151: We Got an Email From a 21 Year Old Doing Money Better Than Most

A Young Adult Asks For Help

Jessica 0:00

In today's episode, we are tackling a question that we got from a young adult asking about what to do when it comes to saving, investing, and setting themselves up for success. Stay tuned.

SPEAKER_00 0:13

Sugar Daddy Podcast, yo. Learn how to make them pockets grow. Find mental freedoms where we grow. Smart investments, money flow.

Jessica 0:24

Welcome back to the Sugar Daddy Podcast, where we help you build a clear financial plan so you can feel confident and in control of your money. Today's episode I'm really excited about because almost on every episode, we're like, tell us what you did. Tell us your success story. Tell us, you know, that you hit a goal. Da-da-da-da-da. Slide in our DMs, slide in our emails. And this person did that. And they are a young adult, and we wanted to share this episode with you, or we wanted to share this email with you because it really blew us away. Um, so let's just get into it.

Brandon 0:59

Before we even get into it, like, because the thing is, is like, you know, it's we dedicate a lot of time to this uh podcast and we love doing it and we love providing the information to you guys, but we have busy lives also, and sometimes we're always like, you know, is it making a difference? Are people really listening? Are they applying the information? And some days we're like, oh man, like we just we might we want to be done. Yeah. It's a lot of work. We want to rest. We want to rest. We want to be done or whatever. So it's a lot of work. But then when we get emails like this, that's like, this is why

Why Listener Emails Keep Us Going

Brandon 1:30

we do it.

Jessica 1:30

Now we're like, ah, we gotta keep going.

Brandon 1:33

It's helping somebody.

Jessica 1:34

Yes. So we got this amazing email, and the subject was financial advice for young adults. I'm 21 and graduated. Hi, Jessica and Brandon. I love your podcast and listen every week. I'm 21 from North Carolina, go Wolfpack, and graduated college early at 19. Since graduating in 2023, I've had five different jobs, mostly because several were temporary positions, and different life circumstances have gotten in the way of finding something long-term and stable. I'm currently looking for a position where I can settle down and stay for the long term. One thing I've been unsure about during this transition is whether I should start investing on my own. Some of the jobs I've applied for don't offer a 401k, and because I've moved around so much, I haven't felt sure about whether I should wait until I have a more stable job before investing. For some additional context, I live on my own. I have a high-yield savings account that I feel comfortable with, currently covering about 10 months of expenses. I also have around $5,000 in student loan debt, which I pay automatically each month and contribute extra toward when I can. I don't have many added expenses and my car is paid off. I am also part of a unique scholarship where they teach you how to invest over four years, giving you up to 20K to invest, and you have the chance to receive the money you earned and roll that into a Schwab investment account. Not sure if I'll have any profits from it yet, though. Given my situation, would you recommend opening an investment account such as a Roth IRA, even without a 401k through my employer? Or would it make more sense to focus on paying down my student loans and wait I have wait until I have a more stable job? I'd also love to hear your thoughts on the bigger picture of how young adults can get ahead financially and start investing when still trying to find their place in the workplace. I'd really appreciate any advice you have and thank you both for making such an informative and approachable podcast. I mean, this email blew me away. This is a somebody who is 21, graduated at 19, is already consuming financial content, like off to the races.

Brandon 3:42

Yeah. I mean, outside of her not being a Duke fan and she's a Wolfpack fan, everything else I loved.

Jessica 3:46

Everything else was fine. No, but this really, I mean, I when I read this, I was like, oh my gosh, this like blew me away. And just, you know, we responded, and you're going to be meeting with her. I'm hoping to meet with her. But young adults that are I mean, you're you're 20 steps ahead of most actual adults.

Brandon 4:08

Yes, because if I could have been in that position, 21, I would have been asking about investing, I would have been very happy because so many things she's already doing correct. Where it's like, this is, you know, all on your own. You've done so many things correcting. You're so far ahead of where the average 21-year-old is. Yeah. On top of feeling comfortable reaching out to people that you don't know for help.

