I’ve almost always made a paycheck. Since even before I was old enough to work, I got a work permit so that I could work at my favorite clothing store: They had me working in the stockroom, unboxing, hanging and steaming clothes ALL DAY LONG-But I was beyond grateful to be there. Between my first “real job,” babysitting jobs, restaurant jobs and working for friends and family, I always found ways to make money. The problem was, I found even more ways to spend it-And fast.
When you start working, the excitement and overwhelm of finally making your own money can be consuming. It’s a sense of freedom, liberation and independence that is different than any other. It can be so thrilling that the thought or consideration for the future often takes a back seat. So much so that “abundance” without a real plan and forward thinking can lead lack.
Financial irresponsibility when you’re in your 20’s can put you in a tough place in the long run and for a long time. From clothes to fancy dinners to credit cards, spending recklessly in your 20’s (without considering and contributing to your financial future) can cause you to fall short when you’re ready for bigger and better things.
Changing the way you think about spending and saving (and doing it early on) can make all the difference in the health of your financial future and your financial stability. And financial stability and security are directly linked to overall health and wellbeing. Financial security plays just as important of a role in wellness, quality of life and happiness as quality of relationships, physical health, mental health and job satisfaction.
While changing the way you think about and handle money can be a VERY difficult mindset (and behavioral) shift to make, there are many small changes that can impact your future in a big way:
Say “No” to Credit Cards
While it is important to build credit and even though credit cards are a great way to start building credit, opening and using a number of credit cards (specifically high interest store credit cards) can become problematic, and fast. It can be easy to focus on what is important (or what we want) NOW rather than what will be best for your future. In fact, just a few years of credit card irresponsibility and recklessness can impact decisions and opportunities well into your 30s, 40s and beyond. Be mindful of what types of credit cards and how many cards are best for you. Start with one and build slowly as you become more accustomed to and responsible in using and paying credit.
“Put It Apart”
Start saving immediately or “Put it Apart,” as my Italian grandmother would say. Take a part of every single paycheck and put it aside. Even the smallest of savings will really add up over time. From your very first paycheck, take something (ANYTHING) and put it aside. Start small, keep it consistent and grow as you are able. If you start saving early and build healthy savings habits, when you want to go on that big trip or treat yourself to something really special or even when you’re ready to buy your first car or home, you’ll be ready.
Decide what is important to you and indulge in those things, cut back elsewhere. It’s okay to treat yourself and do or buy things that you want. It is crucial to enjoy your life NOW and not spend your years waiting for the perfect time to start or the right time to enjoy to take care of yourself, BUT being choosy about how you spend your money is important. When you’re picky about how you spend your money, you get to enjoy the things that will make you happy now (and pass on the things that won’t benefit you mentally, physically or spiritually in the long term) all the while preparing yourself for your best future.
It can be difficult to manage yourself when you see others indulging in ways that you wish you could. Comparing yourself to others (what they have, where they are in their careers (and financially), what they are able to do, buy or have) can cause you to overextend yourself and create feelings of inadequacy, disappointment or fear. Trying to keep up can be hugely problematic. When you find yourself comparing yourself to others, refocus your attention on your short and long term goals. Look for patterns, habits, changes you can be proud of and keep your eye on the prize.
Consider Your Personal Goals
What’s important to others is not necessarily what is important or good for you. When thinking about finances, think about your personal goals, habits and what feeling secure and satisfied with finances means to you. Create something tangible that you can refer back to often: A list, a mission statement, short and long term goals, etc. Many people refer to the 50, 30, 20 rule for managing money. 50% of your earnings go to needs (rent, food, bills), 30% go to wants (shopping, fancy dinners, vacations), and 20% go to savings. Check in regularly and adjust accordingly-Ratios should work for you and YOUR specific personal goals.
Partner with Financial Planner
It’s never too early to meet with a financial planner. Financial planners can help with planning and organizing your financial future, including debt management, investments, student loans, maximizing savings, healthcare benefits, retirement (IRA, 401k, 403b) and tax deductions. They can help you to meet short and long term financial goals including buying a house, paying for higher education, paying off debut in the most efficient way, purchasing and contributing to a life insurance policy and/or investing in retirement in ways that work for you (without sacrificing too much at one time), where you are now and where you want to be at various points in your future.
Illustration by Richard Chance via @refinery29