Hey there! It's Talk About Money Tuesday, my favorite day of the week!🤑
It's been hard to miss the steady stream of headlines in recent years about the rising cost of reaching the traditional milestones of adulthood.
For many young people, buying a home, owning a car, or living independently doesn't even feel like a realistic goal in today's economy.
That presents a challenge and opportunity for parents and mentors. Along with teaching young people how to save, budget, and spend wisely, we can help them understand why adulthood looks different today and equip them with the skills to adapt to a changing landscape.
As parents, we don't have to have every answer.😅 But having open, honest conversations about money can go a long way toward building our kids' financial confidence no matter how the economy changes.
Money Stat
$200,000
Americans who aren't already homeowners face a grim truth: Sixty-two percent of them can't afford to buy a starter home. The average price of one in the U.S. is $200,000, according to LendingTree research.
LendingTree's data links starter home prices to the income needed to afford one. Non-homeowners meed to earn roughly $62,000 to enter the market, but their median salary is $55,000.
Affordability varies widely by location. Rhode Island has the smallest share of people that can afford to buy an entry-level home, at 16.5%, while 54% of starter-home shoppers in Arkansas and Alabama can afford to buy.
Get in the Zone
Money skill: How to calculate the full cost of a major purchase
Why it matters: Young adults will have to decide on whether or not to buy a range of (super) expensive items in their lifetime. Knowing how to look past the sticker price helps them understand what they can actually afford.
Try this: A major purchase is rarely just the price. It's a collection of costs that can affect future choices.
➡️ The next time your family discusses a major purchase, explain to your teen or emerging adults how interest, insurance, maintenance, taxes, and other expenses can change what something really costs over time.
I remember insisting I could buy a car with the money I earned from the part-time jobs I had in high school. Then my mom added up the total cost of car ownership to show me how the monthly payment was just the tip of the iceberg.
I may or may not have told her that, in my mind, regular oil changes seemed like they could be optional… 🤦🏾♀️🤣
➡️ Ask your teen to rank what's most important to them in a future home, car, or college experience. Is it a short commute? Low or no debt after graduation? Reliability? Being near friends?
Then compare a few different options based on those priorities and talk through the tradeoffs. What does each choice offer, and what do they have to give up?
This helps young people understand that the smart financial decisions aren't about choosing the cheapest option. They're about choosing the one that supports their goals and stays within their budget.
Smart Money Quiz
Which factor is most important when deciding whether a major purchase is truly affordable?
A. Whether the monthly payment looks small
B. Whether your friends have something similar
C. Whether the full cost fits your budget and financial goals
D. Whether you can qualify for credit
(The answer is at the end of this newsletter.)
Money Talks
Home prices, mortgage rates, and other costs have outpaced many young workers' earnings. And broader economic factors — like limited housing supply and affordability challenges — also shape what's possible, putting homeownership out of reach for some people no matter how carefully they plan.
That doesn't mean homeownership or financial independence are impossible. But it does mean young people need to understand the financial factors they can influence and the broader economic forces that shape their options.
Here are two ways to get a conversation started with youth about growing up in an economy where traditional timelines may no longer apply.
1️⃣ When your teen says something like, "I'll never be able to afford a house," ask why they feel that way. Use their answer to separate the things they can influence — their savings, their skills, their income, their credit scores, and where they live — from the things they can't control, like national interest rates.
2️⃣ Share with your child how the path to adulthood has changed across generations. The financial realities your teen will face make look different from what you and other adults experienced, so comparing today’s opportunities to those of yesteryear doesn’t always tell the full story.
Factors like housing costs, education expenses, wages, and career paths have all changed the way young adults approach major milestones. Encourage your teen to focus on building strong financial habits, understanding their options, and making decisions that fit their own circumstances and goals.
Loose Change
🏠 When a Gen Z woman's landlord wouldn't renew her lease, she bought a duplex, picked up a tenant, and cut her housing costs.
💪 A survey of 1,000 adults, age 18-27, reveals that Gen Z is focused on making moves to become homeowners, despite financial challenges.
🚗 Young people (and others) who decide they don't need fully-loaded automobiles are driving increased sales of stripped-down vehicles.
Thanks for reading! If you want to read some of my past newsletters, click here. And if this newsletter was forwarded to you, please subscribe here.
'Til next time,
Audrey
Founder &
Certified Financial Education Instructor
The FinLit Zone
ANSWER
C. Whether the full cost fits your budget and financial goals. A purchase can have a manageable monthly payment but still create financial stress if it leaves too little room for savings, emergencies, or other goals.
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