Every other Friday this incredible thing happens at 2:00am. I get a notification on my phone that there’s a deposit in my bank account– and suddenly all of my elaborate fears of being homeless and having to expose what my cardboard handwriting looks like to strangers melts and transforms itself into a warm, expensive dish accompanied with a glass of something and cucumber from Herb & Wood with my friends the next day. Payday is my favorite holiday but when it comes to numerical value I have to admit, ask this girl about which episode in SATC did Carrie’s Monolo Blahnik’s get stolen, and faster will you receive the very correct “Season 3 episode 17” number than you would asking me at what age I will be able to retire.
Listen, I didn’t go to math school. I’m not shy about telling you that my calculator on my iPhone gets more action than my Duolingo app. Upside, this means all you servers/bartenders/nail techs within my living perimeters benefit from my insecurities of accidentally tipping poorly–and if you’ve ever seen me in your bar trust that your take home just increased by 35%, or something.
I’m going to take a wild guess and assume that while many young adults out there are amazing with numbers (I’m looking at you U of A’s ΑΕΠ alumni) financial illiteracy is a real and scary monster of our generation. So if you haven’t already figured out the rule to start saving at least 15% of your income to savings, than you just may need to sit back and put on a helmet because Lady Danger is dropping some knowledge.
Here are some 8 simple ways to get started.
1. Create a budget.
Credit card fees and loan rates are going to cost you more than 2017’s trip to Holy Ship your friend from college keeps asking you to join them on. A lot of people are blessed without debt. But according to Forbes Magazine 45% of Millennials with student debt don’t even know that they are paying an average 18 percent of their salary on them.
The most helpful (but holy-Chicago annoying) tips I’ve ever received was from a very intelligent Application Developer I know. He told me to get out a simple excel sheet and write down every expense I have each month and add them up. Track everything. Even the trip for Carne Asada tacos at 3am you choose to ignore on your bank statement and trash can, and yeah even the Lemonade album you purchased on iTunes after an Ambien still counts. Figure out what your budget is using your take home base pay ignoring commissions and additional payouts. Live off that. Literally. It hurts but this means good-bye weekly brunch, so-long Spotify Premium, hasta luego Tinder Plus (seriously it was an accident). Find a reasonable amount of weeks you can “life” this way and put the remaining amount in savings. This is the first step in creating realistic living habits. At least homeless chic is cute these days.
2. Save your money like it is your final rose ceremony of the bachelorette and you are down to Jason Momoa and any Hemsworth brother. Seriously–how does one choose? You don’t. Save that rose.
Depending on your age and income, there is a very specific percentage of your payday holidays you should keep in savings. You can speak to a financial advisor for free, they will talk to you about your assets and potentially judge you about your spending, its fine let them. However, and forgive me fellow friends of this profession, anyone could be a financial advisor. I mean I’m sort of doing it right now, and I majored in Chipotle. Cool that burn down with some Veuve Clicquot if you’re offended by that, and if you can’t afford it then well, case and point. I’ve made a strong 30% rule for myself and have my bank immediately transfer doll hairs to a separate bank account I have purposefully made it hard to gain access to. This way Danielle doesn’t spend all of Danielle’s money. This is important.
Another tip, if you have just paid off a monthly reoccurring payment (car; credit card; debt owed to that bar for that one time) then use the average monthly payment you used on that bill towards your savings as well. You lived off the same paycheck before, why not pay yourself back?
3. Download an app on your phone to keep your @$$ in check.
I like Mint because it’s mild humor keeps me checking it for updates. There are a lot out there–don’t be paranoid about using them. Also, download a credit check app too. I prefer Credit Karma.
4. Stop paying for everyone all the time!
If you’re like me, you’re awesome at getting your best friends and the old guy in the back super bourbon happy on a weekly basis. Stop it. Cut that ish out right now. Drunk you and sober you need to have a talk. You can do this when you’re older. Maybe rotate who gets the shots. If your friends are too poor to buy themselves drinks, have them follow the steps above and call them in 4 weeks.
5. Read about it.
It’s not all about you. Stay in the know about your credit card company’s APR and pay attention to what you pay for in general, seriously that strip of bacon was $7? Pay attention to cost like she/he is the hottest girl/guy in the room, and she/he is so into you being in her/him. A very financially intelligent hottie, Annamaria Lusardi stated that “We estimate that as much as one-third of the [credit-card] charges and fees paid by less knowledgeable individuals can be attributed to ignorance” in 2009. I just read that article. That was written 7 years ago.
6. Pay yourself in savings before you pay off your debt.
This is a very important one. You need emergency money to live comfortably for 6 months to 1 year if you lose your job, or if Kanye West becomes president. Put aside money for saving before you pay a bill, even if its $1. Thank yourself later.
7. Are you in a position to be putting money into a 401k yet?
You may not be ready to put aside money in 401k just as of yet. You need to pay off short-term debt first before you can really look into the long-term as well. If you’re not sure, call one of those fancy financial advisors. They will keep it real with you on that. If you are ready on the other hand, find out how much your company matches and depending on your age you can select how aggressive you want to be. Ask about stock options. Research, research, research.
8. Substitution a.k.a downgrading.
Make some changes. Maybe don’t go for the Mum Rosé this Sunday. I mean relax. I’m not saying its cute to go around bragging about Korbel, but for as many things you would buy at Neiman Marcus, there’s at least 2 of them under $50 at Target. For every dollar you were going to spend on a similar item anyway and saved it instead put into a savings account.
Find a great book to help you get started on figuring out what your Financial IQ is. Are you really as savvy about saving as you think? Can you answer the following question:
If the interest rate falls, what should happen to bond prices?
(c) Stay the same
(d) Do not know
U.S. News & World Report L.P.
Once you feel good about where you’re at, its time to invest. More on this soon.