One of the top personal finance influencers wants young adults to stop making these financial mistakes

Your Rich BFF founder Vivian Tu has quickly become one of the most prominent personal finance influencers, with millions of followers across Instagram, TikTok, and other social media platforms. A former Wall Street trader, the 30-year-old shifted gears after noticing that even many of her colleagues in the banking world needed help with even basic financial tasks.

Through Your Rich BFF, she now offers financial advice to millennials and Gen Z where they like to get information: on social media, while also publishing a book, “Rich AF,” hosting a podcast, and appearing on television. In an interview with CBS MoneyWatch, she dispels common money myths and describes some financial mistakes young adults often make. This interview has been edited for length and clarity.

CBS MoneyWatch: How did you get into this business and what made you think it could become a career in its own right?

Viviane You: I’ve been surprised that people older than me or further along in their careers don’t know the answers to questions like, “Can you help me rebalance my 401k, choose a health insurance plan, and to understand if my company’s stock options are worth anything. “I’ve been asked the same questions over and over again, so I created content to answer them so people would stop asking me!

It turned out that many more people than my colleagues needed information. We don’t get that in school, and it’s the one thing we all desperately need. We would all be much better off if this was part of our education.

So where can people learn to be smart about money?

The same way you hold a pencil or learn to drive, your parents and guardians teach you. Some people from generational wealth or whose parents are money-minded receive this education.

However, the vast majority of us do not come from this type of background. Our parents are imperfect, and so are their money. So we face the same money problems as our parents. Then you turn to the Internet to try to find the information yourself.

What’s the problem with finding information online?

Many myths circulate, especially on social networks. A big myth is that investing is very exciting. It’s not. It’s watching grass grow or watching paint dry. If you feel like you’re on a roller coaster, your heart rate is increasing, you’re excited, nervous, you’re probably wrong.

Investing is a great way for anyone to have a dual-income household. You work hard to make money, and your money can work hard for you. You can only work so many hours before your body and brain burn out, but your money can work 24/7 without a lunch break. Early in your career, the hope is that you put money aside and that it will help you when you don’t want to work as much or can’t.

RIGHT. And at a recent Wall Street Journal event, you noted that the algorithms that power social media can amplify erroneous and even financially reckless content, like “get rich quick” schemes. How to make simple investing principles appealing to the TikTok generation?

As far as getting people to actually care, I think it shows what that money actually looks like when it’s used. Instead of saying that if you save now, you can retire as a multimillionaire at 65, say, “At 65, you can wake up every morning, have a lemonade, go golfing, live in Naples, in Florida – you can live every day without having to make more money. » This is more convincing than simple statistics.

Meeting people where they are, explaining to them why financial things are important to them, makes things happen. For example, when I explained how having a good credit score helped me earn travel rewards that I used to fly to Italy in a flat seat, everyone wanted to know how to improve your credit score. Showing that responsible decision-making pays off is when people will actually pay attention.

What other money myths do you think need to be debunked?

Number 1 believes that you need to become completely debt free. Yes, eliminate high-interest debt as much as possible, but when you have low-interest debt, you don’t need to rush to pay it off. You can start investing while paying off your debts. Not all debt is bad.

Number 2 is: don’t buy things you don’t need with money you don’t need to impress people you don’t even like. When making a purchase, ask yourself, “Do I want to have this or do I want people to know I have this?”

Third, investing is not just for the rich. This is how rich people get rich. The best outcomes for average investors are to buy and hold exchange-traded funds and mutual funds that track broader indexes. It’s about having a very diversified portfolio, adapted to your age and your risk tolerance.

This is not what people want to hear: they want to become rich tomorrow. If your time horizon is 24 hours, very few investments will ever earn what you need.

One of the hallmarks of personal finance advice is that the choices we make as individuals determine our financial future. But this view fails to take into account the systemic forces that shape our financial lives, like income inequality and recurring economic crises. More recently, for example, we are seeing how the advent of artificial intelligence can suddenly transform certain jobs. What do you think ?

We must understand that our generation cannot save its way to wealth – we cannot have the “happily ever after,” the white picket fence house that our parents had through savings. Back then, you could work a middle-class job, earn a middle-class salary, buy a house, and go on vacation twice a year. It’s more difficult now. But you have to be able to do the best you can with the hand you’re dealt. Control what you can control and if something happens, know how to pivot.

For example, if you just graduated with a degree in programming and are worried about AI taking over those jobs, dive into learning how to use AI and see how you can maintain job security. There will always have to be someone to make the AI ​​smarter, to design the system and to be the driving force behind it. It’s not like it exists. We must learn to use it to our advantage rather than being competitive. It should be a collaboration. Why not leverage it to take on the 25% of work you hate so you can free yourself up to do other things?