Jessica 4:32

That is, y'all, that is such a key thing. And it's something that we're trying to teach our kids. You know, we tell them it's okay to ask for help. We make them in public places, go up and ask the server, ask the barista, ask the person, you know, like if you want something, go ask. Nothing is going to be handed to you in this life.

Brandon 4:52

You'd also be surprised that when you're reaching out to professionals that are at a place where you hope to get to one day, you'd be surprised the number of people that are willing to help people. Yes. No strings attached. Yeah. Like you'd be surprised, like, oh, this person's, they're so successful. Like, why would they ever care to like, you know, respond to my email or help? If they're the person if you're the if they're the person who you truly think they are, they will help in some form or fashion.

Jessica 5:21

Yes, absolutely. So we can't wait to connect with her kind of one-on-one. Brandon for the financial aspect and then me for some of the career coaching aspect. But, you know, shout out to this young lady for just being miles ahead and for thinking about her future. And there's no doubt in my mind that she is going places. You know, graduated early, lives on her own, car paid off, got savings, you know, looking at investing, reaching out to people, being vulnerable in the communal community, being vulnerable, asking questions. I mean, that alone is a whole bucket of life skills.

Brandon 5:59

Because a lot of people, they feel shame in not knowing something. Like, oh, I should know this. And they don't know and they don't know it. And so they don't ask the questions or they don't get help. I love that she was vulnerable enough to say, like, hey, this is what I've done. This is what I don't know. This is, you know, I have questions about this. Yeah. Like being able to do that, that's going to get her so far in

Should She Invest Without A 401(k)

Brandon 6:18

life.

Jessica 6:18

So let's break down some of the parts of that email. She's asking about. So she doesn't have a super stable job situation. She doesn't have a 401k through her employer. Should she be investing? Ready, go.

Brandon 6:32

Based off of the information that she's provided me, I believe she's at a place where she can invest. Because she's she Yeah, because the reason what I'm thinking about is that one, she has 10 months worth of expenses saved up, which is amazing.

Jessica 6:45

Amazing.

Brandon 6:45

So she has her emergency fund set up. She said that the only debt that she has is her student loan debt. That's $5,000. So it's a low balance on top of if it's federal loans, because I don't know if it's private or federal, but if they're federal, either way, it's going to be a low interest rate, more than likely. So she has a low interest rate with a low balance. She's paying and she's already paying that automatically.

Jessica 7:05

Automatically.

Brandon 7:05

So she has that covered. Every other spend seems to be covered, then, and she doesn't have the option of contributing to a retirement account, which is actually very common if she's doing um contract work.

SPEAKER_04 7:16

Yeah.

Brandon 7:16

You know, we don't have access to the uh full benefits package of that employer. So I wouldn't say in this scenario, like she probably should open up a Roth IRA. Based upon like the information that I've heard, she should probably open up a Roth IRA and start investing as soon as possible. Because once again, at 21 years old, the dollars that you're putting in have so much more time to uh utilize compound interest that grow there's nothing better than starting investing as young as you can.

Jessica 7:43

Yeah. Okay. Um, what about the paying off the student loan question?

Brandon 7:47

So based upon what she's provided me information-wise without knowing anything additionally, um, I would say more than likely that is not something that I would be hyper-fixated on.

SPEAKER_02 7:56

Okay.

Brandon 7:57

Reason being is that $5,000 is a low balance for student loan in the standards.

SPEAKER_02 8:01

Yes.

Brandon 8:01

And if it's a federal student loan and she's looking at somewhere around, you know, 6% interest rate, that once again, that is a low interest debt.

Jessica 8:08

Yeah.

Brandon 8:09

And the money that she otherwise would be putting towards paying off that student loan debt quicker could be more beneficial investing in the Roth IRA and having that compound interest there.

Jessica 8:20

Right. Right. Um, what else would you say? Like as far like when you meet with her, when you guys set up time, obviously you'll let her guide the conversation, but what else is top of mind for you, for her, for somebody that young? Because just to be clear, when we started this podcast, it was for millennials, elder millennials, right? Where and most of your clients are in the same kind of bucket age-wise as we are, you know, young adults, uh, adults, starting families, buying homes, you know, trying to navigate, being in the sandwich generation. We never started this podcast with the idea of helping 21-year-olds. That was not our demographic. Yeah.

