Latest news with #Shahnazari
Yahoo
27-05-2025
- Business
- Yahoo
6 Financial Traps Middle Class People Fall Into in Their 20s
Your 20s are a wild ride. You're figuring out how to adult, maybe landing your first 'real' job, juggling student loans and trying to fit the occasional impulse Amazon buy into your budget. Learn More: Try This: You might feel like you're making progress, especially if you're not living paycheck to paycheck. But even middle-class folks with steady incomes can fall into some sneaky financial traps when they're young that don't show up on their bank statements until years later. Here's a look at the ones to watch out for — before they quietly drain your future wealth. According to Chris Heerlein, CEO of REAP Financial, one prevalent financial trap for 20-somethings is living beyond their means. It's easy to get caught up in a lifestyle of consumerism, especially with the influence of social media, which often shows a curated version of success. Many individuals in their 20s may even rely on credit cards or loans to fund unnecessary purchases, like expensive dining out, luxury clothing or gadgets. Heerlein noted the immediate gratification of buying what you want can quickly spiral into debt that becomes harder to manage as time goes on. 'My advice here is to live within your means by creating a budget, tracking your spending and prioritizing saving over consumption.' Remember: It's important to build a cushion with an emergency fund and focus on paying down high-interest debts, like credit card balances, before spending on non-essentials. For You: 'Too many young adults neglect to save for a rainy day, thinking they will not have any unexpected expenses,' said Kevin Shahnazari, founder and CEO of FinlyWealth. A January U.S. News survey found that 42% of Americans don't have an emergency fund, with nearly as many (40%), saying they couldn't cover a $1,000 emergency expense with cash or savings. Even modest financial shocks can lead to debt accumulation or delayed payments without a cash cushion. Ideally, a three- to six-month cushion of living costs should be saved before investing or purchasing big-ticket items. Shahnazari said being uninformed about credit, which can lead to maxing out credit cards or paying only minimum payments, can result in negative credit scores and interest payments. To use credit wisely, he said one must keep credit balances low, pay them in full when feasible and check credit reports to catch errors or fraud before they become big problems. You can access your credit report for free weekly at or annually through the major credit bureaus — Experian, Equifax and TransUnion. This is a major misstep. Saving for retirement may feel abstract in your 20s, but compounding growth over the long term is incredibly potent, said Shahnazari. Delaying 401(k) or IRA contributions will cost you thousands in the long term. Saving small, consistent contributions can make you a millionaire in the long term. Student loan debt is a fact of life for many, but Shahnazari said sliding into minimum payments without a payoff strategy can lengthen debt terms unnecessarily. Keep in mind that refinancing, income-driven repayment or accelerated payoff plans can be money- and stress-saving. Many 20-somethings lack the financial literacy they need to make smart choices about loans, investing and taxes. Taking the time to learn about finance — through classes, books or planners — empowers you to make smarter money decisions. The solution to evading these traps, Shahnazari explained, is careful money management, planning and continued money education. 'The earlier adults get established in these practices, the better positioned they will be to handle their finances,' he said. More From GOBankingRates These Cars May Seem Expensive, but They Rarely Need Repairs This article originally appeared on 6 Financial Traps Middle Class People Fall Into in Their 20s Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
27-05-2025
- Business
- Yahoo
6 Financial Traps Middle Class People Fall Into in Their 20s
Your 20s are a wild ride. You're figuring out how to adult, maybe landing your first 'real' job, juggling student loans and trying to fit the occasional impulse Amazon buy into your budget. Learn More: Try This: You might feel like you're making progress, especially if you're not living paycheck to paycheck. But even middle-class folks with steady incomes can fall into some sneaky financial traps when they're young that don't show up on their bank statements until years later. Here's a look at the ones to watch out for — before they quietly drain your future wealth. According to Chris Heerlein, CEO of REAP Financial, one prevalent financial trap for 20-somethings is living beyond their means. It's easy to get caught up in a lifestyle of consumerism, especially with the influence of social media, which often shows a curated version of success. Many individuals in their 20s may even rely on credit cards or loans to fund unnecessary purchases, like expensive dining out, luxury clothing or gadgets. Heerlein noted the immediate gratification of buying what you want can quickly spiral into debt that becomes harder to manage as time goes on. 