All good things must come to an end—welcome to Pt. 4.
Just kidding, though, because we’re just getting this gravy train rolling. While this marks the end of the takeaways from the book tour, I have yet to actually finish reading said book—so prepare for more! (And while you’re at it, pick up your own copy here.)
If you're new here (hello), we've already covered:
Next week, we'll talk a little bit about credit cards, but for now, let's take this book series knowledge home.
There were a few newlyweds in the crowd who asked for Manisha’s advice on ‘splitting the pot,’ so to speak.
She talked about something I had really never thought about before: we’re the first generation to deal with the question of finance within marriage en masse, because we’re getting married later and typically participate in dual earner situations. Depending on your age and career, both members of the marriage could be coming in with sizable assets (or, less sexy, sizable debt).
She suggested “yours, mine, and ours” buckets if you aren’t comfortable combining your assets into one metaphorical pile.
The “ours” bucket pays for your housing, your food, transportation, and other things that you both need to live and benefit from mutually. In situations where one partner significantly out-earns the other, she suggested a pro rata “ours” bucket in which the contribution from each person is proportional to their income.
For example, if I make $100,000 and my husband makes $200,000, I contribute $50,000 to the “ours” bucket and he contributes $100,000. It’s only fair, honey!!!!!
The respective “yours” buckets can be used for things like gifts, personal grooming, shopping, and other shit you don’t think the other person should be on the hook for.
The debt conversation is more tangled, because debt situations vary significantly from person to person. She said that some people view marriage as assuming the other person’s good AND bad, which means assets AND debt.
She made a joke that we always ask ourselves if we’re physically, emotionally, and intellectually attracted to another person, but we never ask (aloud, at least) if we’re financially attracted. She said that’s a perfectly valid question, as money affects marriage more than most anything else.
She also noted that she deals with a lot of people who don’t know how much their partner makes. WHAT THE ACTUAL HELL, PEOPLE? How does that work? Y’all just ignorantly making big life decisions out there? SMH, I can’t.
The only way to decide how you’ll treat your (or your partner’s) debt within your relationship comes down to a conversation. And if your partner isn’t willing to talk about it, well… maybe you should give the ring back.
Switching gears slightly to the gender stratification within conversations about money, she said financial literacy amongst average citizens (both men and women) is about the same: low. The rates vary between 30-35%, on average. I.e., none of us really know what we’re doing. Yay!
But, she said, the main difference is that men have an elevated sense of confidence and assuredness about their money knowledge (LMAO #shocked) whereas women tend to have a more realistic perception of their understanding of money matters.
As a result, men begin talking about money earlier with each other—in college and sometimes even high school. Women, on the other hand, tend to avoid the topic altogether, feeling unequipped to engage in the conversation—so unless they take a genuine interest, they never learn.
That’s heartbreaking to me, because as Manisha noted, money gives women voices and choices. It allows you to have control over your own life.
As I’ve noted before, it really bothered me that all my male friends seemed to care about and partake in investing while my female friends didn’t know and—frankly—didn’t really seem all that interested.
(To be clear, my friends are obviously interested in making and having more money, but weren’t actively investing or trying to do so like my male friends.)
It is precisely because men become comfortable talking about and are confident in their money knowledge that they gain more true understanding over time. And, as we’ve all learned about the compound power of money, that can make a HUGE difference in the long run.
If an 18-year-old guy starts investing in index funds, he’s going to have way more to show for it in the end than a woman who waits until she’s in her late 20s or early 30s to get some skin in the game. Time matters. Unlike a lot of other things in life, when you start matters.
So, ladies, let’s have more candid conversations with each other about money. Ask questions. Find money mentors. Behave as though your income, savings, and investments are all you’ll ever have, and if you do so successfully, they’ll be all you need.
The first step is picking up this book. If you haven't done so yet, don't cheat yourself any further.
Welcome to part 3! We’re almost done—only one part to follow of book tour knowledge, focusing on perhaps the most juicy, controversial, and inexplicably emotional tenet of money: relationships and gender.
First time visitor to the series? Make sure you check out Pts. 1 and 2, dealing with LOANS, DEBT, AND SAVING and FINANCIAL ADVISING respectively. They'll serve as a warm, soft, cuddly foundation for the cold hard truth below.
