Read more from Rachel on xoVain!
After finishing college, I was (like many of my peers), unemployed for a while. When I finally found work, I thought a salary would solve all my problems.
The thing is, I had no idea what to do with money once I started making it. I wasn’t raised rich by any means, but my parents didn’t really clue me in on their money-making decisions.
I’m doing all right now, but when I first graduated, I was super dumb with my cash flow. I made some mistakes and had to learn from them. Now I’m here to start the discussion on all things $$$$, not because I want to stress you out, but because I want to learn from you.
NOTE: I am in no way qualified to give professional financial advice. This is just me speaking honestly from personal experiences, and sharing the lessons I learned from my own screw-ups and successes. Do with this as you will.
Obvious Lesson Number One: Credit Cards Aren’t Free Money and Nothing Ever Will Be
I mean, I knew that but it didn’t stop me from racking up a couple thousand dollars worth of debt right out of college buying dumb stuff I don’t need, like clothes and makeup and self-help books.
(Side note: I know it seems contradictory to call clothes and makeup “dumb stuff I don’t need” since I write about them a lot, but that’s the thing -- when I do my research and put time and thought into a purchase, I typically don’t regret it. It’s when I just start throwing money around and making impulse buys that I get in trouble.)
For a while there, I had no income but I still wanted to live the life I wanted, so I just kept spending on credit. I saw my “available credit” as a bank balance, and almost a challenge. It was awful, and I knew it was awful but I couldn’t stop! Addictive personalities are a drag, I know.
I’m still paying for that time in my life, literally. Credit card debt is a huge deal, and sadly very common. It’s a tough one to recover from, because rather than just quitting credit cards altogether (which IS an option), I wanted to learn how to use credit correctly. Credit is useful for getting apartments and cars and things.
Once you have an income and feel ready to get a CC, do a lot of research and find one you like. Get yourself some travel rewards, or rewards on other things that matter to you.
Oh and if you DO rack up some CC debt, here’s my best advice and what has worked for me: Cut up the card so you can’t keep spending on it, set up a payment plan that’s as aggressive as you can manage, and use your debit card for as long as possible. Make it a priority because interest is a bitch.
Number Two: Stop Paying for Your Bank Account!
When I had a student checking account there were no fees but then I graduated and my life became a bleak, expensive sad trombone sound.
I had to get a new joint checking/savings account and the friendly bank lady was like, “Oh yeah, and we will charge you $15 every month if you don’t have $300 in your savings account.” I had just picked up a waitressing gig and I was like, “Oh, I can do that!”
Yeah, OK. That never happened. I just paid the $15 every month for like a year. That’s almost $200 I spent just to have an empty savings account. LAME. Get an account with a bank that has no fees.
You’ll be hard-pressed to find a brick and mortar bank that won’t charge you fees. That’s why I highly suggest getting an online bank account, like Charles Schwab, Capitol One 360, or Ally Bank.
Third, Learn How to Budget. It’s Fun! Sort Of!
I use Mint.com to help me budget. I also use Excel spreadsheets. You can figure out which way works best for you. I like Mint because it does the work for me, essentially and also sends me passive-aggressive emails when I’ve gone over my budget, like “Rachel, you went over your food budget this month,” which is well-meaning enough but my brain reads it as “Rachel, you fat lush, you spent $60 on sushi. Really? Get it together.” So that is helpful for me.
Mint will also track your spending, and let you look at charts to see where the majority of your money is going. I wrote about this over on Vain, but Mint has been really helpful for me in getting my spending habits under control. Once I saw how much of my money was going toward shopping, I was able to get better control of myself.
Fourth, Make Saving Money a Fun Competition Against Yourself.
I suck at saving. Part of this is because I don’t make a whole lot of money, so I feel like saving is pointless. But the less you make, the more important saving is!
It’s hard for me to grasp saving as a concept. I’m good at saving for specific things, like a trip or a computer. But just having money in savings isn’t as appealing to me, which sucks. So I have to make it a game for myself. Each month, I challenge myself to save more than I did the month previous.
I saw this money saving challenge thing on Pinterest where you save 1 more dollar each week than you did the last, and you do that for a year. After a year, you’ll have $1,378 saved up. I think for primary savings you should have a secured amount each month you plan to save, but if you were saving for a trip or maybe a laptop that would cost about $1,000, this is a good way to build up the savings slowly.
Also, if you can -- set up your paycheck so part of it goes automatically into a savings account each month.
Fifth, and Lastly, Get Real with Yourself and GET MONEY
If you want to have more money, you need to spend less or make more.
Spending less is easier than making more usually, but you should still try to make more at every opportunity. If you’re lucky enough to be employed by someone who offers some sort of IRA, take advantage of it! Especially if your employer is willing to match your contributions in any way. I’m real aggressive with my IRA saving and it makes me feel very powerful.
Be confident when making your salary requirements. I mean, don’t be ridiculous but know your worth. You might not have a lot of experience, but they’re obviously hiring you for a reason so go for it.
There’s other ways to make more money too, especially if the field you work in is something you can freelance on the side. Or you could cook meth! I don’t know though, I heard filing taxes for freelance meth cooking is super complicated so I’m not sure it’s worth it.
It really kills me to hear my 20-something friends talk about how “boring” it is to save money or discuss money. This is a super important time in our lives. It’s exciting and critical. Just like the other parts of our lives, the financial mistakes we make now could ruin us forever.
I’ve had my taste of debt, and I’d rather not accrue anymore. Debt is sometimes inevitable. Events we can’t predict happen and things like medical bills can weigh us down, but that’s even more motivation to save now.
I know a lot of kids feel hopeless about their financial futures because, well, jobs are hard to come by and we’re all up to our pretty little eyeballs in student loan debt but I think we can be a system of support and knowledge for each other.
I know a lot of these tips probably made some of you roll your eyes, but knowing things in theory and experiencing them in real life is different. Nobody taught me about credit card debt or bank fees. I had to learn everything on my own, which is hard but it’s pretty much the only way I will learn because I am an obstinate tween.
Women, especially young women, often get talked down to when it comes to money, investments, and finances and that sucks.
We’re all at different places and we’ve all learned different lessons, so let’s get hyped up on learning more and getting better. What are some of the most important financial lessons you’ve learned?