The biggest thing that shocked me about getting a real-person job and paying for all my own stuff is how many times I had to enter my social security number into online forms for credit checks and proof of identity.
Want to rent a washer/dryer? We’ll need your credit score for that. Need water in your apartment? Social security number, please. Trying to order Jimmy John’s to go? Credit check!
Suddenly, I had 5+ online accounts with my social security number (i.e., my identity and financial security) tied to them. Accounts where my negligence could result in a direct hit to my credit score—the future key to being able to buy a car, a home, and countless other life necessities.
While keeping up with utilities, rent, and various other bills seems like a relatively low-stress obligation, it’s mildly stressful during startup to realize that you’re now responsible for monitoring the status of multiple accounts with different account numbers, different due dates, different bill delivery methods and (likely) different passwords, when up until this point all you had to worry about budgeting for was your biweekly burrito bowl.
How my OCD kicked in to save the day
Clearly, I’m not a financial planner—but I did create a spreadsheet that helps structure a budget I think could be helpful for newly salaried individuals. It’s been super useful for me in setting guardrails for my spending (actually adhering to the guardrails is not as simple).
All you need to know to utilize this tool is your take-home pay (so, your salary post-401K contribution/health insurance/federal taxes/etc.) that’s on your paycheck every pay period.
The workbook I made calculates exactly how much you should be saving, spending, and using for fun each month, based on a financial planning theory called the 50/30/20 model, and it proposes that you use 50% of your income for needs (rent, utilities, groceries, etc.), 30% for wants (restaurants, drinks, amusement), and put 20% in savings.
Here's what it looks like, with no values added yet:
Once you input your salaried paycheck amount (in the blue), it’ll auto-populate the total amount of money you have in that pay period to be spending responsibly in the three purple cells across the top (usually this is roughly every two weeks). It’s helpful because most bills are due on a monthly basis—so it’ll tell you how much of each individual paycheck you have available to spend and save.
The tough part is, predictably, actually sticking to it.
The categories included are the broad ones that I use, but obviously feel free to personalize as little or as much as you think would be beneficial to you.
If you don’t have a budget or any idea how to make one, I’d recommend using the table to calculate these figures as a baseline and then—if you want to get super control-freak—plug those numbers into a Mint account (I blogged a few months ago about how to set up your budget and link your accounts in Mint—for a refresher, you can check it out here) to track your spending.
In case you missed that one, Mint is an Intuit product that links to your checking, savings, and credit card accounts and then tracks your spending and categorizes it for you. You tell Mint how much you want to spend per month in each category, and it warns you when you’re about to go over budget.
The most useful feature, in my opinion, is the auto-categorization. This way you can see your spending at a glance without having to track it yourself.
Once you know your total allotted portion to spend, you can break it down into subcategories—e.g., $1,000 for rent, $280 for groceries, etc. Then you can ensure you’ll have enough to put 20% in savings every month! And you can guiltlessly spend on bars and restaurants, because you’ll know exactly how much you have allotted to spend without dipping into your savings.
I'm planning to write another budget-related post soon on how to build your first professional wardrobe without having to sell one or more of your organs (and still look fly at work), so stay tuned.
Download the workbook below, plug in your take-home pay, and use the budget tool. Happy adulting!
By now we're all probably well-aware that I love finding ways to make more money. I don't think that makes me greedy, just crushingly regretful of not obtaining a degree in software engineering and now compensating as aggressively as possible.
Whether that's stretching my income (or my side hustle that pays a lucrative $7.25/hour) further with high-interest checking accounts and intense budgeting or figuring out the best places to invest my money long-term, I nickel and dime myself like a financier turned starving mathematician.
That's not to say the cash flow is very baller or that I'm actually STICKING to my budget (can I get a 'holla' from anyone else who's a couple thousand over goal already for the year?), but at the very least, I'm self-flagellating via Google Sheet by chronicling each month that I'm over.
I've said it before and I'll say it again—it's sad money is taboo. I think if we talked about it more openly as a collective society, people would have a better sense of what they should be spending, what they should be saving, and where they should be doing it.
[Before you continue, you may want to take a look back at my initial blog about investing as a basis for this one if you're as utterly clueless as I was in May of this year. This was my high-horse Ted Scream about why all the ladiez out there need to kick their fiscal asses into gear.]
This blog generated its fair share of conversations about money with friends, and one friend in particular (shout-out to you, Ryan Haas) recommended the book A Random Walk Down Wall Street.
And while this book is the equivalent of the world's sassiest finance textbook, it (a) is dense enough to get you nice and sleepy before bed, (b) makes you look smart as it sits haughtily on your nightstand, and (c) actually makes some super helpful points.
