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I don’t know about you all, but the past week has been crazy hectic. Between graduating from undergrad, packing up my apartment, and starting to grapple with the need to be an actual adult, I’m feeling ‘life’ kick in as I dive head first into the nitty gritty of post-grad existence. So while I start to read one of my graduation presents - Adulting: How to Become a Grown-Up in 535 Easy(ish) Steps (shout-out to grandma) - I realized it would be beneficial to talk about one of the more sobering realities of adulthood: paying off debt.
For most of us, our current debt is probably either credit card debt or student loans, and I’ll address credit card debt later this summer. This week, I want to answer the question: How do I pay off my loans without letting it take over my life?
If you didn't know already, most U.S. adults are currently in debt. I mention this to assure you that debt is something that most adults deal with, and you aren’t alone. Although there are many myths about student loans, the Federal Student Aid department has reputable resources available for navigating different repayment options. Debt does not have to take over your life if you learn to manage it effectively, and there are multiple ways to do so.
Step 1
Acknowledge your current situation. When it comes to tackling student loans, this can mean unpacking years of anxiety (that accumulated while we were in school), having uncomfortable conversations with parents or other supporters, and learning to take a deep breath when totaling all that you owe. Be kind to yourself-- remind yourself that millions of individuals deal with debt AND that you will pay it off. Schedule that sit-down conversation with any co-signers on the loan, and make a list of all the loans you have so you can start to get organized.
Step 2
Know your grace periods, and choose a payment plan. Many federal loan programs have a 6-month grace period, which can allow you to take your time in developing a payment strategy. This step is important so that you don’t miss any first payments, which can result in further fees. If you don’t choose a payment plan, you will likely be defaulted into a 10-year plan with fixed monthly payments.
Alternative options include payments linked to your income (as your income increases, your payments increase), or linked to time (as the months go by, your payments increase). If you are concerned about the size of your monthly payments, you can check out various tools to evaluate the lowest amount you can pay.
Step 3
Consider broader loan repayment strategies. For example, you can explore options such as consolidating loans, which means lumping all of your loans together so you aren’t making multiple payments to multiple sources each month. Make sure you evaluate the pros and cons of consolidation before you make any decision.
Beyond consolidation, two popular strategies for debt repayment are called ‘avalanche’ and ‘snowball’ methods. In short, paying off debt in the ‘avalanche’ method means that you prioritize paying off loans with the highest interest rates first. On the other hand, the ‘snowball’ method involves prioritizing loans that have the smallest balance first.
Each individual will have a different preference for their repayment strategy - some like the mental reward of paying off small loans quickly (through the ‘snowball’ method), while others want to avoid overpaying on interest (through the ‘avalanche’ method). You can also combine both strategies as you see fit. At the end of the day, the baseline requirement is to make your minimum payments on time to avoid penalties-- the rest is up to your preferences and priorities.
Step 4
Consider loan forgiveness options. In some situations, and for some careers, loan forgiveness (aka clearing your obligation to pay off a loan) is a great complement to a repayment strategy. Such programs exist for careers in Public Service, Law, Health Education, and others-- check out this guide to 80 student loan forgiveness options for more information. Additionally, the speed that you pay off debt can influence your eligibility for loan forgiveness-- sometimes taking longer to pay off debt can help reduce the total amount you pay.
Other Tips
How does this fit into my general budgeting and saving strategy?
Over the past few weeks, we’ve discussed general budgeting and savings, and now we can include loan repayment into our overall personal finance strategy.
Given that you have to make minimum payments on your loans each month, these payments should fit into your ‘fixed’ expenses in your budget. In other words, making your minimum payments is in the same category as paying your rent, buying groceries, and paying taxes, and I aim for all of these ‘fixed expenses’ to be about 50% of my budget. If you can make additional payments towards your student loans, consider using part of your budget for ‘financial goals’ to do so.
Thinking about paying student loans can be daunting, and sobering. Luckily, there are so many resources, success stories, and other tools specifically created with recent graduates in mind. When you’re starting to plan your own strategy, remember that paying off debt does not have to take over your life. It’s simply one part of your financial activity, and it’s there because you decided to make an investment in yourself!
