Money Talk$ — Like the Comet

This October officially marks three years that I’ve been with the credit union, and the last 36 months have taught me a lot, both personally and professionally. If there’s one lesson I’ve learned while working in the financial industry, though, it’s how much people in their early-mid 20s don’t know about money management unless they work in the financial industry.

Money is literally always on people’s minds. I mean not to quote Luda, but Ima quote Luda: “I got my mind on my money, money on my mind.” Most of the time when people are thinking about money, it’s because they’re stressing about it. I mean who can blame us? It puts a roof over our heads, food in our stomachs and a smart phone in our hands, amiright? People are even shouting out of windows about it - “IT’S MY MONEY AND I WANT IT NOW.” (plz lol at that.)

Luckily, as the copywriter/social media manager/communications hub at a credit union, I’ve had to write my fair share of educational material about managing your finances. As a result, I’ve picked up a lot of helpful information, tips and tricks as it relates to your dollar dollar bills, y’all and making sure you’re making the most of them. So, let’s have some fun with finances.

I feel like I have to do a disclaimer here though, I am in no way qualified to give anyone financial advice. These are just tidbits of info and tricks that I’ve learned over the last three years that you may find interesting/helpful. So, take them with a grain of salt.

BUDGETING LIKE A BO$$

Let’s start by bringing it back to the basics.

You should have one financial goal every month: do not spend more than you earn.

Simple enough, right?

Right. Now, let me ask you this, do you know how much you spend each month compared to what you’re bringing in? It’s easy to say you have an idea of how much you’re spending each month, but have you ever actually sat down and wrote out all of your expenses?

Fun fact: it is recommended that everyone have at least three months worth of living expenses saved and available at any given time. That’s right. Meaning you have enough money to cover three months worth of rent/mortgage payments, utilities, groceries, phone bill, cable/internet expenses, etc. This is also known as a rainy day fund.

Knowing exactly how much you need each month for expenses is the first step to building a budget because then you can literally see on paper how much you’re dishing out each month on a baseline level. You can even break it into different expense groups to make it easier:

Fixed expenses are expenses that typically cost the same month over month. For example, cable bill, rent, Spotify subscription, etc.
Variable expenses are expenses that do tend to change in cost from month to month, but you have some sort of control over them. For example: groceries, gas, eating out, entertainment, etc.
Periodic expenses are expenses that happen a couple times a year. For example: paying for this semester’s tuition, renewing your license tabs, etc.

Be honest with yourself when writing out your monthly budget. This will help when you start to see areas that you may have been underestimating and need to make changes to decrease your expenses. You might even have to make the near-impossible decision between choosing just one of your streaming subscriptions such as Netflix, Hulu and Amazon Prime, but if it saves you even $20 per month, that’s an extra $240 in your pocket per year. The other option is to increase your income instead of cutting your expenses which may mean picking up an extra job or side hustle.

Some quick tips to re-evaluate your spending habits:

Aim for one no-spend day per week (or month if you need time to adjust), meaning you don’t spend any money for the entire day.
Use only cash for certain budget categories such as your pumpkin spice latte fixes. Swiping your debit or credit card is easy because you don’t see the money leave your account. Physically handing the money over will make you more conscious of what you’re spending.
Allocate a set amount of cash per week for spending on specific expense categories. For example, give yourself $30 at the start of the week for eating out. Once that $30 is gone because you’ve spent it on three lunches with your coworkers, that’s it. You don’t spend any more money on eating out for the week.

Unfortunately, we can’t all be Ariana Grande and afford to buy anything we want (nor can we be one of the lucky seven who got a ring from her), but building a solid budget and re-evaluating our spending habits is a great place to start. :)

GIVE YOURSELF SOME CREDIT

The next biggest piece that goes into rocking out your finances as a 20-something, is understanding credit cards and scores.

Let me start by saying, I think the credit card industry is a complete sham that has gotten so big, there’s literally no way it will regress any time soon. You have to borrow at some point in time to generate a credit score, because believe it or not, credit scores are used for more than just determining whether your not you’re a liability for a financial institution when applying for loans. They can also be a determining factor when applying for housing such as an apartment and some employers even look at it during the hiring process.

Therefore, if you didn’t already guess, keeping your credit score healthy is vital. So, whether you just have one credit card or eight (please, do not have eight credit cards), you may be able to benefit from the info and tips below.

