Girls, we gotta look out for ourselves.
For generations, women have been conditioned and encouraged to rely on their fathers, boyfriends and husbands for all things financial. And even though it’s 2022, that can still seem like an easy way out. And it’s tempting to take that easy way of letting someone else worry about it for you. This stuff can seem complicated and intimidating and scary. But you know what’s really scary? Not being able to chase the life you want because you were too afraid to learn. You have to push yourself here and get a little out of your comfort zone. The knowledge you gain now is literally worth thousands of dollars in future income and savings.
As with anything regarding money, there's a large amount of privilege at play here. A lot of this advice will seem impossible to those earning low incomes, but I truly believe that this is stuff everybody needs to know. And learning these things requires extra time and extra energy, two things in short supply when you're in financial survival mode. My advice is to start small, celebrate your victories and never stop learning.
Obligatory disclaimer: I’m not a financial advisor or an expert by any means. So if you ask for specific advice in the comments, my response will most likely be “Google it!” There’s a wealth of information out there written by people much more knowledgeable on this subject than I am. I’m including some of my favorite resources at the bottom of this post to get you started. And I'd love to hear more suggestions from others in the comments!
- Be proactive. Don’t wait around for someone to teach you this stuff. It should absolutely be taught in high school, but it isn’t, so we have to learn it ourselves. Start reading, listening to podcasts, watching YouTube, whatever. When you come across a term you don’t know, or a concept you don’t understand, research it until you do. Decide today that you’re taking charge of your financial future. Then do it.
- Pay yourself first. Saving money is the key to building wealth. A good baseline is to start saving 10% of everything you make. Make $50 babysitting? Save $5 of it. Make $500 consulting? Save $50. Build this habit as soon as you can and remember that every bit counts. This money should start going towards your emergency fund.
- Take retirement seriously. Soooo many women in their 20s (and even 30s) don't think about retirement or take it seriously. It seems complicated, it seems like it's about the distant future, it seems like an old person thing. But this can be a very costly mistake. This article from Investopedia explains it more thoroughly than I can, but basically, when you're young you have time on your side, and the power of compound interest. Start learning it about, even if you're bored or intimidated. Your future self will thank you.
- Build your emergency fund. This is money you save for a rainy day. Emergencies include unexpected loss of income, unplanned medical bills, sudden car repairs, pet surgeries, etc. I can't tell you how many times my emergency fund has saved my butt. There's a ton of good advice out there about how to do this, where to save it, so start learning and start saving.
- Closed mouths don’t get fed. Know your worth and don’t sell yourself short. This is so important in your job search process and throughout your career. Know the value you bring to the table and be able to state it clearly and confidently. If you’ve been raised to be a “nice girl” (it’s me, hi), then this might feel really weird and egotistical at first. But guess what? Men do it all the time, and they negotiate higher salaries and raises. Learn the skill of negotiation even if it makes you want to throw up. Practice in the mirror, practice on your friends, but ask for what you want. No one is going to just hand it to you, even if you deserve it.
- Build good credit. I wasn’t someone who racked up credit card debt in my 20s. I made the opposite mistake: I was terrified of credit cards, so I didn’t use them. I thought I was protecting myself, but it turns out it's a good idea to start using them responsibly to build credit. The key is to stay within your means and pay the balance in full every month. You want to build good credit in order to show lenders that you're a responsible person and a safe bet.
- Live within your means. Spend less than you earn. If you don’t have it, don’t spend it. If you can’t afford it, don’t buy it. This is the basic formula that you can't outsmart. Get good at cooking for yourself. Get good at having fun on the cheap. Learn to want what you already have. And if you have expensive taste, get good at saving up for those luxe items.
- Pay attention to your money. Know how much is coming in and going out. Check your bank account regularly, and read your credit card statements. Banks and companies make mistakes, identity theft happens, and that free trial you thought you canceled might turn into a recurring subscription fee without you realizing. Keep an eye on things. You can't control what you don't track.
- Learn to add value. Become someone who shows up and gives. I like to use the metaphor of a potluck; don't show up empty-handed. This can apply to lots of areas of life, but I'm talking here specifically about your career. What do you bring to the table? What's your superpower? When you add value to your workplace or to other people's lives, you're more likely to be compensated accordingly. Develop skills that make you indispensable at work. Within your means, invest in yourself and your own development. Take classes and workshops that interest you, whether career-related or not. Make yourself a person who shines and excels at a few specific things.
Personal Finance Resources
This is actually really what I needed right now. I just turned 18 and I’m having a hard time saving money, so the 10% will come in handy.