'My advice here is to live within your means by creating a budget, tracking your spending and prioritizing saving over consumption.' Remember: It's important to build a cushion with an emergency fund and focus on paying down high-interest debts, like credit card balances, before spending on non-essentials. For You: 'Too many young adults neglect to save for a rainy day, thinking they will not have any unexpected expenses,' said Kevin Shahnazari, founder and CEO of FinlyWealth. A January U.S. News survey found that 42% of Americans don't have an emergency fund, with nearly as many (40%), saying they couldn't cover a $1,000 emergency expense with cash or savings. Even modest financial shocks can lead to debt accumulation or delayed payments without a cash cushion. Ideally, a three- to six-month cushion of living costs should be saved before investing or purchasing big-ticket items. Shahnazari said being uninformed about credit, which can lead to maxing out credit cards or paying only minimum payments, can result in negative credit scores and interest payments. To use credit wisely, he said one must keep credit balances low, pay them in full when feasible and check credit reports to catch errors or fraud before they become big problems. You can access your credit report for free weekly at or annually through the major credit bureaus — Experian, Equifax and TransUnion. This is a major misstep. Saving for retirement may feel abstract in your 20s, but compounding growth over the long term is incredibly potent, said Shahnazari. Delaying 401(k) or IRA contributions will cost you thousands in the long term. Saving small, consistent contributions can make you a millionaire in the long term. Student loan debt is a fact of life for many, but Shahnazari said sliding into minimum payments without a payoff strategy can lengthen debt terms unnecessarily. Keep in mind that refinancing, income-driven repayment or accelerated payoff plans can be money- and stress-saving. Many 20-somethings lack the financial literacy they need to make smart choices about loans, investing and taxes. Taking the time to learn about finance — through classes, books or planners — empowers you to make smarter money decisions. The solution to evading these traps, Shahnazari explained, is careful money management, planning and continued money education. 'The earlier adults get established in these practices, the better positioned they will be to handle their finances,' he said. More From GOBankingRates These Cars May Seem Expensive, but They Rarely Need Repairs This article originally appeared on 6 Financial Traps Middle Class People Fall Into in Their 20s
Yahoo
18-04-2025
- Business
- Yahoo
Households in the West Have the Most Debt — Experts Explain Why
Credit, like a mortgage, a car loan or a student loan, can often help individuals and families get ahead in America. But debt isn't distributed evenly throughout the country, and when households accumulate too much debt, it can be difficult to keep up with payments. Learn More: Read Next: Households in the West have the most delinquent debt. According to credit data from August 2023 collected by the Urban Institute, numerous western states have debt in collection that exceeds the national rate of 22%. For example, Nevada's delinquent debt rate is 27%, Arizona's rate is 23% and New Mexico's rate is 26%. Several factors contribute to the fact that western states have higher amounts of debt than the rest of the country, and GOBankingRates spoke with experts to unpack this trend. Also find out how much a $100,000 salary looks like after taxes in the West. According to Statista, the average sales price of a new home in the United States was $512,200 in 2024, but home prices can be much higher in the West. According to Kiplinger, in San Jose, California, which has a median household income of $153,202, the average home price is $1,923,230. Similarly, homes in Orange County, California average $1,509,257, while the area's median household income is $110,042. Arizona also had an average home price of $1,160,346, while the median household income is $66,264. 'In my work helping customers manage credit obligations, I've observed that mortgage debt in these regions typically consumes 40% to 50% of household income, compared to 25% to 35% in the Midwest,' explained Kevin Shahnazari, founder and CEO of FinlyWealth. Housing scarcity also impacts the housing costs and the debt patterns. According to Shahnazari, strict zoning laws, environmental regulations and geographic limitations, like mountains and coastlines, contribute to housing shortages, which drive up prices and prompt homeowners to assume larger mortgages. Trending Now: Melanie Musson, a finance expert with explained that the growth the West is experiencing is partially due to an influx of people moving into the area. 'Many of the people who live in cities and towns didn't grow up there,' she explained. 