The financial planning landscape for millennials is fundamentally different than for any other generation that has come before. Between unprecedented student loan debt and income levels that have lagged behind those of previous generations, building wealth as a millennial can seem like a daunting, confusing, and often impossible feat.

As a millennial and financial planner, Rachel Podnos O’Leary understands the unique obstacles and opportunities that face her generation. In her new book, 21st Century Wealth, she shows you how to achieve financial independence no matter your starting point. With tips on how you can build wealth through cash flow planning, debt reduction, investing, and strategic tax planning, you’ll learn how to leverage time and money as your most precious resources, whether you’re working on paying down student loans or wondering how to invest your 401(k), this simple guide has the answers you need.

Drew Appelbaum: Hey Listeners, my name is Drew Appelbaum and I’m excited to be here today with Rachel Podnos O’Leary, author of 21st Century Wealth: The Millennial’s Guide to Achieving Financial Independence. Rachel, thank you for joining, welcome to The Author Hour Podcast.

Rachel Podnos O’Leary: Thanks, I’m really happy to be here.

Drew Appelbaum: Let’s kick this off. Can you give us a rundown of your professional background?

Rachel Podnos O’Leary : Sure. I attended college and law school in Florida where I grew up. After law school, I didn’t really know what I wanted to do with myself and I moved to DC kind of on a whim–I had some family there, my sister was there, I have cousins there. I worked there for a couple of summers, and since I moved there kind of without a plan and without a job, I ended up working at a wealth management financial planning firm in the area. That’s how I got into this.

I worked there for a few years and I worked with some women that were really inspiring to me and very encouraging of me and so I became a certified financial planner.

At that point, I actually left that firm to join my father who is also a certified financial planner and has his own firm, and I’ve been working with him and actually now, my siblings as well, in the family firm for the last seven or so years.

Drew Appelbaum: Now, why was now the time to share the stories in the book? Was there an “aha moment,” was there something really inspiring, have you been seeing a lot of millennials making really bad financial decisions lately?

Rachel Podnos O’Leary: This book didn’t really arise from one “aha moment” necessarily. I decided to write this because over and over, I encountered situations where a young person came to my firm for financial planning. Someone just like me or one of my peers or friends, someone early in their career who really needed financial advice, and we weren’t able to work with them or take them on as clients and that’s very common in the wealth management industry. It’s very hard to work with young people in a profitable way for the business.

Because often, these people are high on debts and low on assets and that’s true even of high earners. That was really frustrating for me as a peer to a lot of these people. I decided to write this book with hopes that it would be of service to them and help to people that find it hard to work with financial planners and wealth managers due to just not having assets early in life, which is most people.

Drew Appelbaum: Now, when you said, “Okay, I have to put this down, I want to write this book,” a lot of authors have the idea of the book rattling around in their head, you might even have an outline of the book itself, but then, during the writing process, you dig deeper into some of these subjects and you come through some major breakthroughs and learnings. Did you have any of these major breakthroughs or learnings during your writing journey?

Rachel Podnos O’Leary: Yeah, I did actually. This book took me a really long time to finish. When I started out writing it, I actually was writing it for women. I wrote almost an entire book and at the end, I realized that almost all of the advice that I was giving in that book was deeply applicable to men. I retooled the book and ended up with this, and I’m really proud of this version. I think it’s definitely better and a more accurate version, so I can help more people.

Yeah, when I was writing it, it helped me frame the way that I see the world today. It changed my outlook on what money is for, how much money do you need to have quality of life, and what does that mean for millennials? I did a lot of deep thinking on that as I was writing the book.

Meat and Potatoes Personal Finance

Drew Appelbaum: Now, when you were writing the book and you set off to write it for one group, you said, “Hey, this could have a broader impact on the entire millennial generation,” but can people outside of the millennial generation have takeaways from the book as well?

Rachel Podnos O’Leary: Sure, absolutely. The middle chapters of the book are meat and potatoes personal finance, honestly. I wanted this book to be a one-stop-shop for someone who wanted to get a very broad overview of personal finance concepts that most people should know.

