Home Radio Segments Guest Segments How To Live Richly – No Matter What

How To Live Richly – No Matter What

Farnoosh Torabi, Live RIchly

With Farnoosh Torabi, Finance Expert, Journalist, and Author of the book You’re So Money: Live Rich, Even When You’re Not

Steve spoke with Farnoosh Torabi, a journalist and the author of You’re So Money: Live Rich, Even When You’re Not. The pair spoke primarily about differences between generations and the traditional concept of working hard and foregoing pleasures in favor of saving for the future. Farnoosh explained how the old ideas of constant saving, never enjoying your earnings, is slowly being replaced with the idea that we can and should enjoy living our lives (spend what we make on the things we enjoy), while still being sensible.

Talking To Contemporaries

A lot of kids (or the younger part of the population) get advice about money from their parents, the kids of Baby Boomers. But the truth is that they (and millennials) are more likely to listen to the advice of contemporaries—people in the same age bracket.

Let’s be real: in their heart of hearts, they know their parents are giving them sound advice about working hard and saving. Kids know this information comes from experience, that their parents want only the best for them. Still, they tend to be more receptive to hearing the same information from their peers.

A New Approach

So, Farnoosh’s approach when teaching young adults?  Don’t dismiss traditional values and ideas, but consider how you package your message. It’s all about the language you use. It’s about trying to see eye-to-eye with young adults, meeting them at their level, and then expanding on what they already know.

Young adults are struggling, working hard to make ends meet. They have bills. They have student loans, most likely. They may even have credit card debt. But on top of this, they are young and also want to eat out and enjoy doing things with their friends. Social life is a big part of the money equation; learning how to be able to afford it is the challenge.

Messages From The Media

The current generation of young people is being bombarded with a lot of messages regarding saving, spending, and investing. One of the loudest messages, though?  Live beyond your means. Farnoosh’s variation on that message is pretty simple, Live beyond your means but spend within them.” In other words, you should still work towards trying to achieve your goals—buying a home, buying a car, going back to school, starting a business, or starting a family—but figuring out a way to save while still enjoying life might require a little thinking outside the box.

The Issue Of Debt

It used to be the case that you could go to school and take out a modest loan to cover it. After graduating, you’d get a good job in your field and repay the loan without a lot of difficulty. But now? Student loans are massive. Jobs are limited. The values and goals are the same, but the debt is becoming crippling.

Today, debt is a work in progress. People are being more cautious and conscientious when it comes to taking on debt, especially students. They have to be wise; student loans follow you indefinitely and can wreak havoc on your credit score. It’s really important to educate yourself on the nature of debt, the right kinds of debt to take on, and how much debt you can reasonably afford.

A New Way Of Thinking

The up-and-coming generation, Gen Y, is on a different track. The internet has conditioned them for instant gratification. But that doesn’t mean they aren’t willing to work hard. So, it’s about retraining their brains in the way to think about money. One way to do this (and to foster a habit of saving instead of spending) is to get in the habit of “paying yourself first.” Don’t wait until the end of the month to take some of your earnings and put it toward saving and investing because by the end of the month, you’ll have found some way to spend all the money. Instead, take some money for yourself, for your future, either out of your first check every month or out of every check, right off the top, before you spend any of it on anything else. It’s a way of turning around that selfish “me first” thinking so that it serves you in a positive way.

Cutting back on expenses is another crucial part of saving. Have a conversation with yourself by asking, “What’s important to me right now?” Determining what your goals are and what’s important/necessary for your success will help you develop the infrastructure needed to achieve that success. Like I said, kids are willing to work hard but what they often lack is a well-structured sense of direction, of where they want to get to. Establishing goals and priorities is what gives you the power to then examine your spending and say, “Okay, this is necessary, that is frivolous.”

One of the tricks Farnoosh teaches young people to help them enjoy life while still being financially savvy is how to live on a discount. Try to negotiate everything, from your rent to your auto insurance to your cell phone bill and your gym membership. A lot of times, getting a discount is as easy as asking for one.

Capitalize On Your Skills

So cutting back on spending and saving yourself some money is one side of the coin. But what about making more money? The best way to do this is to capitalize on the skills you already have. One obvious way is to ask your current employer for a raise. Present him/her with evidence of what you bring to the table on a daily basis.

