March 23, 2021

3 money lessons from ‘Broke Millennial’ I wish I’d learned sooner

I was a bit naive about money when I started “Broke Millennial,” but reading it…

  • I was a bit naive about money when I started “Broke Millennial,” but reading it has been a big help.
  • Author Erin Lowry has smart advice for paying down debt faster and saving more money.
  • Her rationale for negotiating a higher salary shaped the way I approach every job.
  • Read more stories from Personal Finance Insider.

Erin Lowry is on a mission to help you get your financial life together. What started as a blog titled “Broke Millennial” has now turned into three books, online courses, and multiple presentations about personal finance as it relates to young adults. 

Lowry rose to prominence for her candid, practical, and simple advice, promising to take her audience from “flat-broke to financial badass.” As a young adult myself, I’d been aware of Lowry’s books for a while, and recently sat down to read the first book in her “Broke Millennial” series.

While the book came out in 2017, I was looking for something that could cover the broad financial landscape for young professionals, and I was confident Lowry’s advice would still be relevant. I felt eager to learn but admittedly naive about a lot of personal finance topics.

I liked that “Broke Millennial” promised to do more than just cover credit cards, debt, investing, and budgeting. Inside, I would learn about my relationship with and mindset about money, how to handle student loans and navigate awkward money conversations with friends, and how to be transparent financially with a partner should the relationship be headed towards a lifelong commitment.   

“Broke Millennial” certainly lived up to these promises. The book was enlightening and easy to understand, and I loved the way Lowry used personal anecdotes to speak to broader financial questions. However, there were certain sections that stood out more than others, often leaving me mid-chapter thinking, “I wish I’d known that sooner.” 

With that in mind, I figured why not share them with others. Depending on your level of personal finance expertise, they may seem rudimentary. But, if you’re like me and embarking on a new journey of financial understanding, keep these three unexpected, but extremely important, lessons in mind as you go. 

Paying your debt biweekly can help you become debt-free faster

Before reading “Broke Millennial,” I didn’t believe there was between making debt payments once every month or once every other week. What difference does it make if I owe $400 a month and pay that all at once or $200 on the first and third week? I naively assumed both scenarios produced the same outcome. But “Broke Millennial” changed my thinking.

Think about it like this: Paying $400 once a month means you’ll make 12 payments a year totaling $4,800. However, if you’re paying biweekly, you’ll end up making 26 payments of $200 resulting in paying back $5,200 in the same amount of time. When paying down debt, the faster the better. Nobody wants to end up paying more than they need to in interest, and biweekly payments ensure a quicker process. 

As Lowry points out, many people are paid biweekly anyway, so it shouldn’t feel like an additional stretch if you’re used to a certain amount of your paycheck going towards debt. Of course, not everyone earns money in the same way, but the strategy is worth considering if you’re trying to become debt-free as quickly as possible. 

Saving money is just as important as paying down debt

Another concept that seemed simple once I read it but hadn’t clicked before: Saving money should be a priority even when you’re in debt. While it’s important to pay back debt quickly, particularly if your loan includes a high interest rate, it doesn’t mean anything if one unexpected expense puts you deeper in the red than you were before. 

Imagine making a final payment on your student loans only to come home and find a tree branch has fallen on your roof. Or your dog needs medication. Or someone scraped your car and drove away. If you don’t have any savings, you’ll be right back in the place you thought you just left. Lowry reminded me why it’s so important that a portion of your paycheck immediately go towards savings before any other expense, even when you have debt to pay off. 

Negotiate your salary, especially your first one, for long-term gains

As Lowry reports in “Broke Millennial,” a study by George Mason University and Temple University found that those who don’t negotiate their first salary end up losing more than $600,000 over the course of their career. I couldn’t believe it when I read it either. 

The study revealed that people who negotiate their salaries, on average, can increase their income by about $5,000. Since raises over time have a compounding effect, starting higher means you’ll ultimately earn more in the long run. While not every career trajectory is going to look the exact same, knowing the risks of not negotiating made it seem silly to not at least try. 

Overall, Lowry uses it as a lesson to illustrate that asking for what you deserve — whether a starting salary, raise, freelance gig price, or any other monetary transaction — is just as important as being smart with your money when you get it.