Brandon 9:02

Well, one is for the investing aspect, making sure that she understands, you know, come the basics of investing. So, for example, you know what a Roth IRA is. You know you should be contributing to one, but do you know why? Do you know what you should be investing in? Do you know why? So making sure she understands the basics of, you know, okay, I'm investing money in a Roth IRA. How does how does the tax like I don't I don't know a lot of the information that she knows per se as far as her understanding? So, like, do you understand how a Roth IRA works?

SPEAKER_01 9:27

Yeah.

Brandon 9:28

Do you understand that it's after tax money going in, growing tax deferred? You could pull it out in retirement, if um tax-free. Uh, do you know that you have access to the principal prior to retirement age? Does she understand those things? Does she understand like what an ETF is, what a mutual fund is? Because the idea the biggest thing here is from an investing standpoint, I don't want people just to invest. I want you to understand why you're investing. Because if you don't understand what you're doing, that's when errors happen.

Jessica 9:55

Like I don't need you to be I know you're so big on the education.

Brandon 9:58

You don't need to be Warren Buffett, but you do need to have a basic understanding of how an ETF works. What are you actually investing in?

Jessica 10:04

Yeah. Well, and what stood out to me is the fact that she noted, you know, that she doesn't have access right now to the 401k. But as you're job searching, that is part of your compensation package. So looking for specifically for companies where you know you're going to have a 401k, hopefully you have, you know, four or five, six percent match, which would be amazing. Um, I think those are things that you need to think about as you're looking for your job as well.

Brandon 10:31

So one other thing also hops out to me, um, thinking is like, what is your health insurance situation? Now, granted, she's 21 years old.

Jessica 10:39

She might still be on our parents. She might still be on our parents. Sounds very independent.

Brandon 10:42

So I don't so I would wonder what that is as far as like if you're working contract jobs, are you having access to healthcare? Are you paying for it on your own? What does that look like?

Student Loans Versus Roth IRA Growth

Brandon 10:51

And making sure she understands that because one of the things there is that if she doesn't have adequate health insurance, that could be something we need to look into for you because that could be the thing that really derails your plan. You break an arm, break a leg, where you're gonna be fine eventually, but now you got a $40,000 bill.

Jessica 11:07

Oh, yeah. Well, and I mean I vividly remember like getting the boot early, right? It's like you graduate from college, you turn what 21, and it's like buy parents' insurance, but then my brother had the benefit of getting to stay on until 26. And I'm like, that is a game changer. Oh, yeah. Not having to pay for your own insurance for an additional five years. Like, I mean, I was happy for him, but I was pissed for myself.

Brandon 11:30

Yeah. So like I would look at some of those foundational things to make sure that, like, hey, is there anything that's not covered now that if something were to happen, it could derail all the savings and all the progress that you've already made at such a young age.

Jessica 11:43

Well, and her last question was what I I would love to hear your thoughts on the bigger picture of how young adults can get ahead financially. So anybody, so again, our podcast is for millennials, elder millennials. So anybody who maybe has somebody like a chai, we have friends whose children have graduated college, are going into that young adult phase. What should they be doing, right? If they're working, even if it's a summer job or maybe a paid internship, like what would you say to help them build habits, set themselves up for success?

Brandon 12:12

Honestly, I think it a lot of it starts with, you know, one of the primary pillars of why we started this podcast is to normalize conversations around money.

SPEAKER_01 12:21

Yeah.

Brandon 12:22

So having open conversations with your kids, and it doesn't even have to be that deep. It can be, you know, it doesn't even have to be planned. It can just be in regular conversation. They will start to absorb the information and you'll be able to build upon the growth in their understanding.

Jessica 12:38

But as if we're talking to other 21-year-olds who maybe have not had these conversations, what would you say?

Brandon 12:44

I would say first you got to start with the education aspect. Okay. And that's, you know, there's a variety of places. Art podcasts, various other podcasts, um, there's different courses from different um, you know, people who are within the financial space, different books that you can read. Because it's really all gonna start with that understanding. The foundation because you don't want to just start doing stuff.

Jessica 13:05

Yeah. Yeah.

Brandon 13:06

You got to start with some form of a basic education before you just start randomly doing stuff.

Jessica 13:10

Yes. And I'm just gonna call this out. If you are a younger person, I'm gonna say like under 30, and you are interested, like even behind me on the shelf, I've got multiple finance books from people that we know personally. Like, I am happy to send you the book. Also, don't forget to go to your local library, get that library card. All of these New York sellers, yes. For the audio, audio, the free audiobooks in your library, whatever your library in your state uses for free audiobooks. But I'm serious, like I'm saying this right now. If you are listening to this episode and you are like, hey, I'm interested in a finance book, send me a DM or send us an email and I will mail it to you, no strings attached. Because that is literally like a lot of these books were already gifted to me anyway. So I'm more than happy to pay it forward so that you have a resource and a piece of education from people that we know personally and trust.

Brandon 14:06

I would also say this too. Maybe you have other people in your circle that want to grow in their knowledge base as well. And you guys do it together.

SPEAKER_01 14:15

Yes.

Brandon 14:16

Like, you know, what is the saying? Um, if you want to go fast, go by yourself. If you want to go far, go together, go together. Yeah.

Jessica 14:22

So start a book club, you know. I've even seen at our local library that there's like meetup, like kind of like meetup groups for finance, right? Um, so find out what's going on

Learn The Basics Before You Invest

Jessica 14:34

in your community. But, you know, we have, I mean, go look at our Instagram page and see the people that we follow. There's a lot of great information out there. There's guides, there's resources. We have them on our on our website as well. Um, you know, how to start investing and all of those things. So utilize the re the free resources because you mentioned courses, but I don't want somebody falling into the like, I need a $10,000 course. No, no, no.

Brandon 14:59

I mean, like, you know, some of the ones that are like, you know, a $20 course, maybe like because we know some people that provide courses for a low cost that have a lot of value in them. But the key is you have to do the course. This is doing stuff.

Jessica 15:12

I also saw recently um that community colleges, you know, sometimes offer finance courses. And it's you could, I mean, if you're really interested, right? That could be something. Enroll in a summer semester course and actually go through for a uh a lower cost. Or if you're in college, sign up for a finance class, right? If it's not part of your major, I wish that I would have done that.

SPEAKER_04 15:35

Yeah, same.

Jessica 15:36

You know, it I never took a single finance class, not in high school, not in college. That's like a huge bummer.

Brandon 15:42

You took economics courses, but not like finance.

Jessica 15:44

Yeah, but like personal finance, if you have that in your curriculum, enroll. That would be, I mean, that alone is a game changer.

Brandon 15:51

And I also just say like be okay with not knowing.

Jessica 15:55

Yes.

Brandon 15:56

And why what I mean by that is that you don't have to have everything figured out in life. Like you're never gonna have everything figured out in life. And pretending that you know something that you don't is only so that you don't get embarrassed is only gonna hurt you. Yeah. Like the smartest, like I like to think that we're fairly intelligent people, and we have people in our circle that are, you know, way more intelligent than us, and you know, surrounding ourselves with intelligent people that think differently is one of the things that we love doing. Yeah, but nobody in our circle is shaming someone else for not knowing something.

SPEAKER_01 16:24

No.

Brandon 16:25

Because we all admit, like, hey, oh, I don't know this. Uh, you know this? Oh, give me can you help me with this? Can you provide more information, more understanding for this? So it is okay to not know. Because then you can go and find the information from somebody or a resource that does.

Jessica 16:39

We've actually had several guests on our podcast where they started something, right, within their friend circle. They read a book, they read an article, and then they asked their friends, like, hey, what what employer match do you get? Or do you have an investing account? Or how much savings do you have? Right. Even one simple little question in a non-judgmental way can I mean literally spark a mini movement in your group of friends, right? And if you're doing it together, you're learning together, um, you know, that that is so powerful.

Brandon 17:14

And I feel like, you know, through social media and everything like that, there are like you can find collective groups in different areas that you live for, like a meetup or whatever, yeah, that revolve around that. And you can like the idea is conferences. You want to surround yourself with people that one, you know, maybe be a little bit ahead of you so that you can learn from them, but overall surround yourself with people that are going in a direction of where you want to go.

