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Managing Your Money, Part 2: Managing Money As a Young Adult

During part 2 of the “Managing Your Money” podcast series, we met with Ryan Law, AFC®, CFP®, to discuss tips and tools for managing your finances while in school, budgeting, opening a checking and saving account, compound interest, and more.

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Ryan Law
Teacher, Personal Financial Planning Program, Utah Valley University; and Director, Utah Valley University Money Management Resource Center

Brian Stone
Policy Analyst, Students and Young Consumers, CFPB

[Beginning of recorded session.]

Brian Stone: Welcome to our second episode of the Financial Intuition Podcast where you can find your inner financial intuition one money topic at a time. The goal of the podcast is to educate, inform, and engage our audience with tools and resources created to help them make more informed financial decisions. These tools and resources can be found on our website at You can also click the link in the show notes for more information. This is the second episode of a three-episode Money Management series which focuses on financing your future and how to pay for higher education, managing money as a young adult, and understanding and protecting your credit.

Before we get started, I'll read our standard Consumer Financial Protection Bureau disclaimer. This podcast is being produced by the Consumer Financial Protection Bureau. It is intended to generate discussion about managing money as a young adult. The questions asked and topics discussed were developed in coordination with the presenters and may not reflect the Bureau's policy on any particular matter. Any opinions or views stated by the presenter are the presenter's own and may not represent the Bureau's views. Nothing said in this podcast by a Bureau representative constitutes legal interpretation, guidance, or advice from the Bureau.

Hello, everyone. I'm Brian Stone, a policy analyst in the section for Students and Young Consumers. Our section creates tools and resources for those working to help students, young adults, and their families manage their money, build credit, save or pay for college, and repay student debt.

Today we have with us Ryan Law. Ryan teaches in the Personal Financial Planning program at Utah Valley University. He is also the director of the Utah Valley University Money Management Resource Center, where volunteer peer financial coaches educate students, faculty, and staff for one-on-one counseling sessions and presentations on campus. Originally from Salt Lake City, Utah, Ryan received his Undergraduate Degree from Utah State University in Family and Consumer Sciences with an emphasis in family finance. He received his Master's Degree in Personal Financial Planning from Texas Tech University. Ryan is an Accredited Financial Counselor, AFC, and a certified financial player, CFP. Ryan and his wife, Traci, have five children and live in Spanish Fork, Utah.

We're excited to gain insight from Ryan on managing money as a young adult. So without further ado, let's jump right in. Welcome, Ryan.

Ryan Law: Thanks, Brian. It's great to be here.

Brian Stone: Yep. Glad to have you. I guess to get started, can you tell our audience a little bit about you and your work?

Ryan Law: Sure, I'd be happy to. So as you mentioned, I teach in the Personal Financial Planning program at Utah Valley University, where I also manage our Money Management Resource Center. I oversee the students who do the financial counseling in that center. So I have a unique view into the world of finances for young adults. We see hundreds of students every year who come in for help with their budgets or other financial issues, and we do a lot of research and insights into what it is that young people are struggling with financially.

Brian Stone: Great, great. So it seems like you have a depth of experience in understanding the issues that young people face when it comes to money. So what's one area of personal finance you see young adults struggle with?

Ryan Law: You know, there's actually three main topics that students come in to see us about, and those would be budgeting, credit and debt management, and student loans. I would say that I'd struggle to narrow that down to just one because it seems to be that those three areas are pretty evenly split. So, again, budgeting, credit and debt management, and student loans seem to be some of the biggest areas of struggle that I see students dealing with.

Brian Stone: Okay. And what do you think sort of leads and contributes to those struggles?

Ryan Law: You know, I think in a lot of those areas, it seems like they're really complex and that they're really difficult to figure out how do you set up and stick to a budget. How do you make a plan to pay off this massive amount of student loan debt or credit card debt or purchase a vehicle for the first time or purchase a home? So I think in a lot of cases, there's misconceptions about the complexity of these issues, and I'm not saying that they are simple things that people should just be able to deal with without any further research or help, but in a lot of cases, I think they're just scared of knowing that the balances, for example, on their student loans or trying to just figure out that first time, "What does this big stack of papers mean when I'm trying to purchase a home for the first time?" or how do I even—going to the most basic thing, budgeting, "How do I even begin to determine how much money should go to all these different categories?" So I think it's just a complexity, and if we can help simplify some of those things, I think it will help some of these young adults to move forward in managing their money better.

Brian Stone: Yeah, yeah. I agree. And I know I will say when I first started budgeting and trying to understand the concept, it just seemed, like you said, there were so many different factors, a lot of different expenses sort of going into a budget, and then just trying to, you know, actually match my budget with my pay schedule. That was, like, one big thing that I was doing incorrectly, and so I know a monthly budget is great. And I was, like, creating these wonderful monthly budgets, but I was getting paid biweekly, and so—

Ryan Law: Exactly.

