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When you’re 20 years old, you tend to believe what other people tell you. And that was especially true for me when it came to money. I believed whatever someone told me. Part of that was because I didn’t know much about money. And part of it was because I didn’t care enough about my financial future to do any research myself. I know, I know. Not the smartest move. But I generally didn’t care. As long as I could still make my minimum payments on everything and live the lifestyle that I had, I was perfectly fine. I wish I could go back and shake the 20-year-old version of myself and yell “WAKE UP!!!! This is your future! You should care just a little!!!!” But I can’t. Unless you have a time machine hidden in your closet. If that’s the case then please, shoot me an email. Until then, I’ve listed out 8 lessons that I wish I knew about money back in my early 20’s. And I’m sitting here wondering if you wish you knew these same lessons as well.
1. Debt is not good. (Not even student loans.)
One thing I was told when I was younger was that student loan debt was “good” debt. I guess people figured it was good to have students loans because it meant I was getting a college degree. But what if I had dropped out of college? Would that still have been “good” debt? Also, the idea that student loan debt was good left me unaware of just how much my minimum payment would cost me on a low teacher’s salary. I figured that if it was good then it would be just fine when I graduated college as well. Instead, I was left with a nice sized minimum payment on my loans and let’s be real…I was mostly just paying interest! So no, student loan debt is not good. Student loan debt is just like any other debt!
2. Start saving for retirement now. Yes, now.
My brother had a friend that worked at a gardening store in high school. He was so proud that he was already sending so much of his paycheck to his 401K. I remember thinking “Why on earth would he do that? He should keep his money right where he can see it…in the form of clothes.” Needless to say that my brother’s friend was thinking about the future instead of the present moment. And he was only 16! I didn’t start thinking about retirement until I became a mom and at that point, it was more like “Oh goodness! I have children. This means I’m an adult. Now, what do adults do again? Oh yeah, they save for retirement!” I wish I had known about the magic of compound interest when I was just 22 years old. But let’s be real here. I was way too immature to be thinking about a Roth IRA.
3. People don’t care what clothes you are wearing.
When I first graduated college, I wanted to only shop at high end stores in the mall. I wanted a shoe rack that included 30 pairs of shoes and had as many clothes as I could dream. To be honest, I think I wanted others to like me. So I bought cute clothes. I had a mountain of insecurities and clothes, especially cute clothes, helped mask those insecurities. But no one was actually looking at my clothes. Instead, people were too focused on what they were wearing, doing, and spending money on. If I could go back in time I would direct that sweet 20-something to a more reasonably priced store and tell her to cut her wardrobe by half. Because no one needs as many clothes as I had. And no one was really looking at what I was wearing in the first place.
4. The art of saying “no.”
I spent a ton of money when I was in my early 20s. Money that I didn’t need to spend, and money that I sometimes didn’t even have. Most of the time it was because I had no idea how to use the word “no.” I hated feeling like I was missing out, so I would say YES to every invitation. From traveling to eating out all the time, I was there. Sometimes I’d go places when I didn’t even feel like it, all because I had no idea how to say “no” and not upset people. Over the years I have learned to put my health, savings goals, and my family first. I have a lot of kind ways to say “no” to spending extra money! Here are a few of my go-to ways to kindly tell someone that you’re not interested in spending that extra money:
- “Thanks, but I have other plans at home tonight. Maybe next time!”
- “You’re so kind for inviting me. Right now I can’t fit that into my schedule, but maybe in the future!”
- “I’d love to, but I’m focusing on a few financial goals that I’ve set for the month.”
- And my favorite way to say no: “Not today, but thanks!”
5. It’s okay to skip the fancy apartment.
When I graduated college I was living in the heart of Dallas. I envisioned myself in a cute apartment in Uptown that was walking distance to my favorite brunch spot. The only problem was that a 1 bedroom apartment would run me over $1,200 each month. Did I mention that I was making less than $3,000 each month as a teacher? I desperately wanted that cute apartment in the ideal zip code. I couldn’t afford it so I lived in a cute apartment in a less than decent area. What I didn’t know then was that it’s totally okay to skip the fancy apartment and live in the crappy apartment. Even if that means it’s an efficiency. Just make sure you live in a safe area!
6. Meal planning is essential.
I never thought that I had to meal plan when I was younger because it was just me. I had no husband, no children, so why should I even bother? Instead, I’d head to the grocery store and load my cart up with frozen meals, snacks, and would end up spending $150. Not to mention I was going out to eat several times a week and almost all meals on the weekends! I mean, imagine if I had cut my food budget in half. There’s my retirement savings right there! But I figured that meal planning was below me. In my mind that was only meant for stay at home moms who had soccer practice and Sunday school. But I see now that a meal plan is essential in any person’s life. Just like it’s important to be intentional with your money, it’s also important to be intentional with your food! To read exactly how I meal plan these days, check out this article.
7. Tracking your money isn’t enough.
When I was in college, my mom started making me track my money. That was back in the good old days of Microsoft Money. I’ve since moved on to Quicken and that’s how I still track my income and expenses today (to read how I track our family’s expenses, click here). I figured that since I was tracking my expenses that I was juuuuuuust fine. But all that means is that I knew when my checking account got down to $2 before payday. I was very aware of the fact that I was living paycheck to paycheck. What I didn’t realize at the time is that tracking your finances should go hand in hand with making a budget. Otherwise, you’re not actually telling your money what to do. You’re just watching it leave your bank account! Now don’t misinterpret what I’m saying here. It’s important that you find a way to track your income and expenses. Find a way that works for you whether that’s paper and pencil, an app, or a software program like Quicken! But without a written budget, you won’t be able to make serious steps toward your financial goals. So budget AND track your finances.
8. Don’t let money define you.
When I was in my early 20’s I thought that my income defined me. I was a teacher who wasn’t paid a ton. In fact, I believed that I would struggle with money forever. I married a teacher who also didn’t make a ton. “We are destined for financial failure,” I thought. It wasn’t until we woke up and took responsibility that I realized money doesn’t define me. If I continue to tell myself that I’ll always struggle with money then guess what! I’m setting myself up for a world of hurt and financial hardship. Instead, my husband and I decided that we could change our financial future, even on two teacher salaries. Money no longer defined us and our future. Instead, we set out to create the future that we wanted!
Okay so here’s where I throw a wrench in things. You see, I wish that I had known all these things in my early 20’s. However, I have no doubt that I wouldn’t be where I am today if I hadn’t endured my financial mistakes and lessons. And if I hadn’t been pushed to a point where I knew I needed to change, then I would have never become passionate about budgeting. And it’s in that moment where Inspired Budget was created. Out of passion that stemmed from years of struggle, misconceptions, and then the desire to make a change.