'They're coming into the area with outside money. Instead of people growing up in the area and settling it organically, there's forced growth from outsiders moving in.' Such growth is further contributing to rising housing costs and household debt. Many residents of Western states face these high home prices on limited incomes. Shahnazari explained that high-income tech jobs are present in the Western market, but these opportunities tend to be concentrated in urban centers. 'The broader region includes many rural and service economy areas where wages stagnate despite rising living costs,' he said. 'Nevada, Idaho and parts of Oregon exemplify this pattern: Residents face Western region costs but with income levels closer to national averages.' According to Musson, many businesses in the West face high operating and overhead costs. If they pay employees salaries needed to make a living in the area, the businesses can't stay in operation. 'So, in order to stay in business, companies have to pay employees lower wages so the business can pay for rent and stay solvent,' she said. Households in the West also feature an unusually high cost of living. According to the World Population Review, the 2025 cost of living in California is 144.8, meaning it's 44.8% higher than the national average of 100. Washington's cost of living is 114.2, Oregon's is 112 and Arizona's is 111.5. Since the cost of living encompasses grocery, housing, utility, transportation and health costs, it's easy to see how paying down debt on top of covering everyday costs can be challenging. 'Higher cost of living is the number one reason debt is so high in the West,' explained Musson. 'Lower incomes coupled with higher cost of living make the problem even worse.' More From GOBankingRates 5 Luxury Cars That Will Have Massive Price Drops in Spring 2025 4 Things You Should Do if You Want To Retire Early 4 Affordable Car Brands You Won't Regret Buying in 2025 5 Types of Vehicles Retirees Should Stay Away From Buying This article originally appeared on Households in the West Have the Most Debt — Experts Explain Why
Yahoo
15-04-2025
- Business
- Yahoo
I'm a Financial Expert: 5 Ways You Should Use Your Child Tax Credit
Knowing how to make the most of the Child Tax Credit can sometimes be tricky. Whether you're looking to use the credit for immediate needs or planning for the future, there are several smart ways to put that extra money to good use. GOBankingRates spoke with Kevin Shahnazari, founder and CEO of FinlyWealth, to discuss the best ways to go about it. 'Managing money effectively isn't just about what you earn; it's about how you maximize every dollar. The Child Tax Credit presents a rare opportunity for families to strengthen their financial future if used wisely,' he said. Find Out: Learn More: Here's some of his best advice for managing your Child Tax Credit. One of the smartest ways to use this money, according to Shahnazari, is by building an emergency fund. Many families are one unexpected expense away from financial hardship, and having three to six months' worth of savings set aside can be the difference between stability and crisis. Instead of letting the money disappear into everyday expenses, setting it aside in a high-yield savings account ensures it's there when it's truly needed. Be Aware: Shahnazari noted that credit card debt can drain wealth faster than almost any other financial obligation due to skyrocketing interest rates. Using the Child Tax Credit to eliminate or reduce this debt provides immediate relief and frees up more cash flow for future financial goals. Every dollar used to pay off debt is a guaranteed return on investment because it stops interest from piling up. Investing for long-term growth is an opportunity many parents overlook when it comes to managing their child's financial future. It's easy to focus on short-term needs and immediate expenses, but making strategic investments early can have a lasting impact on your child's financial security. According to Shahnazari, contributing to a 529 college savings plan ensures that money works toward your child's future education rather than burdening them with student loans later. If college savings are already in place, he said parents can also consider a custodial Roth IRA, where even small contributions today can turn into substantial financial security for their child's future. Using the tax credit to boost retirement savings is another move Shahnazari said comes with lasting impact. 'Many parents prioritize their kids' immediate needs but neglect their financial security,' he said. Allocating part of this money to a Roth IRA or a 401(k) ensures you're not only taking care of your family today but also securing their independence in the future. 'A well-funded retirement means children won't have to financially support their parents later in life,' he said. For those looking to increase their earnings potential, using this credit to invest in new skills or side income opportunities can be life-changing. It's tempting to spend the extra money on immediate wants or needs, but Shahnazari emphasized that this is an ideal opportunity to invest in yourself. Whether it's a certification, an online course or seed money for a small business, investing in personal growth can generate financial rewards far greater than the tax credit itself. 'The key is to turn a temporary financial boost into lasting financial strength,' he said. More From GoBankingRates6 Reasons Your Tax Refund Will Be Higher in 2025 7 Tax Loopholes the Rich Use To Pay Less and Build More Wealth 5 Types of Vehicles Retirees Should Stay Away From Buying This article originally appeared on I'm a Financial Expert: 5 Ways You Should Use Your Child Tax Credit Sign in to access your portfolio