And of course, my disclaimer regarding the validity of the information below (because I'm sure you don't necessarily want to take investment advice from someone who writes puns about bags flying free for a living):
I'm merely passing on the brilliance of Manisha Thakor, a Harvard MBA, CFA, and CFP® who’s nationally recognized for her expertise on financial wellbeing. Manisha's the VP of Financial Education at the Seattle-based wealth management firm, Brighton Jones.
All right, pleasantries out of the way. Let's get down to business.
When it comes to home buying…
This is a loaded question and one that I’ve grappled with a lot since understanding how expensive rent can be and how it adds up over the years (you may recall my post about what it’s like trying to buy real estate at 23 and my horrifying realization that by the time I’m 30 I’ll have sunk approximately $100,000 in rent).
A little history lesson: home ownership became a true mark of wealth and prosperity during our parents’ parents’ generation (so, our grandparents). These were periods of high inflation—people were getting annual raises of 8-12% every year, and there were only two mortgage options: 15- or 30-year fixed.
So as your income steadily rose over time, your mortgage payments stayed low. By the time your kids were grown, your house was paid off. Not to mention our grandparents didn’t have nearly the amount of investment vehicle options we have today—a house was how you became prosperous.
Fast-forward to now, especially in hot housing markets. Not only are most of us not seeing astronomical raises annually, but there are so many different mortgage options out there that some people become entangled in these variable rate mortgages and secure loans for homes they can’t actually afford (hello, 2008).
All that to say, Manisha said buying is ONLY better if you can comfortably put 20% down AND you can go with a 15- or 30-year fixed rate AND you intend to live in that home for at least 10 years.
I immediately thought back to all the condos I was looking at in the mid- to high-$200s range. 1,000 sq. ft. of modest 2BR-2BA bliss for $250,000 is very much the norm in Dallas, and that's a cool $50,000 down if we're talking about 20%.
I don't know about your situation, but I ain't got $50,000 at my disposal. And if I only put 10% down, I'd be borrowing 90% from the bank—not a great start for my first property—and paying a hefty interest rate since my credit history is only a couple years old.
Which brings me to a segue topic that will apply to all of you, even if home-buying isn't in your near future: credit. Let's get into that next week!
There are so many other investment options out there that don’t require a $50,000 down payment. (And, by the way, your $250,000 house usually ends up costing closer to $500,000 over the course of your mortgage thanks to your interest rate—something to think about.)
Plus, the property taxes in the state of Texas are also very high, a cost you don’t directly incur as a renter. To give some anecdotal insight as to what I mean by “very high,” a home valued at about $2 million in the nice Dallas suburbs sees about $40,000/year in property tax.
If you’re struggling with this decision right now, this is an absolutely incredible free tool: The New York Times ‘Rent or Buy?’ Calculator. This will now be a permanent staple on my blog’s side bar in this section for easy access.
In short, Manisha’s insight made me feel decidedly better about not being able to afford to buy yet. Join me for my last series post later, LOVE AND MONEY, and come back next week to learn all about credit, my favorite credit cards, and the ins and outs of why they're a non-optional staple in your wallet.
You can check out the book here and take this little journey with me. Let's get money-woke, friends!
Welcome to installment #2 of my Money Diaries-inspired series!
If this is the first post you're reading from the series, head back to Pt. 1 and get your baseline established—not a "must" to understand the below but if you're interesting even obliquely in financial advice then you'll probably find Pt. 1 (LOANS, DEBT, AND SAVINGS) even more helpful!
As background, this insight isn’t coming from me—I'm merely passing on the brilliance of Manisha Thakor, a Harvard MBA, CFA, and CFP® who’s nationally recognized for her expertise on financial wellbeing.
Manisha's the VP of Financial Education at the Seattle-based wealth management firm, Brighton Jones. (Little ~fun fact~: most wealth management firms have a minimum net worth value of $1,000,000 before they'll work with you. Cute!!)
This one won’t be as lengthy as the first post, but still hits on some critical points if you ever want to be someone who has enough money to warrant financial advising. If you're craving more in the meantime, go ahead and order the book. I promise, it's a worthwhile investment (coming from the girl who exclusively buys Calvin Klein underwear because they're on-brand...I know, but trust me).
