Confession: I am bad with money sometimes.
Not like “I’m a famous writer who makes tons of money but can’t buy her apartment because she spent it all on shoes” terrible, but I’ve had my moments. I sometimes spend $25 on lunch…that I eat at my desk. I use skincare products that are way too expensive for anyone except Bill Gates and Warren Buffett, who definitely don’t use those products because they have a lot of wrinkles. I’ve bought boots that cost half my rent (to be fair my rent is really cheap – for LA) and for the first 3 years of my career I didn’t have a 401k (also TO BE FAIR I didn’t have the option because I took a job with shit benefits for the experience).
Needless to say, I’m not sitting on a million dollars. I have a pretty good rainy day fund and now contribute a ton to my 401k (to make up for my past transgressions), but I couldn’t buy a house tomorrow, unless that house was somewhere I don’t want to live right now.
But now I’m 30 **happy birthday to meeee**, and all the excuses I’ve told myself for not having my shit together suddenly sound really stupid when I pair them with my age in a sentence.
So why am I telling you this, sweet friends?
Because I’m guessing that if you’re reading this, you don’t have as much money stocked away as you’d like either. Unless you’re Paris Hilton, to which I say why are you reading this? Aren’t you supposed to be DJing at Art Basel or something?
So today we’re gonna talk about the thing that everyone loves to talk about most: Money. Moolah. Shmuny. Paper. Cake. Stacks. Benjamins. I promise the rest of this article isn’t just different terms for money. Or is it?
Since I’m 30, I’m going to compile 30 tips for managing money. Just kidding. That’s a lot. I think if I knew 30 solid money management tips off the top of my head I’d have more money in the bank. But here are some tips that are easy enough to implement into everyday life without driving you crazy and pinching every penny.
Tips for managing your money from someone who is just okay at managing theirs:
Pay in cash
In a fast-paced world of bitcoin, ether, credit cards, debit cards and 0s and 1s, you probably think paying in cash sounds like a huge hassle. And you’re right! That’s why it’s a great way to save money. It’s way harder watching dollar bills leave your hand than swiping your credit card and saying goodbye to your monopoly money. Try it out. This month go to the bank, withdraw your budgeted amount of money and try not to use your credit card. I know, I know, “but points!” – just try it and see how much less you spend. Then apply that to your spending habits and try not to swipe that little piece of plastic so much.
Have a separate bank account to save up for big purchases
Not a savings account, per se. We’ll get to that later on in the list. But a separate bank account that lets you save up for all the things you want in increments. If you love handbags, set aside a couple hundred bucks a month for those handbags in a separate account. Or if you love to travel and want to take a big trip, open a separate account where you can deposit into every month and watch that travel fund build up. A good trick (if your employer allows) is to set up your direct deposit of your paycheck to be split between accounts. So that way you can give x% to checking, y% to long-term savings and z% to short-term savings.
This will come as a shock, but I’m not great at saying no. I once ate a raw egg for $25 because a group of people dared me to. But do as I say, not as I do. Do you want to go to happy hour? Yes? Then go. But don’t let your friends or coworkers persuade you into doing things and spending money you don’t want to.
You also gotta say no to yourself sometimes. Impulse shopping and impulse expensive dinners are two of my problems. I love good food and I love good clothing, what can I say? But if I want to retire before 90 and maybe one day buy a house or pay off my student loans, it’s probably a good idea to cut back on the instant gratification.
Buy groceries – and eat them
One of my personal favorite things to do is spend almost a hundred dollars on groceries, then get busy with work and social commitments and watch all of that produce and food I just bought go bad. But I conducted an experiment on how much I spend on food when I bring my lunches and cook dinner, vs ordering takeout and getting lunch and coffee out. This is just during the week, not during the weekends – which are usually a free-for-all. (Note: I usually either skip breakfast or eat something like a clif bar that I get at work).
Lunch: $17 x 5 = 85
Dinner: $20 x 5 = 100
Coffee:$ 4 x 5 = 20
Total = $205
Groceries for a week = $50
So I’m spending an extra $150 every week when I don’t grocery shop. That’s $600 a month. THAT IS A LOT.
Make a budget and actually stick to it
Maybe you like excel spreadsheets, or apps like Mint, or maybe you’re like me and you just write out a list of things you have to spend money on every month. However you do it, when you look at your budget and hold yourself accountable, you’re probably going to spend less money. It’s like weighing yourself. Yes, the scale isn’t the end all be all, but it does help to see a concrete number and know if you’re gained or lost weight.
Don’t listen to Suze Orman all the time – especially about coffee
I remember reading Suze Orman’s book when I got out of school, and one of the things that I took to heart for years was her views on buying coffee. She said that if you really enjoy your morning coffee run, you don’t have to give it up, because it’s not that much money in the grand scheme of things. Okay, sure I guess it’s not. But let’s do a little more math:
Iced latte at Intelligentsia: $4.50 + $1 tip = $5.50 x 7 days a week = $38.50 a week on coffee
$38.50 x 4 = $154 a month on coffee
$154 x 12 = $1,848 a year
That’s a trip to Cabo.
I’ve probably spent a total of $15,000 on coffee so far in my life. That is absolutely ridiculous. If I had just made coffee HALF those mornings, I could have a 3 week European vacation or a my dream Chanel handbag with a matching wallet. Cha ching.
