If you're Southern, money isn't something that's proper dinner conversation. It's impolite. It's tacky to talk about money. Know what's tackier? Ending up thousands of dollars in credit card debt because you didn't save in your 20's and spent recklessly.
MONEY IS SO HARD. Seriously though, it can be so challenging to deal with and think about - no matter what stage of the financial game you're in, there are questions and doubts and freak-outs about money.
Some of my past freakouts have included the "WHAT?? I thought I had so much more money than this!!!" checking account realization; the "Of COURSE I'll pay for everyone. Another round on me!" unnecessarily generous and semi-drunken gesture; the "Oh, J. Crew Factory has a clearance section? I'll just buy a couple of things..." rabbit hole; and, of course, the "We owe HOW MUCH in student loans?!?!" sinking feeling.
After college, I was teaching school for a couple of years, had my first experience being financially independent, and learned a LOT of lessons. Now, I manage our finances and pay our bills, create and adhere to (mostly! eek!) our budget, and talk to our financial planner monthly. I have come a long way from my more irresponsible financial days. Though I haven't got it licked, here are some things I've learned.
This seems like a no-brainer, but it isn't. When I graduated from college and got a job, my first impulse was to think, "I'm making my own money and I'll SPEND IT HOWEVER I WANT!" Even if I was saving, I would freely dip into my savings account whenever I needed a little extra.
Everyone is in a different place when it comes to saving - some have room to save a lot, some, a little. Saving between 10% and 15% of your monthly income is always a safe bet. And once it's there, don't dip into into to pay credit card bills or to cover a splurge purchase. That's your nest egg, and you should protect it.
I remember vividly a weekend in Memphis where my car (without me in it) was sideswiped by a tow truck. Though having to get my car repaired was REALLY inconvenient, that occasion marked the first time in my life that I was able to pay for the damages with my own money without having to worry that I wouldn't have enough to live on. That was such a good feeling. Having money saved gives you financial freedom in the best way.
2. Credit cards can be your worst enemy.
As of 2015, the United States was in $733 BILLION of credit card debt. Did that blow your mind or what?? Which means the average person in this country is in $17,000 of credit card debt (that's not including mortgages, student loans, or any other type of debt).
Here's a hard and fast rule: if you can't pay your credit card bill off every month IN FULL, you're spending too much.
Lest I sound preachy, let me clarify that this rule took me about 5 years to actually take to heart.
Credit card companies make billions of dollars a year from the interest they collect when we don't pay our bills off each month. By owing money, we set ourselves up to ultimately pay through the nose on fees and interest that compound on the money we owe. It stinks. And credit card companies are sneaky, enticing us to sign up for a card and get a discount at our favorite retailer, or to get x, y, and z benefits.
Building credit is important, so having a credit card is great! But having a credit card is like having a parent who wants to be your friend rather than your disciplinarian. It whispers, "Hey man, just go ahead and swipe me! This is basically Monopoly money anyway - don't you want that pair of shoes? Come on - you can just pay it off later. You only live once!" Don't listen.
It can be really tempting to spend outside of your means at this stage of life to try to keep up with peers who you feel are living a more affluent lifestyle. I totally know that feeling. It's hard to fight against, but the reality is, many of our peers at this stage who we look to as having luxurious lifestyles are also spending more than they make in order to appear that way. It's a slippery slope, and ultimately, it's a very expensive one that can follow you for years.
3. Credit cards can be your best friend.
On the flip side, having a great card can be fantastic if you use it wisely. For example, Jordan and I did some research into which cards give the best rewards (and there are lots!). We ultimately decided to get an Amazon card, because we knew how often we'd be buying products on that site since we have a Prime account. The Amazon card gives you rewards points that turn into Amazon cash, which allows you to make purchases entirely with points.
Tom Hanks, God bless his little heart, sheds like a maniac. I know he's a labradoodle, but he's 3/4 lab, which means he sheds for two dogs. So we were really hurting having to clean up his hair every. single. day.
We started pooling our Amazon points to save for a Roomba. Right after Black Friday, there was an Amazon event on Cyber Monday where lots of products were crazy discounted. I searched to find that our Roomba, the Pet Series, was on the list of discounted merchandise - $100 OFF. So this normally $375 product was slashed to $275. I looked to see how many Amazon points we had: 272. So I got what is normally close to a $400 product...
...FOR THREE DOLLARS.
Three dollars, people. If that doesn't sell you on a rewards card, I quit.
4. Make a budget.
This is the more boring piece of advice ever - so boring, in fact, that I just started following this advice THIS YEAR. Oops.
I don't like budgets. I don't like math. I don't like Excel spreadsheets. I don't like talking about any of the previously mentioned things. But (ugh) they're necessary (ugh) I guess.
If you're like me and very averse to dealing with numbers, Mint.com offers an incredible, interactive budget that allows you to see what you've spent on each category of your budget in real time. They'll even send you friendly reminders if you're close to spending more than you budgeted on movies, clothes, or food (not that I do that or have ever done that, cough).
Budgeting has really changed the way I think about money. I no longer want to overspend because I'm very competitive against myself to see how much I can save. I've learned through experience that there will ALWAYS be an unexpected expense (a car breaks down, a computer crashes, the dog gets sick, you need a plane ticket, etc.), and paying for those extra things really makes you wish you had all that money on clothes and food back.
5. Read your bank statements.
You, like me, may have signed up for paper statements in the mail, only to toss them in the recycling bin whenever they arrive. We're in the digital age now, which means it's incredibly easy for us to check our statements online; it's also easier than ever for people to steal from us.
Another quick story:
When I lived in Memphis, I had a curiously low bank statement one month. I sat at the kitchen table and pored over every transaction from my debit card in the last few months, only to discover that someone had been siphoning money from my account without my knowledge.
How did they do it without me noticing, you might ask?
Because they realized I wasn't paying attention.
At first, they'd take money out in small increments: $5 here, $7 there. Eventually, they figured out that the cardholder (me) wasn't paying close enough attention to notice these small, strange purchases. So they started getting a little braver. They bought $30 items, $40 items - still didn't notice. It wasn't until they bought a $250 dinner at a Mexican restaurant in Utah that I actually woke up.
So I called the bank and explained what happened, and they promptly explained to me that they already knew this was going on and had sent me a letter three months ago. Apparently, I was one of the people whose credit card information had been stolen in the big Target hack that year, and because I wasn't opening my freakin' mail, I didn't know.
Thankfully, all that money was recovered. But since then, I've caught four separate occasions where I've either been dramatically overcharged or actually stolen from because I now take the time to comb through my bank statement every few days.
Ultimately, money is a tool. It can provide you with opportunities you'd never otherwise have; it can fund things you care about; it can offer you solace and comfort. It doesn't have to be a dirty word. There is no better feeling than knowing that you are on top of your finances and have no dark clouds looming overhead. But the only way to do that is to be proactive.
Shout out to my ladies here - these lessons are especially important for us to learn. Because: