Columbia native works to build financial prowess of millennials
Student debt in the U.S. has increased from $364 billion in 2004 to $966 billion in 2012, according to the most recent data on the subject. The average amount of debt a 25-year-old carried in 2012 was $20,326, which analysts have suggested has kept more young professionals out of the housing and auto markets.
Steven Hughes, founder of Know Money Inc., looks to change the financial outlook of millennials so they become money savvy.
“This organization was born specifically out of need,” Hughes said.
Hughes is a first-generation Jamaican-American whose parents were not college education but instilled in him the value of education.
“In Jamaica, it’s important to get an education because its not free over there,” he said.
The Columbia native realized his dreams and attended Clemson University to study human resource management. But Hughes lacked an understanding of personal finance while there that caused him to take on some big risks.
“I had maxed out credit cards, had an eviction,” Hughes said. “I did everything I could do to harm your financial status at a young age.”
One night when hanging out with some friends at a bar, his car ended up breaking down on the side of the road. He realized he couldn’t pay to get the car fixed and said, at that moment, he felt it was time for him to change.
“I asked myself, ‘How did I have money for drinks tonight, but I can’t get home with my car,’” he said. “I started figuring out what is really going on with my finances.”
After doing his own personal research to develop better personal finance skills, Hughes founded Know Money Inc. in March 2014 to share what he learned with others who were in a similar bind.
Hughes said young people often don’t begin to care about the importance of credit until its too late. Past mistakes are pushed aside and bills go unpaid in a bid to avoid the problem.
“We stop answering the phone, stop opening bills thinking if we don’t open them they’ll go away,” he said. “But 80 percent of your credit score is determined on the things you’re doing right now.”
Young professionals also don’t take the time to invest, which Hughes said can be as simple as putting $50 aside to go into the market.
“I think that a lot of young people are living paycheck to paycheck and say, ‘I’m trying to have fun with my friends,’ ” Hughes said. “It’s a misnomer that we don’t have enough money to invest.”
Hughes has developed through his nonprofit organization a five-step plan he calls the “Five Phase Fix,” which teaches people how to get out of debt and regain control of their finances. The program is comprised of budgeting, saving, debt elimination, credit repair and investing.
Each phase builds on the other by first helping individuals establish a budget based on their income and expenses. Individuals gain valuable information on how to secure higher interest rates for savings accounts through online banking and credit unions, portion out part of one’s budget to pay off debt, fix credit scores and invest in real estate, retirement or a college savings plan for children. The goal, Hughes said, is to hold a person accountable for their financial decisions in order to build their confidence.
“I’m not one who says you can’t drink Starbucks anymore or go out anymore,” he said. “But if you want to meet financial goals we need to make changes to reach them.”
Hughes said feedback from the community has been strong. Last year, he launched “Know Money 100,” which was designed to build the financial status of 100 people. By the end of 2014, he had helped over 250 people.
One of his favorite success stories was helping a teacher develop a savings plan to buy a home. Hughes said the teacher ended up breaking ground on a house last year and buying furniture with the same salary she had before.
Another individual he helped was a social security recipient. He encouraged the person to follow the “52 Week Savings Plan” to put aside a certain amount of money each week. By the end of the year, the person saved more than $1300.
“She was so happy because she had money that she would never be able to save before,” he said.
Hughes said young people particularly enjoy his free classes because they are geared toward 20- and 30-somethings, unlike classes held by banks that focus on retirement and refinancing a home.
He said he hopes to reach a greater audience this year through his “Greenroom” series.
“It’s a series of events to help young professionals get more financial education and make 2015 their best year yet,” he said.
Hughes also will launch the Youth Entrepreneurial Scholarship Program this summer, which is a five-week camp for kids ages 12 to 18 to compete for $5,000 to start a business.
“The program that we’re doing this summer is really focused on helping kids think outside of the box when they think of their future,” he said.
Hughes said his mom had gone to his recent financial seminar and that his father expresses weekly that he likes what his son is doing. What excites Hughes most is hearing his family talk about stocks and investing and knowing that his message of financial independence is spreading.
“When some people see their friend getting this information, they are turned onto it,” he said. “It’s like fire.”