For example, basic cash flow planning–where should I put my money? Debt reduction, investing tax planning, and asset protection, are all really important topics in financial planning, and in my book, you get a very broad overview of each of them. I think that’s applicable to people of all ages and backgrounds.

Drew Appelbaum: Now, as a forewarning, do you want to tell people what’s not in the book? Maybe people who aren’t looking for stock options or the next GameStop?

Rachel Podnos O’Leary: Yeah. No means stocks in this book, yeah, you know? It’s not a get-rich-quick guide–I won’t discuss speculative investing behavior. I might discuss it briefly but I won’t give you a guide on how to go down that path. It’s very high level and I do have opinions that I set out in the book, especially with regard to investing. I believe that most people are better off avoiding speculative investing or get rich quick schemes of any kind really, and to try to avoid fear or greed as motivators for making any sort of investment or money-related decisions.

I’m advocating in the book for most people that they should pursue a path of long-term buy and hold investing into a portfolio of diversified stocks. That is really the most proven strategy for 99% of people who want to build wealth to do it successfully and I discussed that more in the book.

Drew Appelbaum: Now, is there a difference when someone in their 40s comes in for financial advice versus a millennial coming in? What are the typical issues that a millennial is facing these days with their finances?

Rachel Podnos O’Leary : Sure. I’m a millennial and so me, for example, in the last two years, I moved three times, including buying my first house, got married, just had a baby a couple of months ago, and there are financial problems that come with all of that obviously.

On top of that, saving for retirement, I am now saving for childcare and school for my daughter. A lot of people are just like me, a lot of millennials are dealing with a lot of financial issues all at once and they’re all big, expensive things–student loans, buying cars, buying first homes, starting families.

It’s a lot and then on top of all that, they are starting to think about saving for the future, saving for retirement or not retirement, just saving for their own future, which for a lot of young people, ends up being kind of an afterthought because it’s the future, I have problems I’m dealing with now and I can’t even think about the future.

That’s a lot of millennials, it also could be people in their 40s, it just depends.

Drew Appelbaum: Now, how much of a burden is that debt of higher education? In the long run, does it pan out to go into six figures of debt? I bring this up because you do use a lot of examples in the book of a couple who did go into debt from higher education.

Rachel Podnos O’Leary: Student loan debt is a really big problem for the millennial generation and yeah, sometimes it absolutely does pay off to go into six figures of student loan debt, but many times not. In any case, whatever the amount of debt is, it only pays off if that debt is an investment in a higher income for your future and income that is certain to enable you to pay the debt off in a reasonable amount of time following the school. For many people, that’s often not the case.

Drew Appelbaum: Are you finding that the millennial generation is looking to retire a little bit sooner than past generations? How are those numbers working out?

Rachel Podnos O’Leary: That’s a good question. I don’t know. I come across people that talk about retiring in their 50s, and what I say to those people is, “Well, you better be very frugal starting now and probably for the rest of your life.” I don’t know what millennials want in terms of retirement, but I would caution millennials not to focus on retirement.

That is something the baby boomer generation really focused on as the end-all-be-all, without thinking of the second piece of, “Do I have enough money to retire? What will my life be like in retirement with the amount of money that I have saved?” A lot of baby boomers retired and are essentially broke. To me, that’s not a good outcome.

I encourage millennials not to focus on retirement as the goal, but to focus on financial independence as the goal. Once you have that, you can achieve financial independence by midlife. Sure, you can retire, or you can work less, or you can switch careers. I don’t think retirement in and of itself should be the focus or the goal for us.

Basic Financial Literacy

Drew Appelbaum: Now, you say in the book that your goal is to give practical advice that all of us should know but that most of us don’t, even the most educated and highest earning professionals among us. I have to ask because it’s still stunning to me, why don’t people know some of this basic financial stuff?