Greetings from Bangkok! While I’m getting in some traveling before work starts, I want to address preparing for graduate school-- an option that many of us are currently considering.
Masters, PhD, Dental, Veterinary, Medical, Law, Business, and more-- there are so many programs available for those of us that want to spend even more time in school to pursue additional degrees. If you don’t find yourself in this category, I don’t blame you. However, if there is a slight interest in, or you’re already committed to, attending another program, this newsletter is for you.
Finances do not have to be a barrier to you pursuing the life experience of further school. In fact, graduate programs can be an integral part of your long-term wealth strategy as they increase your earning potential as an investment in your professional development.
It’s no surprise that preparation and survival strategies before and through graduate school will differ greatly based your personal financial situation and career goals. For example, PhD and Medical school prospects will be in school for several years, while some Masters programs can be completed in a year. (If you happen to be looking into a PhD program, check out this blog written by a Duke graduate. For Medical students, check out this popular blog about navigating finances.)
Additionally, you can elect to get further degrees through a variety of methods, including courses online or taking advantage of further education sponsored by an employer. While it may not have been popular during your undergraduate career, millions of people across the world enroll in online classes that can offer certificates and continual online learning like Udemy, which offers classes starting from $10.99 each.
When starting to think about graduate school, always start off with identifying your long-term career goals. It may help to first ask yourself the following questions:
Preparing to pay for graduate school, whether you will need to pay for tuition or simply finance your living expenses, is another beast. For many of us, that means considering more loans and seeking scholarship programs (check out resources here and here), among other strategies to afford tuition. For others, graduate school may be further down the road, which would allow for more time to save and pay out of pocket.
Once you start graduate school, or mentally commit to attending, you should focus on your financial ability to support yourself throughout. A few of my favorite recommendations for mastering this are below:
Many of us just graduated from undergrad, so the prospect of going back to school may be far removed from our thoughts today. Or, you may be like me-- the person who frantically took the GMAT because I feared not having a defined plan for the next several years. Regardless of your desired graduate experience, there are tailored resources and strategies that you can employ to facilitate and ease the process.
At the end of the day, the key to getting to, and surviving through, graduate school comes down to a good budget. Empower yourself by acknowledging what you need to live and feel your best, and be creative. Whether you’re starting in a few months or thinking about school in a few years, you can make it work. Let me know if you need help crafting a budget, finding unique resources, or navigating other parts of the process! I’d love to help or connect you to those that can
Last week, I revisited my personal driving force behind starting Common Wealth Coaching and writing this newsletter every week. My goal is to elevate a community of HENRY’s - highly educated, not rich yet :) - to build personal wealth and achieve financial freedom. I’ve had the pleasure of speaking to dozens of colleagues, almost all in the undergraduate Class of 2018, about the challenges of building financial confidence. This newsletter has explored resources on getting started, moving, money anxiety, savings goals, loans, graduate school, and travel (and we are almost at the first milestone of 100 followers!). Lastly, I’ve been humbled to help several clients with one-on-one coaching through their unique financial struggles and ambitions.
From the beginning of this journey, I knew that I could never know all the answers to every question, but I hoped to inspire a desire for continual learning in myself and others as we start building the lives of our dreams. On a daily basis, this means I’m constantly looking for new resources and guides to stay ‘in the loop’ in the world of personal finance. I’ve been introduced to awesome channels like The Financial Diet and The Side Hustle Show, and I’m making my way through book recommendations one by one.
This week’s newsletter is a brief review of The Millennial Money Fix, a book written by a husband-wife duo who have navigated through paying six figures of student loan debt and started a boutique wealth management firm for millennials (on top of attending two professional schools, having two full-time careers, getting married, having their first child, and living in New York City).
Why you should read this.
My favorite chapters.
Chapter 3 and 4 - (Graduate) School and Loans - Several specific ways to finance your way through school, and pay off loans, with textbook definitions and references.
Chapter 5 - Working - All the full-time employee benefits you may be offered (including insurance and retirement) and recommends how to approach each one.
Chapter 6 - Investing - Why, when, and how you should approach investing according to a Certified Financial Planner.
