One of my goals for 2020 was to be better financially. I decided to start with reading Smart Women Finish Rich by David Bach and talk to a few financially sound coworkers. It’s shocking about how little the teach you in school and how much you need to figure out on your own. Here is some of the major advice I learned:
The Latte Effect
For some, saving seems impossible. David talks about how you really do have an option to save or invest based on how you’re spending. For example, if you’re getting coffee and a croissant every work day ($5) you’re missing out on $25 a week or $1,300 a year. The little things add up. For me, my guilty pleasure is eating out for lunch on Monday because I haven’t meal prepped or Friday because I’m lazy. Depending on the NYC prices that can be costing me $520-780 a year! I’ve also noticed that about once a month I splurge on one or two clothing items. I’m currently trying to figure out how I can combat that spending.
Shopping with a Different Mindset
When I first heard about sustainable fashion, I thought it was impossible to get into because the products are so expensive. In reality, the products may be expensive but your cost per wear is actually very low! For example, if you buy a cheap, fast fashion shirt from Marshall’s or Zara it may be cheap in the moment. However, the reality is that the times you’ll be able to wear it is actually making it expensive. When you do buy something, save up for it and invest in good quality so it actually lasts. I’ve also been trying to buy more neutral pieces that can be styled multiple different ways. Thank you #10x10challenge!
Dad’s Retirement Advice
Both my parents and one of my brothers are teachers. This means that their retirement is set up a little differently because they have a set pension that they paid into. For people in the business world, things are a wee bit different. Depending on what company you work for, you should have a 401k in place. 40% of companies in the states match what you put in that 401k. So if you’re not putting money away you are missing out on free money. Once you can hit the threshold for the year ($19,500 if you’re under 50 and $26,000 if you’re over 50) you then should start putting money into a RothIRA. The 401k will give you money monthly that you can live off of and your Roth will give you money you can play with (travel, spas, adventure). Don’t worry if you can’t max out your 401K right now (I certainly can’t), this should be a goal you work towards.
The Importance of Starting Now
Most of my readers are at the tail end of college or in their mid 20s. It is critical that you start saving for retirement ASAP. It will cost you a significant amount less if you start saving early because you have more years so spread out the cash. If you start in your late 30s you’ll have to put away a significant amount of money in order to catch up to someone who has been saving at their early 20s. Start putting away 5% of your check and eventually work up to 12%. David recommends 12% because that equates to paying yourself an hour of your day. Now you definitely don’t need to max out your 401k right away (I definitely can’t do that right now) but the goal is to definitely put some away so you aren’t missing out completely.
Other Ways to Save
- Sell clothes on Poshmark before you buy something new (I show how to do that in this post)
- Budget your money with YNAB and track where your money is going through NerdWallet. (I talk about these apps in this post)
- Learn how to meal prep to save money (post on this coming).
- Buy CD (certification of deposit) so that you can make interest rates of 2.15% instead of 0.03 on your savings account. (Still learning how to do this).
- Open a separate savings account that isn’t attached to your debit. Have a percentage of your paycheck go there and forget about it.
- Have a shopping problem? Pay for things only in cash. Go to the bank and take out enough money for the week. You’ll be shocked how different it feels to hand over five 20s instead of a plastic card.
If you want to start being better with your money, you need to check out this book. David talks about how important it is for women to be involved with her own finances as well as the family’s. The first three chapters are informative if you aren’t already a feminist but other than that you could probably skip it. By chapter 4, David shares his brilliant ideas on how to be financially independent. A must read for women of all ages.
How are you at saving? Do you have any questions about how to save? Have any financial books you recommend? Let me know in the comments down below.
P.S. I still 75 pages of my book to go! Might have to do a follow up if anything else is mind boggling (which I’m sure there will be)!