Rachel Podnos O’Leary: I didn’t know any of this stuff until I became a financial planner. I really think we should all have to take basic financial literacy in high school or even before that. I think financial literacy should become part of the lower school curriculum and in fact, my high school did have some sort of financial literacy class and I thought about taking it. My guidance counselor said it wouldn’t look good on a college application and that I should take an AP course instead like AP statistics or AP government.

I don’t know how much good those classes are doing me now. You know, I probably would have been much better off taking the financial literacy course. I think that people don’t know this stuff because there aren’t that many places to learn it, and unfortunately, a lot of people learn financial lessons the hard way.

That’s what I find in my job is that people end up seeking out a professional because something happened. They made a bad investment or they’re up to their ears in debt or whatever it is and they realize, “Oh my gosh, I don’t know anything about money. I need help.”

Drew Appelbaum: Now, I love in the book that you really try to help the reader and you have some suggestions for ways that someone can create a real framework for an organized, comprehensive, and personalized financial plan for themselves. Can you tell us about a few other ways and what you talk about in the book in terms of developing this plan?

Rachel Podnos O’Leary: I outline a five-step process that I think is useful for really anyone who wants to sit down and make their own financial plan. The first step is just confronting your financial reality. It’s having an awareness of what exactly is going on in your financial life. In the big picture that means at a minimum, figuring out what your net worth is and that’s assets minus liabilities. What do you have minus what do you owe? I can tell you from working as a financial planner that most people have no idea what their net worth is.

That’s really important, it’s a good starting place just to see where am I now. That’s huge and also to look at your cash flows, and see where your money is going. Are you spending 90% of what you made or are you naturally very frugal? If you don’t know where your money is going, if you don’t know how much you’re spending, or how much you’re saving, you need to know that before you can move forward. Those are the two I think really big pieces you need to know and understand about yourself.

Before you can make any plan to move forward, you need to know where you are first. Once you figure that out, I think it’s important if you don’t already have a baseline understanding of some really important financial planning topics like debt, investing, and taxes, that you could read my book or another book or use the Internet, but somehow, you need to have a baseline understanding of how these things work if you are going to make a plan to address them.

That would be the second step is doing some learning and then next is setting goals. I really believe in goal-based financial planning. You know a financial plan is not a set of numbers or projections that exists in a vacuum. It’s all about reaching your goals and the plan succeeds if you achieve your goals whatever those are, and they are different for each person. So goal setting is a really important precursor to then hammering out the details of how you’re going to get there.

Goal setting would be the third step. The fourth step is of course making a plan to get there, that’s really where you hash out the financial plan. You see where you are and you figure out what you need to change, what you need to do to achieve your specific goals in whatever time period.

Most people have some really big life goals. For example, I want to be able to travel for 50 days a year by the time I’m 50, let’s say. Well, I’m going to have to meet a lot of more specific micro-goals along the way to get there. You have goals at various levels for macro down to micro and they all feed into each other.

Then the last step is to continually track where you are relative to your goals and modify the plan accordingly. Again, the financial plan doesn’t exist in a vacuum. It needs to change and evolve with your life. It’s not a static snapshot of your life at one point in time. Life changes, maybe you have a second kid, a third kid or you switch jobs.

Well, the plan needs to adjust and that is high level, the process that I outlined in the book for coming up with your own financial plan.

Drew Appelbaum: I like that you talk about budgets in the book as well and you talk about when folks make a budget, most of the time they end up spending less but does that necessarily mean that the quality of their life also declines?

Rachel Podnos O’Leary: No, not at all. Quality of life is all about perspective and really how you feel your life is relative to others plays a big role and that could be good or really bad. I do find that for many people, especially people who were overspending and going down a bad path financially if they are able to reign in their spending through budgeting or otherwise and begin saving, their quality of life actually goes up because they feel that they are in control of their spending.

They’re in control of their money, they’re on a good path moving forward and that is very reinforcing. It’s empowering, it’s confidence-building and I find that a lot of times those people are happier than people who are spending much more money on enjoying life because they know that they are on a good path.