There are two primary reasons why this book is special, at least from my perspective. The first reason is the very real reminder (from the authors) that, no matter how sparkly it may seem on the outside, nobody’s life or financial situation is a) perfect or b) stagnant. This gives me confidence that anyone (myself included) can be the captain of their life ship no matter what is thrown their way. The second reason is validation -- validation that becoming financially independent isn’t a lonely journey, but in fact, many young professionals (spanning from 18 to age 35+) are trying to achieve this daily.
We’ve heard this a million times, but we are entering the workforce as industries and financial markets are changing faster than ever. This means that ‘conventional’ financial advice-- for example, staying at one company for 40 years to get a pension for retirement -- is shifting from being universally applicable to being deceptively detrimental. Continually learning, and creating a community to share ideas and best practices, is the best kind of support you can give yourself as you start to build wealth on your own.
If you have the time, give this book a try and let me know what you think!
Without even starting a conversation about personal finance, I have found myself in so many conversations with friends (and even older family members) about credit and credit cards. Naturally, I have been agonizing over writing the perfect newsletter, and the truth is, there’s no way I could cover every nuance in one email. Long story short, if you have more questions, please don’t hesitate to reach out -- you can reply to this email or use the online contact form, and we can hop on the phone at any time. There are no silly questions.
In the meantime, I’ve distilled some of the basics of credit, credit scores, credit reports, and credit cards in this newsletter. At the end you will find my personal 8 rules for credit cards and a few action steps. I hope this will help further your personal journey in (1) establishing confidence and (2) building credit for future endeavors.
Credit
For starters, what is credit? Why are Gap and Victoria’s Secret trying to get me to open a store credit card? And why should I be freaking out about my credit score? These questions raced through my mind over the past several months. So of course, I buried myself in research to find the answers.
Most simply put, credit is the ability to get something before paying for it-- a glorified “I owe you”.
Q: Why would someone give you something before you paid for it?
A: Because they have confidence that you will pay them back.
At its core, credit is trust-- trust that you can pay back what you owe. And as we all know, trust is based on your track record. So, you can build credit (or build trust) by demonstrating over and over and over again that you can repay your debts.
Why does this matter?
Who cares if the bank thinks you’re trustworthy? And why can’t you just pay for everything in cash for your whole life? Well, this is where there are differences in opinion and strategy. I will never tell you what to do, but I can tell you a few reasons why so many people care about establishing credit.
▪ Good credit scores allow you to qualify for mortgages and auto loans
▪ You can earn rewards for cash, traveling miles, or other merchandise
▪ Potential landlords or employers, government agencies, and other entities can check your credit report to evaluate your trustworthiness
Building Good Credit
As I mentioned before, credit is a measure of your trustworthiness to pay back what you owe. Naturally, your trustworthiness will be established from consistency and longevity-- you want to continue to borrow money and pay it back consistently. This is the primary reason why your guardian, nosy uncle, mentor, or other advisor may be telling you to open a credit card as soon as possible -- the earlier you start to borrow (and repay), the longer your record will be of establishing credit.
Credit Score
You have probably heard, or thought, about credit scores before. A credit score (also known as a FICO score) is an indicator of how risky you are as a borrower, and they range from 300-850. Higher scores are better-- as you build good credit, your score will go up. You technically have three credit scores from the three major credit bureaus (Equifax, Experian, and TransUnion).
Your credit score is calculated from the information on your credit report-- think of the score as your GPA and the report as your annual report card.
Credit Report
Credit reports contain any and all information associated with your Social Security Number. This includes:
▪ Bill paying habits
▪ Credit history (also known as borrowing history, including loans)
▪ Employment history
▪ Account balances
▪ Credit Utilization
I want to clarify Credit Utilization, because it is a big factor that many don’t pay attention to. Credit Utilization is the amount of available credit that you use. Simply put, if the bank says you can borrow $300/mo on a credit card, and you only spend $30 with your credit card, your Credit Utilization is 10%.
You don’t have to (and shouldn’t) use all the money that the bank will lend you through a credit card. Using up all of the credit that you have access to is viewed as desperation by the bank (which makes you a risky borrower). When you open a credit card, the bank will give you a limit to how much you can borrow each month. Aim to spend 30% of this limit or less on your card to have a low credit utilization.