Although I'd love to include specific details and highlights of everything the book covers (from things like a stock's beta to the Capital Asset Pricing Model), the reason I liked this book so much is because it told me way more than I felt I'd ever really need to know, all while assuring me of one thing: You don't have to be a financier, work on Wall Street, or be a genius to win at money.
Instead of a "get rich quick" scheme, try a "get rich slowly but surely" scheme. How? Index funds.
In short, if you care about your financial literacy, this is a great book to pick up.
It essentially made me feel like I was drinking financial principles and history from a firehose when all I really needed was a few sips to get me through—but as a result of the absolute monetary blast, I now feel far more equipped to navigate the financial minefield and not fall prey to some stupid fad (looking at you, bitcoin).
Plus, I now know a lot of high-brow acronyms that'll absolutely serve me well at cocktail parties in the future.
It addresses things like the flawed logic behind applying 'high risk, high reward' to everything (and why that's not always true), as well as a statistically significant look at the past to show how you can do just as well letting the market do its thing instead of trying to beat it. It also explains why some things inflate in value rapidly (crowd mentality) and how to avoid getting sucked into something that's doomed to come crashing down.
Now let's chat about some of the best #FreeApps and how to leverage them most effectively.
Let's start with the investing app because I believe this is a true value. And because I want to walk my talk about money not being taboo, I'm going to use actual names, numbers, and figures to illustrate my points so you can experience the thought process I used and the outcome.
That said, there are probably a few other ducks you should get in a row first before you start investing 'fun' money. This is the financial advice I've been given repeatedly by adults and young professionals alike:
While I talked about Robinhood and investing in my last blog, I have some results to share now. I invested $1,560 in three exchange traded funds at Haley Loflin's urging—just to get my toes wet, ya know? The best thing about Robinhood (besides its ease of use and beautiful UI) is that you can trade for free. TBH, I'm not entirely sure how they do it, but I know it's legitimate.
When I was deciding how much to invest, my friend Ali Anwar (profiled on my blog here) who owns a wealth management firm (at age 26, no less) more or less advised me to decide on an amount of money I felt comfortable going without. I think that's a good rule of thumb–you probably shouldn't invest money you anticipate that you'll NEED. While my investment strategy is extremely conservative and risk-averse, you never know what could happen.
If your net worth is $20,000 right now, I wouldn't advise socking $15,000 away in the S&P 500—or worse, in any few individual stocks. I'm no financial adviser, but it's just common sense.
I figured I could throw $1,560 in the pot (random, I know) without missing it or feeling risky about it. Here's what I invested in and how much I bought:
3 shares of VOO (Vanguard S&P 500—this ETF tracks a market-cap-weighted index of US large- and midcap stocks selected by the S&P Committee.)
3 shares of VB (Vanguard Small-Cap—this ETF tracks the CRSP US Small Cap Index. The market-cap-weighted index includes the bottom 2-15% of the investable universe.)
2 shares of VGT (Vanguard Information Technology —this ETF tracks a market-cap-weighted index of technology companies, drawing its securities from the top 98% of US market capitalization.)*
*This last one I chose on my own after deciding I believed in the future of technology companies and wanted to get in (relatively) early on the big boys. For reference, this ETF is up nearly 170% over the past 5 years, vs. +80% for VB and and +92% for VOO.
Although, as we know from A Random Walk, a fund's past performance never guarantees its future performance. I fundamentally believe in the value of tech but didn't want to take out individual stakes in specific companies because I don't follow company performance closely enough to bet my ass on my ability to day trade.
I invested the $1,560 in May, and at the time of this writing, I'm up in the mid-$1,700s. That's nearly 10%! I chose to reinvest my dividends so I'm never taking money OUT of this account, but it's still irrationally fun to watch it grow. As I become wealthier over time I plan to flesh out this approach, but for now, it's encouraging to see that's nearly $200 I didn't have before—for doing literally nothing.
And because I do this 90% out of the goodness of my heart and 10% out of personal interest, here's my link for a free stock when you sign up for Robinhood (open this link on your mobile device).
If you use my referral code to sign up, we both get a free stock—that's a 1 in 150 chance of getting something dope like an Apple stock (worth over $200 per share). Or, you can hate fun and sharing and sign up without my link and get nothing. Suit yourself!
Moving on to everybody's favorite topic: Budgeting.
While I've espoused the benefits of budgeting before, I'm still going strong using Mint, a free budgeting app and website (the desktop version is much stronger and more comprehensive, in my opinion).
And while Mint is admittedly a pain in the ass to set up and maintain, it still beats the alternative of manually tracking receipts. Mint links to all your accounts (checking, savings, and credit cards) and categorizes all your purchases.