Jessica 17:37

Yeah, absolutely. And I just think again, asking questions, being curious. Um, you know, if you're if you're with an employer that does offer a 401k, you should have somebody there that you can speak to. Like if your 401k is through Fidelity, you have some sort of a Fidelity advisor that you can call and ask questions to. Now, you might have, you know, having had worked at Fidelity back in the day, you might have opinions about that. But technically there are resources.

Brandon 18:05

They'll probably know more than you do.

Jessica 18:06

And then, yeah, and then you can go back and you can, you know, verify that information, et cetera. But ask questions, be curious. That is the best thing that you can do for your for yourself, for your personal growth, for your career, for your money.

Brandon 18:20

Here's one thing that I wish I would have done when I was younger, and I still can even improve upon it at the age I am now, is finding a mentor. Finding a mentor that can help you, you know, they can help through the experience of the ups and downs they had, and they can probably help you avoid some of the issues that they had.

Jessica 18:42

Yeah, learn from other people's mistakes. Yeah. If you can avoid it, like Jess is really good at that.

Brandon 18:46

Jess is it seems like once we've been together, I always feel like she has someone that she is looking, you know, at as a mentor, or she has, or she's helping be a mentor to somebody else. And I mean, I could think of some of the opportunities that she's had that have come through, you know, having that mentor, that person that is quote unquote a couple steps ahead of her in regards to a career standpoint, but they're in the rooms where she's not, but there's they're bringing up her name in these rooms.

Jessica 19:13

Well, you've got mentors, you've got sponsors, and I think, you know, you can then pay that forward as well. So, and I mean, there's I learned tons of stuff from young people. And so I love being in that position as well. I'm gonna throw a curveball in and I'm also gonna say, because this just came up this morning, I'm not gonna say don't listen to your parents, but take what your parents are saying with a grain of salt, right? Because our parents are boomers, we're millennials, and they are so out of touch right now with the reality that we are living in and the costs that is just rising, rising, rising when our salaries

Job Hunting With Benefits In Mind

Jessica 19:53

are not doing the same. Um, and I mean, I've joked about this and I've said, you know, even my dad has been like, well, just don't buy so much ice coffee. And it's like, I don't do you think that I'm drinking a mountain house worth of ice coffee? Like, what what do you think I'm doing? You know? So um take that with a grain of salt and the way that our parents invested or the things that our parents had access to, like pensions, right? We don't have or they don't exist in the same way. And so our parents largely, if they were reasonably responsible, right? Like they went to work, they kept the job for 30 years, they didn't spend more than they made, and now they have a pension, or they went into the military, like they're fine. You know, they might not be rolling in it, but they're fine.

Brandon 20:38

I would say your dad is the prime example of doing the you know the basic things throughout his career, and more than the basic things because her dad's an educated man, like throughout his career and working, but he did not have a plan. It wasn't like he was sitting down looking at his finances. I'm contributing this amount, it's gonna grow to this amount, I'm gonna have this amount when I get retirement. He didn't do any of that. No. He happened to do the you know, right things to his career and at the end came out fine. Yeah. Whereas that's not gonna be the case for our generation or any or of the younger generations. You have to be very much intentional and focused and have a plan in place and continue the planning.

Jessica 21:15

Yeah. And we want to make sure that, you know, if you are investing, don't invest like your 60-year-old parents.

Brandon 21:21

Please don't.

Jessica 21:22

Right? Like that doesn't make sense. I've seen it. If you're in your 20s, yeah, you've had I've seen it. Yeah. So that again goes back to being informed. You know, even people that you have come to you where it's like, hey, it looks like, you know, you say you have this, you say you have that. But then when you dig in and you peel back the layers and you're like, oh my gosh, why are you so conservative on all this money that you have?

Brandon 21:42

Or I mean, I had a client where I, um, you know, upon looking at her finance situation, and the thing was that she had done this to her employer. So she thought that she was getting the right information. They had her in like fixed annuities that were like getting like four percent.

Jessica 21:57

And she was like what, thirty years old?