Credit Cards - My 8 Rules
As we’ve already begun to explore, credit cards are one of the primary tools to build good credit. Credit cards allow you to integrate a habit of borrowing into your daily life. Unfortunately, so many people misuse credit cards and end up hurting themselves in the process. For this reason, I want to offer a few warnings about credit cards so that you can be the best borrower possible.
1. Don’t overuse your credit card. We’ve already mentioned this above, but you should aim to have a low Credit Utilization. In other words, you should aim to only spend a small fraction of the limit that the bank sets.
2. Don’t spend money that you don’t have. I use my credit card for some expenses with FULL KNOWLEDGE that I have enough to cover those expenses in my checking account. People get into trouble when they forget that credit cards aren’t free money.
3. Don’t ‘get by’ by just making the minimum payment. Making the minimum payment is the longest and most expensive way to pay off credit card debt. You will end up paying what you owe, plus interest (which is known as Annual Percentage Rate (APR) in the credit card industry).
4. Don’t be in the dark about your credit report. It is your legal right based on the Fair Credit Reporting Act to review your credit report from each reporting bureau for free once per year, and this viewing will not affect your score. You can download your score here.
5. Don’t use a credit card for variable expenses like entertainment, shopping, etc. It’s easy to lose track of what you spend on fun things. Instead, use your credit card to pay routine bills (like rent, groceries, etc.) and pay your bill.
6. Don’t impulsively sign up for retail cards (credit cards from your favorite store). These cards are usually easy to get, but have very high interest rates (APRs). Evaluate if the discount is worth the temptation to shop or possibility of debt.
7. Don’t use debt (credit cards) to pay off other debt (other credit cards, loans, etc.)
8. Don’t be late on payments.
Action Steps: Where to Start
1. Obtain a free credit report and see what you have on your record. If you are concerned about your credit score, use these tips to help raise it.
2. If you don’t have a credit card yet, consider opening one to start building credit. Avoid applying for multiple cards at once --do your homework to find the right one.
3. If you currently have one or more credit cards, re-strategize about how to use them and pay off existing debt.
4. Commit to paying credit bills on time and in full (as much as this is possible).
5. Consider using your credit card to pay recurring, unchangeable expenses.
6. If you have an upward change in income, consider applying for a credit limit increase.
In general, future lenders want to know that you are (1) responsible and (2) not desperate for cash. If you can show these two qualities throughout your journey as a borrower, future lenders will have more confidence in your ability to pay off debts (like a mortgage or a loan) and can offer you better deals and rates.
There are tons of details, warnings, and nuances about credit and credit cards, which can certainly make them overwhelming. But at their core, mastering credit and credit cards is all about being well-informed, accountable and strategic. Just because the world of credit is complex (and maybe slightly scary) doesn’t mean it isn't worth it, and it definitely doesn't mean that you can't become an expert yourself!
At the tender age of 21, I’m already realizing that life isn’t about what you do, it’s about who you do it with. I’m trying to stay present in new experiences with new faces while keeping up with relationships that are an established part of my core. Adding my financial independence into the mix presents new challenges that I’ve never thought of before, and many are centered around how I talk about and manage money. I’m guessing that I’m not alone in navigating these new spaces, so I wanted to talk about a few strategies for talking to friends/romantic partners and family members about finances.
While I’d like to go ahead and absolve all money anxiety, normalizing healthy discussions about finance in our inner circles, I know I can’t achieve that alone. I also know that it would require many of us to ‘unlearn’ what we subconsciously may believe-- especially the notion that it isn’t polite to discuss money. I agree with this unspoken rule in some contexts, but I also know that being an adult includes creating spaces to have sometimes tough, and sometimes uncomfortable, conversations when they are important.
To be clear, talking about money should never bring bragging, shaming, or any other negativity into your close relationships. Unfortunately, because many of us haven’t practiced how to talk about money in a healthy way, we can find ourselves in a situation where we are afraid to learn from and support our most trusted companions.
Friends/Romantic Partners
Believe it or not, your friends and/or romantic partner has a lot to do with the way you manage money. In the best cases, you can establish relationships that help you grow into a financially savvy adult. On the other hand, you can find yourself developing habits, or suppressing stress, that negatively impact your financial health.