Brian Stone: Yeah. It adds an extra layer of complexity because now I'm getting paid biweekly, and I have to sort of figure out, like, how to allocate my money when a biweekly budget probably would have been a lot better. It took me sometime to learn, and I'm glad I did.

Ryan Law: Sure.

Brian Stone: But I know that's one of those things that sort of comes up. So that's great.

What do you think are some things—what are some steps that young people can actually take to sort of get a grasp on some of these things, like you said, budgeting, credit, and understanding how to manage their debt?

Ryan Law: Sure. So there's no easy fix, I would say, in any of these areas. I mean, they can be simplified. In a lot of cases, I think it's setting some simple financial goals. So it might be paying off that credit card, or it might be saving up money for that down payment on a first home. But I think in a lot of cases, it's just taking action of some kind.

So you mentioned, Brian, that you budgeted on a monthly basis when you got started, and maybe that wasn't the best approach because you were paid biweekly. But at least you did something. You took a step. Even if it wasn't all the way correct, you did something that helped you learn how to start managing your money, and then you fixed it as you moved forward. And there's nothing wrong with that. In a lot of cases, I think we just need to take that first step. We need to try something. We need to work towards understanding our money a little bit better and managing it a little bit better, and I think down the road, we can fix problems that come up, so, again, setting goals, taking some sort of action.

There's lots of great research out there. Consumer Financial Protection Bureau has a lot of good information. There's other organizations and books that you can go to, turn to for some good financial advice, but I think just taking that first step in these areas will help you.

Brian Stone: Yeah. Yeah, I agree. And as you said, the first step could just be sort of seeking more information, so like googling "personal finance," of course, visiting our website. We have a lot of great tools and resources that are geared towards helping individuals better understand their money and understand pretty much any area as it relates to personal finance. There are also a lot of great videos out there, so, yeah, just taking that step to become more informed. And more informed consumers make better decisions.

Ryan Law: Absolutely.

Brian Stone: I agree. I agree. So as far as, like, budgeting apps, we talked about budgeting, very important. I think it's, like, sort of the foundation of a personal finance plan. What budgeting apps and tools are out there, and have you seen any that work particularly good for young adults?

Ryan Law: Yeah. You're right that there are a lot of different tools out there and a lot of information about budgeting, and some of the things that I look for when I'm looking for tools to help with budgeting is, first of all, simplicity. It's got to be something that people can utilize easily, they can access easily, and it's got to be something that works well for you.

So, for example, if you are really good with handling cash and making sure that you're not overspending in various categories, then it might make sense for you to use the old-fashioned envelope method where you pull money out of the bank. You put it in an envelope. One is labeled "Entertainment." One is labeled "Shopping" or "Groceries." One is labeled "Utilities." Whatever the case is, you pull money out, and you utilize those envelops for that. That's the most basic, simple way that you can do a budget.

But what I'm finding, most people like to use a tool of some kind. So there's a lot of great apps out there that will help you to manage your money on your desktop, on your phone, on your tablet.

Brian Stone: Something whether it's starting that first budget out, like, on paper or using an app or even an Excel spreadsheet, but just using something.

Ryan Law: Exactly, yeah.

Brian Stone: Which makes a lot of sense. Well, along those lines, we hear from a lot of our young people that they may not have a bank account, not fully understand which bank accounts they should have. So in your opinion, are there—what do you see as far as, like, banking for young people, and how would you encourage—or what type of accounts would you encourage them to have to start off with?

Ryan Law: Sure. I think that the most basic one would be a savings and a checking account. Go to your local credit union or bank and get set up with at least a checking account and a savings account. Most employers will direct deposit your check right into your account. So by setting up just those two simple accounts, you're taking again those first actions that I mentioned earlier. You're taking a step by setting up something. It may not be the perfect account. It may not earn a lot of interest right now. That's not the point of these accounts. It's so that your money is going into one central location, and then you can automate some things by having some of the money sent to savings. So just getting, again, basic checking, basic savings account set up, I think, is a good start for most people.

Brian Stone: So you mentioned automation. So how can automation help with saving and saving consistently?

Ryan Law: Yeah. That's a great question. So the idea behind automation is it makes—you take a step one time, and it's done forever after that. So the idea is that you have your money direct deposited, or if your employer doesn't offer that, you deposit all of your money into your checking account. And then you can set up with your bank. You can go there and have them set up rules, or you can do it online where as soon as that paycheck hits on the 15th and the 30th, that 10 percent of it just automatically gets transferred over to your savings account.