Pay yourself first
Okay — I’m not your mom and I’m not telling you what to do, but if you don’t have a sizable liquid savings account, I highly recommend starting to build one. This is a long-term savings account that you contribute to every month and don’t touch when expenses come up. This is your rainy day fund, so if you one day find yourself sitting in HR’s office with a 2-week severance package or if you just get so fed up you jump on a conference room table and yell “you’re all idiots” as loud as you can (not that I’ve ever thought about doing that), you have some money ready that you can live off of. A lot of experts say 6 months saved up is good, but why stop there? This is the money you could also use for a down payment for a house, buying a car or god forbid if something else went wrong you have a sizable chunk to draw from just in case. I call it a “fuck it fund” myself, but name yours whatever you want.
Keep track of your spending
A no-brainer, but also incredibly annoying to do. This takes discipline to remember what you spend money on and then write it down each time. I can usually do this for about 3 days before I start forgetting to write everything down, so godspeed and I hope that you’re better at this than I am, because I imagine it really works.
Download a money management app
Again, this only works if you actually use it. I have no tips for this one, because I can never remember to use these. Whoops.
Hide money from yourself
Ever reach into a coat pocket on the first cold day of fall and find a nice, crisp $5 bill? Great feeling, isn’t it? Well you can get that feeling year round by implementing my patented Hide Your Cash™ scheme. Every time I go to Vegas and win money, I hide it from myself somewhere in my house, to be found at a later date. It’s great knowing I always have a wad of cash in case The Handmaid’s Tale comes true and they freeze all women’s bank accounts and turn us into sex slaves, but also it’s really fun to remember that you have money hidden. Writing this article actually reminded me that I have a bunch of money hidden in my apartment right now that I forgot about. Score.
Invest in your retirement
Every single old person will tell you this, but now you also have a (relatively) young person saying it too. Having a 401k, IRA or Roth IRA (or all of them) is going to make you feel so much better in 30-40 years. There are tons and tons of calculations on the internet that will blow your mind about retirement savings, so jump on it now and be one of those people that gets pleasantly surprised when they check how much money they have saved for retirement already.
Even if you’re not making a ton, at the very least contribute enough to get the full match on your 401k from your employer. That is LITERALLY FREE MONEY. Take it.
DO NOT TOUCH YOUR SAVINGS ACCOUNT UNLESS IT IS AN EMERGENCY
Remember that savings account I was talking about that I lovingly named my “fuck it fund”? That’s this. Do not touch this fund unless you’re in dire straits. I don’t care. Unless you have a completely unforeseeable expense that will rock you to your core, or you’ve thought about a MAJOR life-changing purchase like a house and are finally ready to pull the trigger, do not touch this savings account. Did I mention do not touch this savings account?
Pay off your credit cards. Not later. Now.
This is coming from a girl who is ashamed to say she has a few thousand on her credit card right now. Paying interest on credit card debt is just like throwing away money every month, and that should make you mad. It makes me mad.
Student Loans – How to deal
Mini rant: The fact that we still have student loans in one of the most prosperous countries in the world is beyond me. We give tax breaks to people who can’t afford to buy houses, but do it anyway. We give tax breaks to people who can’t afford to have kids, but do it anyway. And we punish people who are trying to contribute to the bottom line of this country by furthering their education in a world where you can’t get very far without a graduate degree. We deport people who come to this country and contribute far more than most of our citizens, because racism. It’s like our government is a really unfair parent who gives all its attention and money to the problem children, and punishes the good kids. And that isn’t cool. Okay, anyway…on to how to handle student loans.
This is a very complicated matter, and I suggest you talk to a financial professional about your student loans situation. It really depends on your interest rate, how much you have in debt and whether you’re paying public or private loans. It also depends on how much extra income you have to pay off your loans.
Looking at all my options, I’ve opted for income-based repayment. I don’t have a large chunk of change sitting around, waiting for me to just throw at my student loans, so saving for retirement and having my “fuck it fund” fully funded are more pressing than paying off student loan debt. Making a dent in these loans is important, but right now saving for the future is more important than paying a shitton of money to the government and having zero savings. They’ll have to be paid off eventually, but right now my money is better spent and saved elsewhere. That’s also based on my career and earnings trajectory and my financial situation. So even though I love to give unsolicited advice, I think that it’s best for you guys to do your own research and figure out the right plan for you. I wouldn’t necessarily ever recommend carrying debt, but if you’ve got quite a bit of it, it’s going to take some time to pay it off – and having some money stashed away in the bank is just as important, if not more.
So this is all cool, but what if I just got out of school and have a little over zero dollars?
Hello, I am you. More accurately, I was you. I ate a lot of hard boiled eggs and popcorn my first couple years of my career, and I didn’t have a lot of fun. But let me assure you, things will get better. If you have a career with some upside potential, you’re going to be fine in a few years. My advice is to spend as little money as you can as long as you can. Act like you’re still broke, even when you double and triple your salary. I did not do this, and I really wish I did. But alas, I’m too accustomed to the good life now. Beauregard, where’s my afternoon Dom?
Alright sweet friends, that’s all for now. I’m tired and I’ve run out of financial tips. I’ll try to find you guys some more and do another installment, but this should be enough to get all of us started on the track to total, utter financial freedom. Soon we’ll all be sitting in our HoverRound scooters at the top of the Grand Canyon shouting about how rich we are like Joy and Bernice.