Dealing with Debt

Drew Appelbaum: We mentioned it a few times already but I wanted to really talk about debt and debt is such a burden on a lot of folks. I wanted to look at what have you heard and what you have seen and why are people really avoiding dealing with debt or really digging into their finances and how important is it to really put together a plan to get rid of that debt?

Rachel Podnos O’Leary: Well, it’s really important. Yeah, I get it. Even I, even being a financial planner, there had been times, not necessarily with money but with other things, something that is troubling or problematic, I just try to crush it. I don’t want to think about it, I don’t want to look at it, I don’t want to go there, and I just focus on other things. It doesn’t mean the problem goes away. In many cases, it is festering and getting worse, and that’s what a lot of people do when it comes to money and especially with debt.

It’s a pain point and it’s stressful and I think it’s really easy to kind of kick the can down the road. You know, you say, “Oh well, maybe I’ll look at it tomorrow,” and especially with certain kinds of debt like student loan debt is so complicated. I mean federal loans, private loans, writing that chapter, or writing that section of the debt chapter in my book was really hard because there is so much complexity there. It’s even really complex for me, and I couldn’t possibly cover it all in the book. I really try to stay high level, but the point is, I think people avoid it because it’s painful.

It can be very complicated and who wants to deal with that? But it is really problematic to avoid debt because debt comes with interest, and it will grow and grow and grow the balance if you don’t address it, if you don’t tackle it head-on. Debt more than a lot of things is something you just have to rip off the Band-Aid and address it head-on.

Drew Appelbaum: Now besides the book, do you have any other resources that you would suggest to millennials to really get their finances in order?

Rachel Podnos O’Leary: Oh yeah. I mean, gosh, I don’t know how many specifics I can list here off the top of my head because there are so many. I mean the Internet, right? Google, Google things.

There are so much there, we have access to more information than any generation in history and I would just say Google, number one obviously, but a few specific resources do come to mind especially for example for student loan, there is a great site called studentloanhero.com, and that’s a lot of calculators and so much information on student loans. I know a lot of people find that really helpful.

Another kind of general tip I’ll say, and I talk about this in my book is I really love using online calculators to figure out all sorts of things. The Internet is full of them especially sites like Think Rate and Nerd Wallet and a whole slew of other sites. There are calculators, there are rent versus buy-a-home calculators. There are calculators to see if a particular refinance offer for student loans or for your home mortgage is going to break even or pay off, it’s a good deal.

There are net worth calculators. Calculators are a great tool. They are a great way that anyone even someone who isn’t financially literate can figure out a lot of important things about their own financial picture, so I highly recommend those. Those are the two big things that come to mind.

Drew Appelbaum: Well Rachel, we just touched on the surface of the book in this conversation but I just want to say that writing a book, which is really going to help folks understand the importance of savings and debt and making a financial plan is no small feat, so congratulations on being published.

Rachel Podnos O’Leary: Thank you.

Drew Appelbaum: Now, I do have one question left, it’s the hot seat question. If readers could take away only one thing from the book, what would you want it to be?

Rachel Podnos O’Leary: I would say that the message, the main message of my book is one of empowerment for millennials. I think that a lot of the current narrative around millennials and money is really negative and it focuses a lot on how tough it’s been for our generation and it really has. I mean I understand that, but I don’t think that dwelling on that is productive and I really do believe that millennials can build as a generation in most individual millennials can build wealth and that we are so young, and we have so much time, which is so important in wealth building, I think that we can have a really bright future.

I would think that’s the main message of the book is we’re young, if we start now we can build, we can build wealth, and have a very bright future.

Drew Appelbaum: This has been a pleasure and I’m excited for people to check out the book. Everyone, the book is called, 21st Century Wealth and you could find it on Amazon. Rachel, besides checking out the book, where can people connect with you?

Rachel Podnos O’Leary: Sure, I’m on LinkedIn and Twitter. On Twitter, it’s @rachelpodnos.

Drew Appelbaum: Rachel, thank you so much for coming on the show today, and best of luck with your new book.

Rachel Podnos O’Leary: Thank you. Thanks so much, Drew.