But there are likely many other skills you possess that can’t be fully maximized wherever you work. Harness these skills and capitalize on them through doing some freelance work on the side. Start a blog or a YouTube channel; babysit or petsit on the weekends; do freelance writing or graphic design work. Finding ways to supplement your income is crucial to making your life financially manageable. And having some extra, self-employment income may also be a way to lower your tax bill with some extra deductions, which is just another way to put more money in your pocket.

To get more tips on living well while living within your means, visit Farnoosh’s website.

Disclosure: The opinions expressed are those of the interviewee and not necessarily of the radio show. Interviewee is not a representative of the radio show. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances. The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by the radio show.

< class="collapseomatic tsps-button" id="id6691b49c666b5" tabindex="0" title="Read The Entire Transcript Here" >Read The Entire Transcript Here< id='swap-id6691b49c666b5' class='colomat-swap' style='display:none;'>Collapse Transcript

Steve Pomeranz: And now for something completely different. You know, old guys like me, I’m over 65, I think we have a tendency to tell our kids in the younger generations to save, save, save your money for retirement. Give up your current pleasures and defer gratification. And they look at us cross-eyed.

It’s all good on paper but is it actually necessary? If you’ve been listening to the show for a while, you know I don’t really give this advice. I believe in living your life while at the same time being sensible about your money. And so does my next guest: finance expert and author of You’re So Money: Live Rich, Even When You’re Not. I welcome Farnoosh Torabi to the show.

Steve Pomeranz: Welcome, Farnoosh.

Farnoosh Torabi: Thanks for having me. It’s great to be here.

Steve Pomeranz: Your contemporaries, those that you speak with and that you’ve interviewed—and these are people that are also my kids’ age—are they going to listen to people like me when it comes to getting advice about money?

Farnoosh Torabi: Well, I think in the heart of hearts, they know that your advice is solid. They know that their parents only want the best for them and that the older generation is speaking from experience and that it’s valid. But at the end of the day, I think contemporaries want to hear from their contemporaries. They much more value the advice from a peer than an uncle or an aunt or a parent.

And I think that would probably be true when you look back when you were in your 20s and your 30s. You kind of shrugged off what mom and dad said even though you knew it was good advice. It meant more to hear it from a contemporary who was maybe in your own shoes, living through some of the same experiences you were.

And so my approach to educating young adults is not to dismiss the traditional ideas and values that I know work and I see have worked, but it’s all about how you package the message. It’s all about the language that you use. It’s all about trying to get to see eye to eye with young adults and to understand that they’re working hard, but they’re struggling too. They have student loans, they have perhaps credit card debt. They’re not making enough money, and then on top of everything else, they’re young. So they want to go out to eat, they want to hang out with their friends. The social life is a big part of the equation and how to afford that is getting more challenging.

So I think to kind of show some sympathy and to kind of talk to them more one-on-one. I think that goes a long way, and I think that’s what’s more appreciated than what comes from an older parent, which at times just feels like a lecture as opposed to really good advice.

Steve Pomeranz: You mentioned the word messages. What are the current media messages that are being transmitted to your generation with regards to saving and spending? What are the pressures that you guys are under?

Farnoosh Torabi: Well, for me, my message has always been you want to live beyond your means, but spend within them. In other words, try to still achieve the goals that you want to achieve, whether it’s to buy a home, buy a car, go back to school, start a business, start a family. You have to sort of think outside the box.

I think that’s the challenge right now is for young adults working, a lot of the tried and true ways of achieving goals are falling through the cracks. They’re not really working. So it used to be you would just take out a loan for college, and you would finish college and you would pay off that loan easily, and you’d be done with it within 10 years. But now what’s happening is the price of college is escalating, student loan debt is escalating, and then the jobs aren’t really there to support the debt. So what’s happening is that the values and the goals have remained, but the challenge now is how to achieve those very same things that our parents achieved in a way that’s economically feasible.

Steve Pomeranz: Farnoosh, when I was growing up, it was okay to spend on your credit card, to live beyond your means. We’ve seen that kind of come full circle. What is the attitude towards debt these days amongst your contemporaries?

Farnoosh Torabi: Well, it’s a work in progress. I think that a lot of young adults are learning the hard way that you really can’t take on an $80,000 student loan or even, in some cases, I hear hundreds of thousands of dollars, which is just a nightmare situation. But unfortunately, a lot of young adults are learning the hard way that there is a point to which it’s going to be really hard to pay off debt no matter how much you earn and that you really need to take a more measured approach to the kind of debt that you take on and how much debt you take on.