Right now, I'm adhering to the 50/30/20 model. 50% of your take-home income goes to needs (rent, groceries, etc.), 30% goes to your wants (dining out, movies, travel), and 20% goes into savings. This is, admittedly, an aspirational budget plan at which I often times fail. How come every month there seems to be an outlier purchase? Whether it's a dress for an event or an irresistible, non-negotiable $100 cat tree for S'Nemo, it's more or less impossible to stay inbounds.
BUT IT'S SO IMPORTANT THAT YOU TRY. Like, all-caps important.
You can download my free budget planning tool here—it's a spreadsheet I created in which you plug in your take-home pay and it spits out the right breakdown of how much money you should be allocating in each category, linked at the bottom of this old post about making the most of your entry-level salary.
Once you know how much wiggle room you have, you can plug these budgets into Mint.
I like to set the solid stuff as one-and-done budgets (in other words, they don't roll over from month to month).
For me, it looks like this (because again, nobody benefits from people being coy and everyone has a lot to gain from a little insight):
Rent + Utilities - $1,015
Groceries - $250
Transportation - $250 (not including car insurance or car payment, just gas and Ubers)
And then all my fun money is divided up between categorized rollover budgets. SO, if I go vastly over one month (every month), the spending rolls onto the next month and eats into that budget.
For a glimpse into what I mean when I say budgeting isn't foolproof, consider I was $600 over my travel budget up until very recently and I'm currently $500 over in my girly stuff category. But because it's rolling over, it's slowly getting paid off by each month's allocated money—and not just getting swept under the rug and forgotten as a, "Whoops, I spent $200 on shoes in June! Oh well!"
If you've tried and failed to use Mint as a budgeting app before, try a broader approach.
I read this awesome pointer in the NYT Smarter Living newsletter about how sometimes your 'want' category spending varies widely from month to month. One month you may go out to eat 5 times a week and spend $600 on restaurants, but not travel at all (or vice versa).
For that reason, you may feel guilt surrounding not spending your money the 'right' way. Remember, there is no right way to spend it, as long as you're improving your quality of life and staying inbounds.
For example, I realize it's stupid as hell that I spend $2.44 on Starbucks every single day, but to me, that's an expense that's worth it. Sure, I could make my own coffee, but I figure the tweaking productivity I get from SBUX is worth it to me.
They suggested setting an overall "want" budget (whatever the number 30% of your income is) and categorizing everything that isn't a predictable, static category (e.g., rent or car insurance) into that budget. That way you know your overall limit, but don’t feel bad if you go overboard with one particular budget and go way under on another.
Maybe if I ever pay off my zillion dollars in cat-related debt, I'll switch to this system!
And finally, tracking your net worth over time.
Enter stage left the fiscal crucifixion via Google Sheet.
Just kidding. Here's what this entire post boils down to:
Money, for better or worse, is a really stressful thing. Some marriages are broken in half because of it. Some people have a vague and creeping sense of anxiety every single day because of it. It's one of the most influential determinants of your quality of life, and I know it affects people my age with good jobs because I've had candid conversations with enough of them to know it's very front of mind.
As Jake Burton, the man who founded Burton Snowboard and put snowboarding on the map famously said in his How I Built This interview, "Money doesn't necessarily buy happiness, but it does if the things that make you happy cost money." Damn. Blow up my life with your truth, Mr. Burton.
The reason these apps and tracking devices are valuable is less about the 10% return and more about the day-to-day peace of mind you'll glean from understanding what your finances are doing and how to get a handle on them (and then, of course, the 10% return).
That said, it's difficult to know—without explicitly tracking—what your money is doing month over month. You've got money constantly flowing in and out in separate accounts, so how are you supposed to know if your net worth is growing or declining over time, especially if you have multiple checking and savings accounts and credit cards?
I created an "asset tracking" spreadsheet I update on the 1st of every month. This includes both of my checking accounts, both savings accounts, my credit card bill, my 401k, and my Robinhood investments. This way I can ensure that—overall—my net worth is growing at a healthy rate every month.
And although I was initially apprehensive to track this stuff so closely for fear of what I'd find, I have to say, staying close to my money and knowing my net worth to the penny has been shockingly comforting to me. I look at money (and the stupid shit I'm always tempted to buy) a little differently now.
Money doesn't have to be a source of stress, even if you're young and don't have a lot of it. I bet if you institute all three of these things (and pick up a copy of A Random Walk Down Wall Street) you'll cut your money stress in half just from acquiring a heaping pile of knowledge (and later, greenbacks).
Cheers. Let's all get learned up so we can all get rich.
The young woman's money guide for all the things you're too embarrassed to ask your friends. Build the life you thought you were too broke to afford through managing your spending habits, travel hacking, and simple, smart investing.
Full-time Brand marketer at Southwest Airlines, part-time Yoga Sculpt teacher, occasional Waffle House Model and reformed materialist.
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