy/general interest rates set will determine what interest rate you are given.
You can make [larger] payments to pay down the principal faster, which is better, as it will save you a lot of money over time.
You’ll want to calculate the cost of rent vs. the cost of a mortgage plus taxes and insurance. If it’s going to cost you about the same either way and you’re planning on staying in the area for a while, I say it’s better to buy than rent. But if you aren’t ready to guarantee that you can make those payments and be responsible for a mortgage, don’t do it yet.“
FYI, readers shared some home-buying mistakes they wish they had known and you’re gonna wanna take a look for yourself.
7. “How expensive will university be?” —buzzfeedbuzzfeed123
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“Very expensive. But some choices can help with that, like applying for in-state schools rather than fancy-name universities out of state. You can also try applying for state and federal grants and scholarships. Many, many grants and scholarships go unused each year because people don’t even apply for them.”
Obviously, college can be superexpensive and tuition is only half of that equation. You’ve still gotta pay for textbooks, transportation, meals, and more. So here are some money-saving tips you can totally use if you’re a college student.
8. “How did you get the money for college? And how does anyone get the money without killing their body with cheap foods and selling other things?” —buzzfeedbuzzfeed123
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“When I was preparing for school, I applied for 30 grants or scholarships — usually, guidance counselors or websites keep lists. I got seven, and $1,500 here and $7,500 there really makes a difference. Another good option to offset costs is to explore earning general ed credits from community colleges for the first year or two. They can count toward your degree (just do your research on both the community college and the destination university to make sure the credits will be accepted, and get it in writing). Community college courses will cost a lot less than university and they’ll allow you the time to work and study because you can do it part-time if you choose and save money by staying at home while doing it.”
9. “How do taxes work? Is it easier/cheaper to do them yourself or to get someone to do them for you? And if so, is it better to do them at a chain like H&R Block or at a private business?” —cryybabyy
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“Ugh, taxes are the worst. If it’s just you and it’s pretty straightforward (one or two jobs, or work in one or two states) then I’d take the effort to learn about the process and do it yourself with online software because it’s definitely cheaper. I’ve used TurboTax for about 10 years. It’s mostly guided and will walk you through the process, and it has links you can click on for more info about key terms and how certain things should be used. Make sure you keep your paperwork handy (bank statements, W-2s, etc.) and set aside a good two to three hours of computer time to do it. When in doubt about something, google or YouTube it to understand a concept better.”
“I use TurboTax and it’s pretty painless if you work a salaried job. Basically, unless you’re self-employed or selling like $20k+ a year on eBay or something, you’ll get forms with everything you need to enter into TurboTax from everywhere that gives you money: your job, banks (since you get interest, or capital gains if it’s an investment account), etc. These days, you can also log into most of your accounts directly and it’ll magically import everything. And they also have tax advisers you can video-chat with if you get confused about something (this service costs a bit extra but it’s nowhere near what a traditional accountant costs).”
10. “How do you manage money with possible spouses and partners?” —idgafatthispoint
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“Don’t merge all your money. Use half of your salary to budget for rent, bills, etc. That way, if you have a huge difference in salaries, then someone isn’t paying more than they can afford. It also means that outside of the essentials, you can spend your money how you want and not feel like you’re spending your joint money.”
“Honestly, finances need to be a part of your big conversations as you get more serious with someone on the level of wanting kids, etc. I’m still seeing the negative financial repercussions of my first husband’s poor money management. There are lots of different ways to do things — some partners like to keep things separate, some don’t — but regardless, make SURE you are open and honest about everything, especially debt and financial priorities. And seek someone who you feel is on your team in this and not someone you have to support or save.
11. Lastly, “do most of you have your life together with money? I mean, the oldest millennials are almost 40. Do you guys know what you’re doing?” —idgafatthispoint
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“It varies. For me, I’m 36 and I’d say I’m starting to get it together. I’d also say we’re about 10 to 15 years behind where our parents were so while our parents bought houses in their early twenties, we’re mostly in our thirties when we do it, depending on where we live. There are always exceptions, though.”
“My husband and I are 37. We’re doing pretty well together despite my crippling student loan debt (about $150,000 now). We both have retirement accounts — 401(k)s and IRAs — that are on track for retirement. We have two young kids and we put money into 529s for them (college savings accounts). We have plenty of savings. We are on our second house; we bought and lived in the first one for a few years, then sold it for more than we paid for it and moved to a new state. We would like more in savings but the house needs updates. We live in the Upper Midwest, where cost of living isn’t super high.”
“I’m in my mid-30’s. I felt there was pressure to buy a house, have a nice car, etc. in my twenties, and I felt bad that I didn’t have a job that meant I could afford them. My mum was 20 when she and my dad bought their first house (three bedrooms) and a few older family members made comments about how I should get on the housing ladder ASAP. But I don’t think that’s typical anymore. The house that my parents bought as first-time buyers is now totally out of reach for younger people (it would cost about 15 times their annual wage). Flash forward a decade and a few of the people who had nicer houses in their twenties have been forced to sell and move somewhere cheaper/back with their parents. I guess what I’m trying to say is there is no one age where people have it all figured out; don’t compare yourself to others as they might be in a totally different situation.“
Submissions have been edited for length and/or clarity.
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And if this sounds like music to your ears (and bank account), check out more of our personal finance posts.