And that’s part of my job is to really educate young adults. I recently spoke with a young woman who graduated from college with about $40,000 in student loans, and before she was even going to figure out how to pay that off, she was looking at law school. I really had to level with her and say, “Why do you want to go to law school? What’s your goal? What’s this going to do for you, and how are you going to pay for this? Because it’s a big undertaking financially, and I don’t want to deter you from pursuing your dreams, but you really need to be practical.”

And so I think when you’re young, you’re very idealistic, it’s very easy to make bad decisions and uneducated decisions that can haunt you for years.

Steve Pomeranz: I think you think that things are just going to kind of take care of themselves and many times, actually many times they do.

My guest is finance expert and author of You’re So Money: Live Rich, Even When You’re Not, Farnoosh Torabi.

Let’s get to some specifics. You talk about the idea of putting yourself first. This kind of sounds selfish, but why is that the right thing to do?

Farnoosh Torabi: Because no one cares more about your money than you. And at the end of the month, I find that a lot of people struggle to save. So why not try to save at the beginning of the month? You should prioritize your savings and put yourself first because between your friends and between all the pressure that you have to spend money in different ways, that money is going to go away before you even know it. And so I say, you know what? This is the me, me, me generation after all. So this is again about packaging the message in a way that they can relate to it.

Steve Pomeranz: Wait. Wait a minute, Farnoosh. I thought I was the me, me generation. You guys are too?

Farnoosh Torabi: I guess it’s a phase, right? We all go through this phase. It’s not really a generational thing.

Steve Pomeranz: Yeah.

Farnoosh Torabi: You know, the Gen Y is characterized very much as like this me, me, me, self-centered generation, which I would argue that it’s not. I think that in every generation, there are some people that ruin the image for everybody else. I think that Gen Y is actually a very hardworking generation. They’ve been raised at a different pace. They expect things to happen instantly because they were raised on the internet.

Steve Pomeranz: Yeah. Oh, how true.

Farnoosh Torabi: They don’t have the patience level of their parents. But that’s not to say that they’re not willing to work hard and pay their dues.

Steve Pomeranz: So you’re talking about paying yourself first.

Farnoosh Torabi: But paying yourself [crosstalk 00:06:35].

Steve Pomeranz: Yeah. What does that do for you? Why is that important?

Farnoosh Torabi: Because if you really want to adapt a savings behavior, you got to address that at the beginning of the month. And think of it as doing yourself a favor. You work so hard, why not save some of that money immediately for you? Again, because this is a very me, me, me generation, let’s use that self-centeredness in a positive way and say, “Here’s your money. Save it first even from yourself because, otherwise, it’s all going to go out the window. Between your friends, socializing, and all this other stuff, all these other expenses that you’re racking up.”

Steve Pomeranz: So are you in favor of creating little buckets like, I guess for women, a shoe bucket or…

Farnoosh Torabi: Sure, yeah. And we talk about this a lot on my show on Yahoo, on Financially Fit, how to budget, how to save, how to save according to your goals. And I think it’s really constructive to compartmentalize your savings. Say, “Okay, this is my savings for retirement. This is my savings for the weekends when I go out.” And with our bank accounts these days you can create various different savings accounts within one account, sort of sub-accounts that you can tap into and manage better that way as opposed to one big pot and it’s a little harder to figure out, “Okay, how much goes to where?”

But yes, certainly I think it helps you stay organized. It’s just another facet of staying organized with your money, which goes a long way in making sure that you’re not compromising your other savings in order to pay for things that you want.

Steve Pomeranz: My guest is Farnoosh Torabi. She’s a finance expert and author of You’re So Money: Live Rich, Even When You’re Not.

I often talk about on this show there’s really only two ways to kind of get this thing fixed, and that’s either you have to raise the bridge or you lower the water. Raise the bridge is get more income, lower the water is reduce your expenses. That’s how you get the ship or the boat under the bridge.

So how do you lower your expenses? How do you compartmentalize your thinking to figure out, I guess, what is necessary and what is unnecessary?

Farnoosh Torabi: Well, you have to first figure out what’s important to you, and that’s a conversation that young adults rarely have with themselves. You know, what are my goals, what do I want to do in five years? Where do I want to be professionally, personally?

