As a teenager, I found myself daydreaming of my 20-something year old self; I’m independent, experiencing all that life has to offer, and have the money to do what I want, when I want. Lo and behold, that’s not how my twenties came to be. Like most people, bills, student loans and other living expenses have become my harsh reality. Naturally, to escape the stresses of adulthood, I made choices to live a little..maybe a little too much. Now in my late 20’s, I’ve come to recognize the money mistakes I made in my early and mid 20’s. Here, I explore these mistakes and what I did to fix them.
Being part of the millennial generation, I admit to having a FOMO (fear of missing out) on new experiences that my peers are able to enjoy. From the newest must see movies, to concerts and music festivals that etch unforgettable memories in our minds, I want to do them all. In theory, these activities sound great, but in practice, they take a big chunk out of my wallet. Transportation, tickets, food, everything adds up quickly. So quickly, in fact, that I found myself using almost all of my spending money too far out from my next paycheck.
Living paycheck to paycheck was not something I was comfortable with, and working at ACap, I saw how responsible spending can work in my favor in ways more than one. I came to realize that it’s not about how much money I make, it’s about how much I spend (and save) of it. By attending these activities less frequently and setting budgets prior to, I am now still able to enjoy myself and experience these new things, while having a comfortable cushion in the bank until the next payday.
Although I work in the financial industry, thinking about my own money proves to be a stressful topic. I found myself wanting to know where I stood with my finances, but too afraid to take the plunge to really know. How irresponsible have I been with my money? Do I have to give things up after knowing how my money comes and goes? What if I’m unknowingly very deep in a financial mess that I won’t be able to get out of quickly? All viable points, of course, but I knew only putting it off meant impairing my financial health.
A few months ago, I sat down, a big cup of coffee in my hand, and put together a spreadsheet. My monthly and annual income, expenses, necessities and miscellaneous spending, it was all...THERE. There for me to do what with? Well, for the rest of the night, my eyes were glazed over with shock at how much of my income I spent on a monthly basis. Turns out, I’m in the very fortunate position to have money left over month-over-month (if I allow it, of course).
After I had some time to gather myself, I took a deep breath and had a serious conversation with my husband. He was not only understanding, but agreeable that we should make efforts to change how we spend our money. After all, are we working hard to have nothing to show for? Now that I knew for a fact that I shouldn’t be running out of money at the end of every month, the next viable step was to start tracking my income and expenses on a regular basis. I do so by using the Mint app, synching my bank accounts and fixed expenses to it. I also set savings goals and spending budgets within the app, which, over time, will continuously give me a clear picture of my financial health. When I first started using Mint, I was able to hone into some very bad habits.
My husband and I were going out almost every weekend and were spending much more on each outing than I would’ve estimated. Now, we plan a date night once a month, which allows us to fully enjoy ourselves with the peace of mind knowing we can comfortably afford it. Nothing had prepared me for what turned out to be my biggest spending mistake; we were eating our money! Ordering food in and eating out multiple times a week was eating away at hundreds of dollars a month. Embarrassed and determined to make changes, we now cook more at home, limiting outside food to once a week. We also plan our grocery list prior to going to the market, further budgeting how much we spend on food.
Although it will take time and patience, I know that every bit of smart spending and saving will help my husband and me see our financial goals come to fruition. Not only have I seen it progressively with my finances, I’ve also seen it here at ACap. Even with situations that seem impossible to get out of, with smart planning and the will to make serious changes, it is possible to truly live a financially independent life.
ACap Advisors & Accountants is a boutique, fee-only investment management and full-service accounting firm, specializing in helping doctors and healthcare professionals make sound financial decisions.