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Hey, guys. It's Chelsea from The Financial Diet.

And today's episode is brought to you by Squarespace. And today we're going to be talking about something that I think is really important to talk about, especially when you're at the beginning of a money journey. When it comes to money, there are a lot of really detailed things that we tend not to learn about until we're either older or we're confronted with a specific event.

And we also tend to make a lot of assumptions about money that once we get into creating our financial lives we really realized aren't true. I think a lot of people believe that in order to be good with money, you have to be some kind of an expert. But that's really not the case.

You just need to know the difference between what is true and what is false. In running TFD, we've learned a lot of truths about money that we didn't know when we started. And there's so many to cover, but these are the nine most important that we wish we'd known about sooner.

Number one, you don't have to put 20% down to buy a home. I think a lot of us operate on the assumption that in order to ever be a homeowner, we'll have to have 20% of that home's cost basically in cash sitting around. But that's totally untrue.

There are several programs out there that assist people to get mortgages. A common when you might have heard of is called FHA loans. And those really allowed people to buy homes without the 20% down.

In fact, they can start as low as 3.5% of the overall cost of the house. This is especially helpful for first-time homebuyers, and it allows you to have more flexibility at the time in your life that you buy and the kind of home that you buy. Now, keep in mind, the lower amount of cash you put down on a house, the higher amount you'll have to pay in things like PMI or private mortgage insurance.

But those costs will also depend on things like your credit score. You can be a good candidate to buy a house even if you don't have a ton of free cash available. You just need to know about some of the options.

We'll link in the description below to more information on a few of the types of mortgages you can get for less than 20% down. Number two, your credit score isn't just about paying bills on time. Fun fact, your bill payment history only really accounts for about 35% of your overall credit score.

Other factors, like how much of your available credit you use, how many hard checks, you've had how long you've had a credit history are all really important to deciding what your score will be. Now, of course if you don't pay bills on time, you're basically sabotaging your ability to have a good credit score. But you can't think that just because you pay a bill on time, you automatically have a great one.

We'll link you guys in the description to more information on how to build and maintain a great credit score. Number three, transportation is one of the biggest unseen costs in your day-to-day budget. Americans spend on average between 9% and 25% of their monthly budget on transportation, which is particularly insane when you consider that the average American could probably cut that cost in half.

It's one of those budget sections that we don't really prepare for, and people don't often talk about. But everything from your insurance to your gas to the cost of car itself to car apps like Uber or Lyft or taxis, all add up to a huge day-to-day cost. And challenging yourself to really reduce those costs through things like biking, walking, public transportation, or ride sharing is a great way to find extra room in almost any budget.

Number four, you can use credit cards without buying things you can't afford. A lot of us tend to fear credit cards, or even avoid using them, because we really associate them with spending outside of your means. And granted, a lot of people are irresponsible about how they use credit cards, and can rack up serious debt with them.

But there are many ways to use credit cards that don't involve overspending at all. Not only are credit cards a very good way to build up your credit score, they're also great for protecting yourself against things like theft. For example, if every purchase you make is directly linked to your bank account, you're way, way more vulnerable to having that money drained.

And trust me when I say that it's way easier to get a credit card to take off a fraudulent charge than it is to get a bank to reimburse a checking account that's been drained. Once I had my debit card skimmed, had almost $5,000 taken from my account, and didn't get it back for a month. But aside from their basic benefits, credit cards also allow you to use things like points, rewards, or cash back to get serious benefits from the money you're already spending.

If you're brand new at it and don't trust yourself with a credit card, automate some bill payments on it, and leave the card at home so you cannot tempt yourself. And once you get better at using them, simply make yourself the rule that you cannot buy anything on a credit card that you cannot fully pay off by the end of the month. Mastering your credit card use is one of those really easy ways to get a ton of benefit from your day-to-day spending.

Number five, a 9-to-5 job is not an automatic ticket to financial freedom. A lot of students seem to look at the eventual 9-to-5 professional gig like the answer to all of their problems. But if you don't know how to manage money, it just becomes another problem.

An annual salary, where you have money deposited into your account every two weeks, is a really easy way to feel overly comfortable with bad spending habits. The first thing anyone should do when they get that 9-to-5 job and the salary that comes with it is to make sure their savings and their investment and their retirement are all automated as soon as the check hits their account. You should basically never see the money you're saving, or it's going to become a source of temptation.

A 9-to-5 job can be very beneficial, but you have to know how to manage that financial comfort. Number six, you do not need be wealthy to invest money. Another fun fact.

Only 9% of millennials see themselves as investors, which is ridiculous when you consider that A, things like retirement accounts are also investing, and B, you can literally invest with a few dollars. Aside from just your basic for 401k at work, there are plenty of low cost of entry mutual funds that allow people to invest on a serious budget. Investing is not just something old rich guys do.

It's something that's available to everyone, as long as they know the basics of how to get started. We'll link you guys to a few great options for investing on a budget. Number seven, you can invest without ever buying an individual stock.

There are two things you should know about investing. One, you don't have to buy individual stocks. And two, it's actually not a very great idea to buy them.

Things like mutual funds and ETFs-- which stands for Exchange-Traded Funds-- basically bundle a bunch of stocks together and allow you to invest in a more slow and safe way. Essentially, these basket of investments follow the market, which over time almost always outperforms individual stocks. It's extremely risky to invest in individual stocks.

And aside from just not being necessary to being an investor, it's also something that should really be viewed more like gambling. You're taking a chance. And in fact, people have even done experiments where they have taken a group of investment experts and pitted them against a group of kittens, and both groups pick stocks.

And guess whose stocks performed better? The kittens. If you are interested in individual stocks, one good time to consider them is when you're interested in supporting an individual company or industry.

But overall, you can and probably should be an investor without touching individual stocks. We'll link to the kitten experiment below. Number eight, interest rates will kill you.

When you're just starting out financially, you're really not trained to look at interest rates super hard. But trust me when I say that they will be one of the biggest deciding factors in your financial life. A good versus bad interest rate on everything from a credit card to a student loan to a mortgage to a car to whatever it is you're getting can literally often be the difference of tens of thousands of dollars over time.

Even something like a cell phone can hit you with a super damaging interest rate. Now, if you're just starting out building credit or having to rehabilitate your credit, you may not have a ton of options in terms of low interest rates. But no matter what, you should always be looking at that number and saying, how much is this going to cost me over the course of repayment?

And can I negotiate it down? And if you're ever in a situation where you can avoid paying interest, such as by paying off a credit card in full each month, avoid interest. We'll link to some more information on interest rates and how to make the most of them below.

Number nine, the repayment plans you start with aren't the ones you're stuck with forever. Nearly everything that you buy with a loan has an option to be refinanced or consolidated somewhere down the line. And it may not be for you.

But it's always worth checking in to see that the repayment schedule you're on is the best one for your goals and for your budget. Perhaps you could be paying off your loan faster and saving some of that interest in the long run. Or perhaps you could be paying it off over a different longer schedule without increasing your interest.

There are tons of options available based on your credit score, your payment history, and your current budget. Always do a checkup at least once a year on your various loans to make sure that you're paying them in the smartest way possible. As we've mentioned before on the channel,.

Lauren's husband has refinanced his student loans twice since graduation, and both refinancings have been awesome for his longer term financial goals. Long story short, your financial beginning is not your financial destiny. You just have to know how to be smart with what you have.

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