Getting a financial adviser is wise, if you don’t yet have one. But be careful—if you feel a little icky about them, she explained, it’s with good reason, because financial advisers don’t have a universal standard like doctors and lawyers.
I’ve only received informal personal finance advice from my friends Ali and Evans who own a wealth management firm and practice personal finance education in his free time, respectively, but now that I have this information I’ll probably move forward with finding an official adviser.
Side note: we were talking about investments and wealth management along this same vein, and she off-handedly made a comment about how "if you have less than $250,000 in assets, you should work with Ellevest," and I swear you could hear a penny drop in the room. Someone in the back was like, "What if I have no money?" Hilarious.
The questions you should ask your financial adviser, in order of importance:
Alright, folks, thanks for playing. Tomorrow we'll talk about everyone's favorite thing to stress about as young adults: renting vs. buying.
Welcome to the first installment of my “Money, Honey” series, where I’ll be taking you through a shit ton of (literally) valuable advice from the Refinery29 Money Diaries book tour. (And as I read the book, I’ll probably be sharing more.)
Keep in mind this investment, budgeting, and advising insight isn’t coming from me and my degree in public relations. It’s coming from Manisha Thakor, a Harvard MBA, CFA, and CFP® who’s nationally recognized for her expertise on financial wellbeing.
Her pedigree ain’t the only impressive thing—she’ s worked in the financial services industry for more than 25 years and is currently the VP of Financial Education at the Seattle-based wealth management firm, Brighton Jones. (Little ~fun fact~: most wealth management firms have a minimum net worth value of $1,000,000 before they'll work with you. Cute!!)
She’s low-key hysterical, too—she kicked off the night explaining that her ex-husband’s mistress sent her a “greatest hits compilation” of their salacious emails which made her thankful for her prenup during her divorce. Yikes.
This first piece focuses on loans, debt, and savings, as the title suggests. Over the next few days, look for:
Let’s get started, people.
How much should I be saving? What if I’ve got hella debt?
First of all, Manisha's comments on emotion and attitude surrounding money were intriguing to me. She noted:
"You don't have to pull back totally on your joy, but if you save excessively right now, 10 years from now your life is going to look VERY different from your friends'."
As a self-proclaimed minimalist, she said she had two work dresses, two pairs of jeans, a couple pairs of shoes, and four work outfits when she started her career in her twenties. Essentially, she cut ties with the materialistic rat race and instead 'saved excessively.' Obviously her lack of wardrobe options didn't affect her career too much, seeing as she's a 45-year-old vice president now.
This also hit me in the feels because, as a young person living in Dallas, I feel constant pressure and temptation to say yes to every "dinner & drinks" invitation and cash in on my 25% Lululemon discount every time they drop new leggings. The idea of being freed from that (and the promise of wealth looming) was so, so appealing to me.
So, that's a saving mantra—but what about debt?
Not to toot my parents’ horns, but damn, they really set me up for success. By establishing early in my life that hard work = $, I was fortunate enough to have my Alabama out-of-state tuition free. Obviously, college is still expensive as hell even WITH tuition paid for, and my mom and dad foot the bill. Thank you, Mary and Chris. I now realize how huge that was.
For this reason, up until now I really didn’t know shit about student loans (having not dealt with them myself) so when people would reach out to me with questions I’d have to inform them I was utterly useless.
Let’s tackle this in two steps, because Manisha’s advice will probably make you feel better, not worse.
First: Let’s say you have no debt.
You were privileged enough to get through school (and your life thus far) debt-free. But you’re not packing a trust fund or a six-figure salary, either, so you’re still concerned about building up your own little nest egg.
The standard advice is 3-6 months of expenses. Manisha explained that for some people this is really, really unrealistic: “It could take some people a decade to save that much.”
The average American spends $2,000 on truly unexpected expenses per year: a fender bender, your cat’s bladder surgery, you name it. She suggested an “emergency fund” magic number of $2,000 instead. This is $2,000 you never touch unless you absolutely need it. She said hitting this $2,000 figure was more important than contributing to your 401k, which is obviously controversial, but her reasoning was this:
If you’re contributing to your 401k but you don’t have $2,000 in savings available and something happens, what are you going to do? You’re going to put it on a credit card.