There's other automation that you can do too like automatic bill pay. You can have all of your bills paid out of that checking account. You can have your rent, your mortgage, everything like that. All can be taken care of out of that checking account. You can also have money automatically sent to a brokerage account. So if you're trying to build up some wealth in other areas, then you can have that money sent there as well. So you can really handle most things by just taking—maybe it's an hour or two the very first month that you're going to spend setting all of these things up so that they're done and they're taken care of, but after that, you don't have to worry about it.

For example, we recently refinanced our mortgage, and one of the first things that I did was take some time to make sure that my payment was set up automatically so that it comes out on the 1st of each month. I don't have to send a check. I don't have to wonder if it's going to be paid. It's just going to be pulled from my checking account automatically. So that's the idea is that you're setting up these steps so that you don't have to worry about it again in the future. I know I'm never going to have a late payment as long as that—as long as they pull that out. So it's easy. I'm avoiding late payments, and I don't have to think about it anymore. It's just already taken care of.

Brian Stone: Right, right. And what it does also, as you mentioned before, it reduces complexity in a complex personal finance situation, so—

Ryan Law: Right.

Brian Stone: I would advise—and I personally do also take advantage of automation with retirement contributions, savings, anywhere I can, bill pay, and I notice that what it allows is me to send money where it's supposed to go. And once I have money in a couple checking accounts—but once I have money in a certain checking account, I know that I can use this money, and I don't have to worry about bills being paid also because they're automatically paid, so—

Ryan Law: Absolutely.

Brian Stone: So next, just as far as savings, different types of saving accounts, we hear often in a personal finance situation, it's important to have a savings account, but the idea of an emergency fund. So what is an emergency fund, and why is it important?

Ryan Law: Yeah. An emergency fund is just having money set aside for emergencies, so exactly what it says. So your car breaks down, or maybe your AC goes out and it's 97 degrees outside. These are things that have to be taken care of, and so there are emergencies that come up that we know—everybody is going to have emergencies. There's nothing that we can do to avoid them entirely, and so the idea is that we set aside some money so that when those things come up, it doesn't break our budget. So that if our car breaks down, we've got some money set aside from our emergency fund that we could then pay for that car repair. Instead of saying, "Well, I'm not going to pay rent this month because I've got to pay for my car," no, that's not a good idea. So you want to make sure that you've got this money set aside.

So you can set that aside in a number of different ways. You can start out with just your regular savings account, but I think it's a good idea to set up another account. It could be an online savings account that pays a little bit higher interest. It could be just another savings account at your bank, just another account where you can, say, label it, "This is my emergency fund, and I will only use it for emergencies."

And one note with that is that if you use the money from that account—let's say that you build up $5,000 in that account, and you use $1,000 to fix your car. Your number one financial goal at that point should be to replace that $1,000. I see this happen all the time where people will build up an emergency fund. They spend it down over time on emergencies, and then suddenly, they're out of their emergency fund. So, again, every other financial goal goes on hold until you have got that $1,000 built back up in that savings account.

Brian Stone: Right. That's important, and then it's also important to remember that emergency funds are for emergencies.

Ryan Law: Yes.

Brian Stone: So a trip with friends to Cancun, it might seem like an emergency, but, you know, it probably wouldn't fall into the emergency category, which is important also to, you know, label your money, label your accounts, and so make sure you've identified what emergencies are. And they're kind of like one of those things, you'll know it when it happens, but a sale at your favorite store might not be an emergency. A trip might not be an emergency, but like you said, car breaking down, medical issue, loss of employment income, emergency, so—

Ryan Law: Exactly, yeah.

Brian Stone: And so when looking for a place to set up this emergency fund or open a bank account, there's a bank and a credit union. So what are some of the differences between the two?

Ryan Law: Yeah. Both are going to be based in your community. Typically, you're going to have both banks and credit unions. The banks, the way that they differ is that banks are owned by stockholders, and the credit union is owned by the members who belong there. So that's the main difference there.

So, typically, with a credit union, they tend to be smaller, and they tend to be just for your local community or for a particular employer, for example. Some are bigger regional ones, and we find those all over as well. But, typically, what happens with a credit union is that the money that they're not paying out to stockholders is going back to their member in terms of savings, and so you might get—you might save extra on your car loan, for example. They might be able to get you a slightly lower rate, and or they might pay a slightly higher amount on your savings account than a bank. But the most important thing when you're looking at those two options, both a bank and a credit union, make sure that they're convenience. Is there an ATM at the place where you work? Can you make deposits that way? Is it easy to utilize their online banking system? So there's really not a lot of differences between the two except how they're owned. So make sure that it's convenient for you.

Brian Stone: Great. And then as far as interest rates, what are some of the features outside of what you mentioned that, you know, young adults should consider when opening their first account? Like, is interest important? And then along those lines, I guess the next question would be about compound interest, and how does that work?