Yahoo
11-02-2025
- Business
- Yahoo
5 Pieces of Money Advice Gen Z Can Learn From Warren Buffett
Older generations have long gleaned the wisdom from Warren Buffet's money advice. The billionaire has provided solid financial insights for decades, but what are his most applicable lessons for Gen Z? Check Out: Explore More: 5 Subtly Genius Moves All Wealthy People Make With Their Money According to experts, these time-tested principles remain relevant for young investors. Below are five pieces of money advice Gen Z can learn from Buffett. 'I tell my Gen Z clients that Buffett's first lesson is starting early with compound interest,' said Kevin Shahnazari, founder and CEO of FinlyWealth. He's seen 20-year-olds who invested just $200 monthly grow their portfolios significantly over five years through this simple principle. 'This quote matches Buffett's famous one about getting rich slowly rather than quickly,' Shahnazari added. 'When working with young clients through FinlyWealth, I emphasize that time is their greatest asset.' Trending Now: The second key lesson Shahnazari highlighted from Buffett is living below your means. 'Many of my younger clients are surprised when I show them how Buffett still lives in the same house he bought for $31,500 in 1958 despite being a billionaire,' he said. 'I guide them to resist lifestyle inflation even as their income grows. 'My platform's data shows Gen Z users who maintain modest lifestyles typically achieve their financial goals 40% faster.' Michael Benoit, licensed insurance broker and founder of California Contractor Bond & Insurance Services, highlighted the same. 'Buffett's frugal lifestyle is a great reminder for Gen Z that financial success doesn't require overspending,' Benoit said. 'I think avoiding lifestyle inflation — the urge to spend more as you earn more — is critical. 'For example, keeping living expenses steady while saving or investing the difference can create financial security faster. If someone earning $50,000 saves 15% annually, that's $7,500 saved each year. Over 10 years, assuming a 6% return, that becomes $100,000.' Third, Shahnazari stressed Buffett's emphasis on continuous learning. 'My most successful Gen Z clients spend at least five hours weekly reading financial books and studying markets,' he said. 'They understand Buffett's principle that knowledge compounds just like money.' Benoit agreed, saying: 'Buffett has said that the best investment you can make is in yourself, and I think this is especially true for Gen Z.' He noted that building skills, gaining certifications or networking within your industry can lead to opportunities that grow your income over time. 'For example, spending $500 on a course that qualifies you for a $10,000 raise is a return that far exceeds most traditional investments,' Benoit said. Fourth, Shahnazari teaches Buffett's principle of buying quality businesses you understand. 'I advise Gen Z to invest in companies whose products and services they use daily,' he stated. Shahnazari explained that one of his 22-year-old clients built a strong portfolio starting with brands like Apple and Nike that she knew well. 'This approach has helped my younger clients avoid risky speculation in unfamiliar investments,' he said. 'Fifth, I emphasize Buffett's long-term mindset,' said Shahnazari. When market volatility spooks young investors, he reminds them of Buffett's view that the stock market is a device for transferring money from the impatient to the patient. 'My data shows Gen Z clients who maintain steady investment strategies during market downturns have significantly outperformed those who panic sell,' he revealed. Benoit equally noted that being selective and thinking long-term is one of Buffett's biggest lessons for every generation. 'Buffett's approach to investments — prioritizing quality and long-term value — is a great lesson for Gen Z. He advises treating every dollar like an investment in the future, whether that's through stocks, education, or savings,' he explained. 'For example, rather than spending $2,000 on a trendy gadget that will lose value quickly, investing it in a high-growth mutual fund could double in 10 years.' More From GOBankingRates3 Things You Must Do When Your Savings Reach $50,000 Find Your State: The Best Banks of 2025 For Each State 9 Things You Must Do To Grow Your Wealth in 2025 This article originally appeared on 5 Pieces of Money Advice Gen Z Can Learn From Warren Buffett