I’ve always heard “honesty is key”, and I can attest that this applies perfectly in financial situations with loved ones. Unfortunately, we may not always know how to be honest, or start being honest, or how much we should disclose. If you’re anything like me, I can tell you that you’re probably overthinking it. There are so many regular interactions that you may not realize involve money, and by talking it through, both you and your loved ones will probably be the better for it.
1. Dining Out - This is such a common activity in close relationships, but it can end up causing stress or irresponsibility around spending. After evaluating your monthly budget, be honest with your friends about what you want to be spending on restaurants and bars. When in doubt, suggest cooking together, meeting during happy hour for discounted menus, or choosing a place together (after scoping out the online menu). Don’t feel ashamed about admitting what you can afford. A few of my favorite lines are “I’m saving up for something” and “I’m trying to cut back” when trying to reduce spending on restaurants and bars.
2. Seeking Advice - We talk to our close friends about of our deepest personal challenges, but we often exclude finances. If you’re struggling to figure out anything from the best credit cards to how to live in your city to how to negotiate your salary, consider bringing up these topics whenever you get the classic, “How are you?” If you aren’t comfortable admitting that you’re struggling, you could pose the question with more curiosity-- mention that you want to be more financially literate in a certain area, and ask for their advice in starting your research. Check out these ideas about having money conversations with friends .
3. Trips - I love that ‘adulting’ includes planning fun trips with my friends, whether we are going to a winery 1-hour away or planning a spring break trip to New Orleans. But these trips can cause a significant financial strain before, during, and after if a money talk isn’t on the schedule. When you ask your friends if they want to commit to any excursion, simply add, “What kind of budget are we aiming for?” This introduces a topic that everyone is thinking about, but may not know how to bring up. For the best results, plan far in advance so that everyone has time to save. Don’t be afraid to say, “I think I can afford to spend ___ over the trip.” Again, admitting what you can afford isn’t shameful-- it shows maturity and will probably relieve others you are planning with.
4. Living Together - Whether it’s one roommate or five, when you are paying bills with others you have to be transparent about how to handle your money. Consider setting a ‘date’ for discussing everything finance related -- from your monthly rent (and whether you’ll be paying for it out of one account, using Venmo, etc.) to covering groceries to saving an apartment emergency fund in case you encounter unexpected fees or repairs. You may even begin helping one another develop more realistic and strategic budgets so no one feels in the dark while you live together.
5. Worrisome Behavior - Its always important to speak up if you see a loved one exhibiting worrisome behavior, and financial habits can certainly be an area of concern. CAUTION: This does not give you allowance to shame, instruct, or otherwise harass/control your loved ones about their financial habits. However, just like you might speak up if you see a friend struggling with months of substance abuse or a toxic external relationship, you may want to strategize about how to start a conversation about worrisome financial behavior. As always, try to approach these conversations from a point of understanding and genuine support -- this is not an excuse to point fingers or make them feel worse, and you may not be seeing the full picture. Check out this resource about financially abusive romantic relationships to keep yourself (and your loved ones) safe.
Family
Every family situation is so different -- there are unique power dynamics, unspoken responsibilities, and precedents set by elders. Instead of offering specific advice, I want to highlight a few situations where it may be beneficial to initiate conversations about money with your relatives.
▪ You feel like your family has unhealthy control over your finances.
▪ You need help managing your finances or staying afloat.
▪ You don’t understand elements of your financial situation (debt, savings accounts, credit cards, investments, etc.) initiated by family members.
▪ You want to establish/clarify expectations for how you will financially contribute to the family.
Starting these conversations may be awkward for a number of reasons, but there are too many stories of families intentionally or unintentionally taking advantage of each other financially. I recommend asking to have the conversation and setting a date/time/place to discuss. Have specific questions in mind for the discussion, and know what your ideal outcome would be (whether its clarity, a game plan, or otherwise). When you start the conversation, it might help to admit if you feel uncomfortable, but remain firm in your desire to embrace transparency and take responsibility for your finances. If you feel ‘shut down’ after bringing up the topic, consider reaching out to another family member and/or reiterating your seriousness.
Whether you are talking to family, friends, or a significant other, bringing up money may seem daunting to everyone involved. Still, it may prove helpful to know that your friend’s high levels of anxiety come from debt, or that your parents expect you to help pay for a younger sibling’s education, or that you and your partner are on the same page about how much you should be dining out every month.
