September 04, 2020
(From the perspective of a very young, NYC-based semi-professional with very basic money management skills)
I don’t know about you, but school never taught me much about money. I learned to count it in elementary school, I probably learned about compound interest in high school, but odds are I was asleep. I studied acting in college, and I am convinced that they purposely avoided the subject of projected earnings. I learned most of what I know about money from my father. My household was not a space for traditional gender roles, my mom had a reliable job and my dad worked from home as a freelance composer. When I was about 12 years old, my dad made a comment that stuck with me for the following decade. He said “the only thing I brought to this relationship was a really good credit score”. My dad is a composer, and I went to college for acting, those are not jobs that are expected to earn millions (or even a livable wage), and I knew those words were a warning to my future self.
I was, still am, and probably will continue to be, very nervous about money. My generation can’t help it! We watched the toll that the 2008 crash took on our parents, we’ve seen some of the biggest dips in our economy since the Great Depression. We know the importance of money (especially in careers that don’t provide a 401K). Ever since moving to New York City (I’ve lived in Washington Heights for the past two years), I have become determined to take this previously terrifying subject and make it less daunting. I can’t say it’s been entirely successful, or that I won’t have nerves or doubts again, but below is a list of tips that have helped me change my mindset.
Maintain Your Credit Score
This is a hard one to keep track of, and often I forget, but if you ever want to be able to apply for an apartment without a guarantor, need a loan, or anything of that nature, you will need a good credit score. Get a credit card as soon as possible! It must be in your name, and it must be active. Use it frequently, and pay it off just as frequently. Personally, I use my credit card exclusively for groceries and food. I keep track of exactly how much I’ve spent, and pay it off each week. Use it to pay off essentials bills (that are preferably also in your name). Set an alarm, set up an automatic payment, anything to make sure you don’t let your bank collect interest. Take advantage of the system by not letting them take advantage of you.
Some books that have recently been recommended to me are “The Broke Millennial” and “The Beginners Guide to the Stock Market”. I know it might not seem like the most fascinating read, but you should look into where to put your money while taking advice from people who really know what they are talking about, especially when considering investments. I have a savings account, and when I opened it, putting money into that account felt extremely adult. That is, until I realized that the interest collected on that account over years would be about enough for a cup of coffee. Putting your money into the stock market is the best way to make your money work for you, but you should know how to make those choices in a safe and informed way.
There are apps for this, but I recommend making a basic list in the notes app on your phone or in a small notebook you can carry around with you. Your budget doesn’t have to be hard and fast, or even existent, but this allows you to be mindful of what you are spending. The act of writing something down encourages mindful action. Instead of buying that new dress on impulse, maybe you’ll think twice. If you really need/want it, great! If not, you just saved yourself 30 bucks.
In “Broke Millennial Takes On Investing”, Erin Lowry gives an example of Jake and Stacey. Jake and Stacey earn the same amount of money, they have the same retirement goals, but Stacey starts contributing to her retirement accounts in her 20s, and Jake doesn’t begin until his 30s. Even if Jake is contributing thousands of dollars more a year than Stacey, those 10 years will leave him with more than 100,000 dollars less than Stacey when it is time for him to retire. This example is much more nuanced than my quick explanation (not to mention the fact that it relies on men and women being paid the same), but what the Jake and Stacey story illustrates is that time matters. I know it is hard to plan for something that is decades away, I can barely plan my week, but you’ll thank your younger self when the time comes.
I am currently in an investment club. We read books, follow stocks, and discuss our financial goals and concerns. I’m not saying that everyone needs to have this kind of structure, but I do think that financial issues should be discussed. Buying into the narrative that money is taboo has caused a lot of stress and misinformation. We allow the system to take advantage of us if we don’t educate ourselves and educate our peers. We need to talk about the money we have, the money we make, and what we want to do with it. Everyone has the same concerns as you do. We’re all in this together.