Only use your credit card for specific expenses. I only use my credit card for gasoline, medication and other health-related expenses such as doctor’s appointments and gym memberships. By limiting the expenses you can use your credit card for, you’re less likely to develop the habit of starting to swipe it mindlessly and can keep your balance low while building a healthy credit score. Try ask yourself before you swipe it, “Can I pay this off tomorrow?” If not, then put the card away.
Never allow your balance to exceed 30% of your total allotted limit. For example, if the limit on your credit card is $1,000, you should never allow your balance to exceed $300. This can negatively impact your credit score if your balance is more than 30% of your total limit when any of the three credit reporting bureaus report your score for the month which leads me to the next point.
There isn’t a specific day or time of the month when the credit bureaus report your score. That’s right. The three credit bureaus (Equifax, Experian, and TransUnion) all report on different days every month. Meaning, one might report on the 12th one month then the 17th the next. It’s always changing and there’s no way for you to know when, so keep your balance below 30% the total limit.
Always pay more than the minimum. The minimum payment is the mean girl of your credit card experience. In the words of Regina George, “This girl is the nastiest skank bitch, I’ve ever met. DO NOT TRUST HER.” The minimum payment seems super nice by giving you the option of paying way less than your total balance, but she’s literally THE WORST. Like she’s the fakest bitch ever and will cost you way more in the long run because of all the interest that you end up owing on that balance you haven’t paid down. I’m not saying you have to literally pay the entire balance every month (though you should), but definitely pay more than the minimum.
Do not close the credit cards you’ve had open for a long time. Your credit score is calculated by five factors, one being the length of your credit history. The credit bureaus will look at the age of your oldest credit account, newest credit account, and the average age of all your credit accounts. So, what does this mean? Say you’ve had a credit card for five years. If you decide you’re going to close that credit card for whatever reason, you will lose the credit history you built up with that card which can be detrimental to your credit score.
Keep track of your credit score. You can use free services such as Credit Karma (they have an app!) to keep track of your credit score. I know, this is scary, kind of like looking at your account balance on Sunday to see how much you actually spent at the bars this weekend, but keeping an eye on your credit score can also help fraud prevention. STRANGER DANGER, amiright?
Do your research and read the fine print. The average rate of credit cards in the United States right now is around 17% APR. SEVENTEEN. What in the fresh hell is that??? Make sure you’re doing your research before applying for a credit card to find the best rate and benefits (ex: cash back, air miles, etc.) that are right for you. Also, read the fine print. Some companies will make everything seem great until you accidentally miss ONE payment and then all of a sudden your interest goes from 12% to 24%. This is real and it happens.

I think that’s all I’ve got for this section, but yeah. Tread carefully with credit accounts. :)

INVESTING. THAT’S IT. THAT’S THE SECTION.

Lets talk about investing. To be honest, this is the topic I know least about and I mostly only know about investing as it relates to retirement. So, this is going to be an extremely short/brief section. :)

Even if you’re paying off debt, still opt into your employer’s 401k program. You don’t have to contribute an excessive amount to your 401k or a Roth IRA, but you should contribute something.
Try to contribute enough for your employer match. Whether your employer automatically contributes to your 401k or not, most employers who offer a 401k also offer a matching program up to a certain percent. For example, your employer may match 1% up to 5%. So, if you contribute 5 percent (the max match) to your 401k and they match that 5%, you’re getting 10% invested in your 401k each month. That will help grow your retirement savings a lot quicker.
Always increase your contribution percentage when you’re given an increase to your salary/wages. If you received a 4% increase, then you may want to consider putting 2% of that towards your 401k or Roth IRA. Yes, it’d be nicer to see all of that increase hit your paycheck each week - especially if you’re a frugal bitch like me who also finds herself spending hella dollars on shit I don’t need at Target - but, investing some of that raise into your retirement savings will make your future self thank you.

Welp. I think that’s all I’ve got for you. Like I said at the beginning, I am in no way qualified to give anyone financial advice. So, just take all of this with a grain of salt. This was honestly less of advice and more just me feeling I needed to let the world of 20-somethings know all the things we don’t know. Ya know?

If you have any questions, I suggest sitting down with your local credit union’s financial education specialist or wealth management specialists to get some qualified advice. :)