All of these conversations definitely don’t have to happen at once, but I can attest that initiating them creates clarity and peace of mind in the long run. Remember to approach your loved ones with humility and without judgement. While talking about money may be new for you and them, you may even end up inspiring them to become more savvy with their finances-- and why not spread the wealth? ;)
It’s no secret that daily exercises turn into long term habits that turn into lifelong decisions. You may decide that you want to save enough to buy your own home, or pay off your debt in 5 years, but actually achieving that goal would be impossible without making a small change in your daily schedule. It’s the difference between saving $3 by making your coffee or tea at home instead of purchasing at your local Starbucks-- we convince ourselves it isn’t a ‘big deal’ that day, but of course, it turns into a huge deal over time.
So how do we make daily changes that have a lasting impact on our financial health? You may think that it starts with finding the right finance app, but in actuality, it starts with adopting practices that make any habits stick.
Making Successful Habits
I’ve seen many opinions on how to make habits successful, but my favorites are summarized in this article. Briefly put, for any habit to stick, you probably need to complete the following:
1. Recognize why this habit hasn’t stuck in the past.
2. Evaluate other habits that support or undermine this one.
3. Add your habit to your daily schedule.
4. Track your ability to perform this habit.
Financial Habits
Just like the habits of brushing your teeth, checking your email, and staying active, financal habits are crucial to ensuring your long term health. Some of the most essential habits include:
▪ KNOWING what you spend
▪ Spending LESS than you earn each month
▪ Paying bills ON TIME
▪ SAVING for retirement
▪ Following a BUDGET
Honorary mentions go to: minimizing impulse buys, studying your bills for errors, using coupons, exploring investment opportunities, maintaining an emergency fund, reducing interest payments, etc.
Finance Apps - What to Look For
Given my interest in personal finance, so many friends have asked me “What apps do you use?” It’s only fitting that smartphone apps are one of the most popular means to developing smart daily financial habits. Not only do they allow you to learn on the go, exposing you to resources and insight you might not otherwise have access to, but they also have the opportunity to simplify and expedite processes that could otherwise be overwhelming.
If you’re like me, my finance needs at this point in life are centered around budgeting, saving, and investing. So, I’ve compiled a few things to look for when evaluating apps for your own use:
Security - Look for spelling errors in app descriptions to verify that they are real. Also be wary of downloading or entering sensitive information (like bank accounts and credit card numbers) into apps on Public Wifi.
Monthly Fees - Many apps will offer the first month, or year, free from any fees to incentivize you to sign up. Double check that there aren’t hidden usage fees that will pop up in the future.
Aesthetic - This may seem trivial, but everything from the interface to the language to the color scheme can make or break your experience. Given that you should probably be checking this app at least weekly, it's important that your app of choice is easy and pleasant to use. Don’t feel discouraged if it takes one, two, or even three tries to find the right app for you.
Top Rated Finance Apps
These apps are popular among iPhone and Android users for their simplicity, low cost, and user-friendly interfaces:
1. Mint - Consolidate all accounts and credit cards to automatically track spending, make budgets, and even get a free credit score. I personally use this app because it brings all of your accounts together in a user friendly interface! Mint is owned by Intuit, which is also the parent company for TurboTax (and I like keeping all of my financial activity under one company and login information). Plus, it automatically classifies all of my purchases via debit and credit card so I don’t have to manually sort them.
2. Good Budget - Budgeting at its most basic form. I used this before, and I like it because it’s super simple. Every month, you put aside money in different ‘envelopes’ -- an envelope for groceries, shopping, bills, etc. You enter your expenditures, and if you overspend on one ‘envelope’ the app requires you to reduce your budget for other ‘envelopes’-- in other words, it helps you develop great discipline for budgeting!
3. Wally - Scan receipts, connect your accounts, and create budgets through this app.
4. Digit - Utilize this app to automatically scan your expenses and income. The app will transfer a small amount to your savings account based on their estimates for necessary spending.