Then, you’re going to have to save for several months (or more) to pay off that credit card, while it accrues 20% interest or higher. The compound interest or match that that same money would make in your 401k won’t compensate for that compounding credit card debt, unless your company has a full 20% match (if yours does, are you hiring?).
Once you've got $2,000, then contribute to your 401k up to the company match, at LEAST. It's literally free money. Don't be dumb.
Here's a little exercise to illustrate why you shouldn't even think twice about this:
Say you're 28. You make $50,000/year. Your company matches 100% of the first 6% of your salary that you deposit into your 401k. (That's a pretty good rate.)
Your portfolio will have an 8% annual growth over the course of your lifetime, based on the past 100 years of U.S. markets.
If you contribute 6% of your salary, by the time you retire, you'll have:
But let's say instead you max out your 401k (right now, the max annual contribution is $18,500), and the first 6% of your salary is matched.
By the time you retire, you'll have:
Now do you still think your shopping budget takes precedence over a 401k contribution?! Y'all!!! It's free money!
Back to emergency funds really quickly...
Of course, if you can swing 3-6 months, do it. Crossing that milestone granted me an incredible amount of financial relief, knowing that I’d be fine even if I were without income for six months. It’s a good goal to strive for.
Second: You’ve got some debt.
Student loans, credit card debt, who knows? There is now more money in the United States in student loan debt than credit card debt, so if you have student loans, you are not alone.
Someone in the audience asked a question about how urgently you should pay off student loan debt.
Should you sacrifice for a couple years to prioritize paying it off as quickly as possible, or should you pay it off slowly over time and live your life normally in the meantime?
Interestingly, the author (Lindsey Stanberry) herself had a lot of student loan debt, and she explained that she and her husband just finished paying it off last month—they’re in their mid-30s.
In the time since finishing school, Lindsey bought and sold an apartment, had a child, and got married—in other words, she lived a fairly normal life. Buying and selling real estate, having a baby, getting married: these things cost money. She explained she prioritized a normal life and decided early on to slowly make payments over time.
Manisha said the magic number here is 7%. “If your loan has an interest rate of 7% or higher, I’d suggest sacrificing and paying it off quickly. If you have a government loan with a rate below 7%, I don’t mind Lindsey’s approach.” She noted that usually only private loans have a rate of 7% or higher.
Credit cards, on the other hand, typically have interest rates in the double digits. Do whatever you have to do to pay that shit off.
But let’s say you’re in a tight spot.
Let's say you took out a credit card for a few large purchases, but now you have a LOT of debt and you’re in-between jobs. That “0% APR” first-year offer is coming up, and you’re about to start accruing 20% interest on that debt and you don’t have income to pay it off.
Merely imagining this scenario gives me a knot in my stomach, so if this is you, I feel for you and I’m sorry. An audience member raised her hand and described this exact situation, and asked if she should work with a debt consolidation company (she’s been getting packets in the mail).
Manisha’s answer was, unequivocally, no: don’t mess with debt consolidation packages.
Easy for you to say, vice president and millionaire Harvard grad, I thought. But then Manisha dropped the sneakiest hack I had never considered.
“If you anticipate more money soon, but not soon enough, and you need to buy more time, roll that balance onto a new card. Open a new card with 0% APR. You’ll pay 3% on that total, which will suck, but it’s a lot better than the alternative of accruing 20% per month while you figure it out.”
Convinced you need this book in your life?
Pick it up on Amazon for $13.38 here.
In case you're unfamiliar with the Money Diaries series on Refinery29, it's essentially a series of editorial content in which they ask women all over the country how they spend their money over the course of a week.
The anonymous contributor writes how much they make, their take-home pay, what they're investing in, how much they pay in rent (and where they live), and then they take you through an entire week of their expenses and lives. It's truly fascinating.
This book compiles all of these entries and inserts financial tips, tricks, and advice throughout. In short, you need this. It's a $13 investment that could teach you things that'll someday make you millions.
See you for my next 'installment' soon!
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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