Brandon 22:00

And it was, I mean, and she was investing a couple thousand dollars a month into it.

Jessica 22:03

Oh my gosh.

Brandon 22:04

And I was like, this is not where this money should be going.

Jessica 22:07

Yeah. So I mean, but that's you know, that's the hard part and the scary part where people hear stories like that and then they say, I'm just not gonna do anything. Don't do that.

Brandon 22:15

Yeah.

Jessica 22:15

Right? Don't do that. Don't do that.

Brandon 22:17

And the thing is, like, I'm glad that she felt open enough to come to me because we could reverse it.

SPEAKER_01 22:22

Yeah.

Brandon 22:22

So it's like the money back and put it in. I didn't shame her. She likes she thought she was doing the right thing. Yeah. Someone

Health Insurance Can Break A Plan

Brandon 22:27

was giving her improper information on how she should be investing. And we went ahead and fixed it. Like, this is not your fault.

Jessica 22:32

Yeah.

Brandon 22:33

We w and we went ahead and fixed it.

Jessica 22:34

Yeah. So again, ask questions, be curious. The investments or the financial advice that our parents and if you're 20, you know, early 20s, that your parents may have taken or might be implementing probably does not apply to your situation. So take it with a grain of salt. But look at what's going on in your community, where are there meetup groups, where are there finance courses, where are can you take classes? Um, financial literacy, I think, is really becoming much more widely discussed. And there are groups, community banks, et cetera, um, that are trying to help you know, the younger generation. Um, when you get to home buying, there's more programs and things available now for her first for first-time homebuyers. Oh, yeah. Look at, you know, those are the things that we want you to to ask questions about, be aware about.

Brandon 23:27

And that all comes back to the education aspect where like inform yourself. Well, I'm looking to achieve A.

Jessica 23:32

Yeah.

Brandon 23:33

What is the information that I need in order to achieve A? And making sure you're doing your proper research. So for example, like, oh, if I'm looking to buy a home, you know, what are some of maybe some of the programs in my area that can help me financially to purchase that home? Like I have a client who went through a very specific program um a few years back here in North Carolina that helped her purchase her home.

Jessica 23:53

Yeah. Yeah. And I mean, listen, we're here. If there's any topics specifically that you have questions about or that you're interested in, again, send us an email, slide in our DMs.

Brandon 24:05

As you see, we read them all.

Jessica 24:06

We read them, we respond to them, we are grateful for them, and we're here to help. That is why this podcast was started. So if there is a way that we can help and it hasn't already been addressed in our 140 plus episodes over the last four years, like reach out, let us know. We are here to help. But kudos to this young lady for being absolutely ahead of the curve and setting herself up for success. I'm really excited to meet with her. I know that you're really excited to meet with her. And this is why we do the podcast. So reach out, let us answer your questions. Um we just want you to be informed. We want you to know that we are a source of information and education for you. And we're so glad that when we get these emails, we know that we're making a difference. And these conversations that we have get to have together are actually reaching you and impacting you. So thank you for reaching out. Uh, we are excited to meet with you. If you're listening, you know who you are, and um, we're really proud of you already. We will talk to you soon. Don't forget, Benjamin Franklin said, an investment in knowledge pays the best interest. You just got paid. Until next time.

SPEAKER_00 25:18

Sugar Daddy Podcast Yo. Learn how to make them pockets grow. Find news of freedoms where we grow. Smart investments, money flow.

Jessica 25:28

Thanks for listening to today's episode. We are so glad to have you as part of our Sugar Daddy community. If you learned something today, please remember to subscribe, rate, review, and share this episode with your friends, family, and extended network. Don't forget to connect with us on social media at the Sugar Daddy Podcast. You can also email us your questions you want us to answer for our past the sugar segments at thesugardaddypodcast at gmail.com or leave us a voicemail through our Instagram.

SPEAKER_02 25:57

Our content is intended to be used and must be used for informational purposes public. It is very important to do your own analysis before making any investment based upon your own personal circumstances. We should take independent money to advise from a license professional and connection with or infinitely research and verify any information you find in our podcast and which you rely upon, whether for the purpose of making an investment decision or otherwise.