So you’re going to have to do that soul-searching as early on as possible because it’s very easy to get swept up and start following the pack and not really realizing what’s actually important to me. And as soon as you can identify those things that are really important to you, whether it’s saying to yourself, “I plan to go back to school, or I plan to buy a home, or I want to get married.” All of those things carry price tags, and so once you can identify those goals, I feel like you can then work backward and then look at your expenses and say, “Okay, this is frivolous. This is necessary,” because now you actually have a compass.

And along the way, there are a lot of ways to even maintain your lifestyle, but at a discount. So make sure you’re calling your creditors and you’re calling everywhere that you have an account, your cell phone company, your gym, your you name it. And just call them and ask them about offering you some wiggle room, your cable company. Saying, “I need a discount. I need to save money.” Because at the end of the day, these companies don’t want to lose you. And if it means giving you a break or some breathing room for six months, whether it’s a 10% discount or $10 off or a freebie, that will help you and that will help them. So you have to kind of negotiate these things.

Steve Pomeranz: What about raising the bridge? You talk about promoting your skills, try to monetize your skills, especially in this day when you know if you have any kind of writing ability, you can create a blog, you can take your skills and get it out on the internet and try to monetize it. What are some of the ideas that people can use there?

Farnoosh Torabi: There’s so many ways to monetize your skills. And when I wrote the book, it was actually at a time where there was a lot on the internet, but now there’s even more. And when I go out there and talk about how to monetize your skills, I’m talking about doing it virtually over the internet. You don’t even have to leave your home, and you don’t have to compromise your work hours to bring in more money, whether it’s through pet sitting or tutoring or doing technical tasks over the internet.

There are websites like elance.com, taskrabbit.com, tutor.com. There’s obviously Craigslist, but there are a number of websites out there to help everyday people who just need to bring in a little extra bacon because this is something again that you might be cutting down all your costs and you might have a job, but you’re still suffering. And that’s because the cost of everything is going up. Inflation is running rampant for commodities like food and gas. So you have to figure out another way to kind of feed the beast. And that will probably, for many people, mean bringing in extra money.

Maybe you can ask for a raise at work, but if that doesn’t work out, how about pet-sitting over the weekends or tutoring a foreign language if you’ve got a foreign language skill over the internet? Or if you’re a great writer, freelance writing. That’s what I did when I was in my 20s. I worked at a news station, but I also freelance wrote and I babysat, and that’s just what you have to do. You’ve got to piece together some income so that you can create the life and the lifestyle that you want.

Steve Pomeranz: We have to wrap this up, but I’m thinking about low-hanging fruit here. We’re approaching tax season, right? We’re coming towards the end of the year, and is there something really easy that I can do to save a couple of bucks here and there?

Farnoosh Torabi: Well, it’s really about staying organized and collecting those receipts that will help you lower your taxable income. If you’re somebody who is maybe having a side gig and you’re bringing in some revenue from a freelance job, a lot of the expenses that you might be incurring to help support that job.

Let’s say you’re a freelance writer and you’re subscribing to magazines and you’re making phone calls to sources, and you’re driving around for the job. In a lot of cases, these associated costs, as long as you keep a good track record and you have the receipts and the paperwork to back it up, can help the lower your taxable income. And I think if there’s one tip I could give to everybody, it’s that. Try to itemize. Sometimes the standard deduction doesn’t do you justice. It’s better to maybe keep track of your itemized expenses and do the total, and maybe you’ll probably save more that way.

Steve Pomeranz: All right. Well, that’s a good message here. My guest is Farnoosh Torabi, finance expert, author of You’re So Money: Live Rich, Even When You’re Not.

I understand you had a show on Lifetime, is that right? Did you just wrap that up?

Farnoosh Torabi: That was a while ago, but it was called Real Simple, Real Life on TLC.

Steve Pomeranz: TLC, right.

Farnoosh Torabi: And then later I was doing a show called Bank of Mom and Dad on Soapnet, and now my show is called Financially Fit, and it airs on the Yahoo network on Yahoo Finance and Yahoo Shine. It’s the number one personal finance show on the web. So, please check it out.

Steve Pomeranz: Great. Congratulations. A real pleasure to speak with you, Farnoosh. I hope to have you back.

Farnoosh Torabi: Likewise.

Steve Pomeranz: Thank you. Bye-bye.