Ryan Law: Yeah, absolutely. So one of the things that I would look for when it comes to your checking and your savings account is make sure you're not paying any fees. There's so many banks out there and so many credit unions that have free checking. They've got free savings accounts. So make sure that you're not paying a fee. I would say that that is the number one feature because even if you're earning interest, but you're paying $4.95 a month to have your checking account in place, you're not going to make any money. So the interest on these accounts that we're talking about, your checking and your savings account, is not really the critical issue.

I have my online—I mentioned emergency funds and having an online savings account. I have one of those for my emergency fund because it does pay a slightly higher interest, and so that is something to look for. But the goal for these accounts is not to earn a lot of interest. When we're looking at retirement and other things, then certainly making more interest is a great goal.

But in looking at compound interest, compound interest is a great way that—a great thing that happens to our money. So let's just do a quick example. If I deposit $100—let's just say an account that's earning 5 percent interest per year. I put that $100 in there. At the end of the year, I'm going to have $105, right? Because I've earned $5 of interest over the course of that year. What happens with compound interest is now that—instead of money on $100, I'm now earning interest on $105. So at the end of the second year, I don't earn $5. I've earned $5.25. So that compounds over time. We're building up interest. We're making money on both the principal that we put in and the interest that we've paid out. So that by the end of 10 years, you've actually got $162 in that account. So that $62 is interest that has been earned on top of other interest, and the longer that money sits in there, the higher that balance grows.

So what are some important money lessons you think young people should apply today?

Ryan Law: So if your goal is to retire early, you do that by budgeting and controlling your expenses. If you want to buy a cabin in the woods or a condo on the beach, you can do all of those things by budgeting and controlling your expenses. So I would say that that's the key is focusing on those things. How do I budget my money, and how do I control my expenses so that I'm really focused on my financial goals and achieving those financial goals?

If you're looking towards a goal that you're working towards—let's just say that it is to buy a cabin in the woods. Maybe that's one of your financial goals. You may—if you're shopping at the store and you're trying to decide if you want to buy this gadget or not, you may say, "Do I want this, or do I want to put this $20 towards my goal?" And so by having something that you're really focused on and then putting that money and seeing it build up in your budget, then you're going to be able to achieve your goals a lot faster. So that's the number one key that I would give is to just really focus on that, on budgeting and controlling those expenses.

Brian Stone: Yeah. Yeah, I agree, and lifestyle creep, which is, you know, inflation as you sort of—as your income increases. Maybe you get a big job after school and then to a career field, and you're being paid more than you were, say, in high school or stages in life. And you begin to spend more, and as your income goes up, you're constantly spending more. And so it's difficult in those circumstances to sort of build wealth at the same time, but just making sure that we were aware of some of those things and aware how—we're not saying, like, don't have nice things because I think a lot of times, especially with personal finance, people get confused, or some of the information comes across as saying, like, you have to budget every dollar. You can't have nice things.

Ryan Law: Right.

Brian Stone: You can't buy a cup of coffee, and it's not that. So you can have nice things, but just planning it out so those nice things don't have you.

Ryan Law: Exactly. Yeah. And I think that's so important to mention that. Part of having money and part of having a job is to be able to go and do fun things. So if there is a concert coming to town that you really want to go to. You've got some friends that you want to get together with for that. Absolutely, utilize your money for some fun things. It's not all about the future, and it's not all about those distant goals. It's enjoying life right now while being focused on those at the same time.

Brian Stone: Today we received some great advice from Ryan on managing money as a young adult. To recap for our listeners, we would like you to walk away with the following takeaways. First, open a checking and savings account. Some features to consider, ATM deposits; branch availability; fees, fees, fees; and online accessibility. Also think about a bank or an institution like a credit union that you want to have a long-term relationship with and you can see yourself working with for a number of years. Understanding the different types of budgets and why it's important to budget, click in the show notes for CFPB's Budget Resources and additional tools that we mentioned today. Understand how saving and building an emergency fund can help protect you from unforeseen circumstances.

Before we go, Ryan, would you like to tell our listeners how they can connect with you?

Ryan Law: Absolutely. I maintain a blog and do some other writing at Again, that's ryanhlaw—r-y-a-n-h-l-a-w, dot-com.

Brian Stone: Excellent. Thank you again for joining us today, Ryan, and sharing your expertise with our audience. We also appreciate our listeners for tuning in.

To stay connected, please visit our Podcast page on, and so you don't miss future episodes, sign up to be notified of new releases.

As always, remember to continue to develop your financial intuition and learn money management lessons you can use now to build a future you want tomorrow. Until next time.

[End of recorded session.]