No surprise here, but wellness is not exclusive to the health of your body. It’s an overall state of being well. It’s what you eat, what you watch, how you communicate, who you spend time with, your emotional state and the health of your finances (& so much more than that).
I think one of the more difficult aspects of being in your twenties (because let’s be honest, there’s a lot of difficult aspects…) is knowing what to do with money, when to do it and maybe how, too.
We all want to be prepared. We all want to feel financially secure. We all want to be doing everything that we can be doing right now, so that it pays off later… but are you? Where do you even start?
Here are my best, practical tips on all things finances. All things you can more than likely start doing right now to help get you one step closer to being financially well.
Define “Success” For YOURSELF
When I was younger, I remember my mom buying me this mirror as a gift with “beauty is in the eye of the beholder” engraved around the edge. I believe that success is in the eye of the beholder; it’s subjective and fluid. It can be anything that you want it to be and it can change at any point in time.
I think that having an idea of what it would look like to you to be or feel successful is a great place to start on your journey to being financially well. Maybe it doesn’t look like a 6-figure salary or a huge house, and that is totally okay! But it’s important to know that now, so that you can properly pack for the journey that you do want to take.
- Open a checking and savings account that you can view in one place.
- Open a savings account in a different place (maybe one you can’t access as easily)
- If you haven’t already – start responsibly building credit. I started with a credit card that I used for specific things like gas. Something that you can pretty much predict the amount every month so that you can pay it off every month.
- Create a budget or at least a list of all of your expenses. I use a spreadsheet on my computer that I can constantly update as my finances change. I’m a big advocate of auditing yourself; knowing what is going out and coming in.
- Create multiple sources of income. Even if some are significantly smaller than others, the more streams the better.
- Become financially independent from your parents or seriously work towards it.
- Open an IRA or take (full) advantage of your employer’s 401k if offered.
- Use your “harder to get to” savings account as an emergency fund. I use Dave Ramsey’s model of having 3-5k in a separate account at all times so that you could pay cash for an emergency, should one arise. This gives you an indescribable peace of mind in knowing that you wouldn’t have to rack-up a credit card if your car needed a new tire unexpectedly.
Be Your Own Employee
My aunt taught me at a young age to pay your bills first, pay yourself second and whatever is left over is yours to spend as you wish!
Paying yourself is HUGE. Saving money is maybe a luxury to some, but a necessity to becoming financially well. I’ve never met someone that enjoys or feels good about living paycheck to paycheck.
You can start by setting aside (or paying yourself) a percentage of your paycheck every pay. Maybe it’s 10%, maybe it’s more. Some dollars saved is always better than no dollars saved. Put away anything that you can, you will notice a snow ball effect as money starts building up!
Treat yourself like your own employee by increasing that amount saved every year or maybe twice a year. As if you’re giving yourself a raise. Run your finances like you would run a business.
Thoughts On Debt
I don’t think that all debt is bad.
I’m not saying that because I have debt, either. I actually have zero credit card debt – only home & car loans.
I think that there is a difference between debt because you couldn’t wait till you could afford it and smart debt.
For example, buying a home and taking on that kind of debt was a much wiser choice than spending almost double every month on rent (with nothing to show for it) while simultaneously trying to stash money to buy a home with cash. Smart debt.
Sometimes I’ll put an entire trip or all of the Christmas presents on a credit card for the simple reason of just being able to easily keep track of how much I’m spending. With every intention of paying it off in full. This can be a little tricky though because those points that you rack up on a lot of credit cards can be tempting, but can also cause an endless debt cycle.
If you have a lot of debt because you couldn’t wait (credit card debt), it really is best to try to dump every dollar that you can towards paying that off.
If you’re considering taking on a lot of debt like buying a home or car, I really recommend pretending first!
Pretend that you already have that financial burden for a few months prior to actually going for it. If your future mortgage is going to be 1k/month, start putting 1k/month + guestemated utilities away into savings each month as if you are paying that bill. Not only will this give you a pretty good idea as to if you can actually keep up with the payments, but it will help you to save up extra money fast. I love this and still do this all of the time!
Make Room For Your Weakness
I love coffee. Specifically espresso. Specifically 3 shots on ice. Specifically Starbucks.
It’s without a doubt my “weakness”; something that I don’t need but definitely want. Every day, sometimes twice.
I have this thing where I need to have a cup in my hand at all times. Kids have security blankets, adults have cups of coffee. Not just any coffee, 3 shots on ice.
If I’m sitting down with my budget, I can’t justify spending what I spend on coffee. Ever. BUT I haven’t nixed it because it genuinely is something that I enjoy having even if I don’t need it. Not everything in life is need need need. Sometimes you have to make room for what gives you life (literally).
Maybe for you that’s getting a regular massage or spending unmentionable amounts of money on a hand-painted balayage. Maybe it’s wine. It’s probably wine. Maybe it’s spending every extra penny on your puppy or supplies for your jewelry hobby.
Here’s the thing; to each their own.
If you restrict yourself to only buying what you need, all of the time, you will explode and/or binge. You will also feel really down about your financial situation because you feel like you can’t have nice things.
You weren’t created to pay bills & die. So don’t.
Respect Your Money
I wrote a blog that elaborates on this idea, but the bottom line is – if you respect money, money will respect you back.
My final, and maybe best, piece of advice is to educate yourself. I really love listening to podcasts on other people’s thoughts about money and business. I don’t always agree or adopt their habits, but I always take SOMETHING away from it. You can listen to your parents, your family, mentors, etc. about what to do with your money – but ultimately you have to follow what feels right to you. What works for you. Whatever that looks like!
Oh, and one more thing… Never take financial advice from someone who’s financial situation you wouldn’t want for yourself!
Peace & Abundance,