5. Acorns - Connect checking accounts and credit cards to automatically invest spare change after any transaction.
6. Stash - Practice and learn about the world of investing with as little as $5. This app will simultaneously teach and familiarize you with investing and is great for newbies. I used this app before, and I really liked that it had educational elements so that I could become more familiar with investing. It also had sustainable investment options that I enjoyed. Ultimately, I only invested a small amount of money with Stash, and because there was a monthly fee, I ended up losing more money than I was making through the app.
7. Robinhood - Invest in the stock market at your own pace with no transaction fees.
Honorable Mentions: PocketGuard, Clarity Money, YNAB (You Need A Budget), Albert
I know we all want easier, faster, smarter, and all around better. It’s easy to seek out a finance app to solve all problems for us, but there will never be a substitute for comprehending, and planning, on your own. Full disclosure, I’ve used several budgeting apps, and while I like that they compile all of my account information together, my tracking process is much more rudimentary. I have an open note on my phone, and every time I swipe my card or pay cash, I write down what I paid for. It’s essentially the mobile pen and paper tactic. No lie, my phone notes look like this:
June 22
7 Chik fil a
16 Wine Tasting
47 Groceries
June 23
14 Chipotle
June 24
26 IHOP
21 Lyft
June 25
52 Target
21 Gas
...You get the idea. This helps me realize that, over 4 days, I spent $204, or an average of $51 a day. The act of writing down purchases in my notes also helps to prevent some impulse buys that I would regret having to take note of. While I like having my apps to verify all activity with my accounts, I wouldn’t get rid of this basic system for any app on the market today.
Ultimately, finding the best app for you will require a little soul (and market) searching, just like you would research any other essential element to your daily life. Reevaluate the habit you are trying to create -- whether its living within your means, paying bills on time, or other practices -- and narrow your search accordingly. Feel free to reach out to me or other trusted advisors when trying to make your choice. Who knows-- maybe it can even be a topic of conversation at your next dinner with friends? :)
Hello CWC! Long time no see! I’ve taken a very intentional 1.5 week hiatus from this newsletter to do, well, life. In this short time frame, I’ve covered thousands of miles by foot, car, and plane as I moved to Chicago and started my first full-time job. To say this has been a period of change is an understatement, but I’m excited to get back into financial coaching as we continue to navigate building wealth as young adults.
The way I see it, we are entering into a secondary phase of developing financial literacy (and confidence) that lays the foundation for lifelong wealth building, whatever your goals may be. If you’re just now joining Common Wealth Coaching, take a look at past newsletters to see where we are coming from. Coming up in the next few months, and now on a bi-monthly schedule, we’ll talk about several topics, including:
▪ Investing
▪ Net Worth
▪ Side Hustles
▪ Book Reviews
▪ Financial Advisors
▪ Budgeting for Pets + Cars
▪ Gender, Race, and Wealth
▪ Lessons from Wealthy Icons
We’ll also have opportunities to do small group ‘finance check-ins’ (free of charge, please click here if you’d be interested in joining!) to share notes, ask questions, and continue ongoing conversations about personal finance and wealth management.
In the meantime, I want to review my summer finance bucket list. As you’ve probably guessed, it’s a checklist of things that you should aim to finish soon, and before taking any big steps (read: investing, big purchases, taking out more loans, etc.). I recommend these steps because they develop a foundation of financial stability and knowledge that insures you won’t make decisions that threaten your long term financial goals.
My Summer Finance Bucket List
1. Finalize a method for tracking your spending. This will allow you to understand your current spending habits and identify any areas for improvement. Think apps, excel sheets, paper and pen (whatever floats your boat).
2. Create a budget. This may be tricky if you are still in a period of transition, but did you know that (1) you can create a budget for a short-term period (like a week) and (2) your budget should change often? This means there’s never a bad time to start setting short-term goals and measuring how well you can reach them.
3. Analyze your savings. Find out how much you have saved (if anything), and determine how much you can afford to leave in that savings account.
4. Start/grow your emergency fund. This will allow you to take intelligent risks and develop confidence knowing that you have ‘back-up’ money. This fund should be different from your rainy day, music festival, travel goals fund-- it shouldn’t be touched under any circumstances besides an emergency. A good goal is to save 1 month’s worth of living expenses in this fund, and slowly work your way up to 3 month’s worth, 6 month’s worth, and 1 year’s worth.
5. Obtain a copy of your credit report, and know your credit score. It is your legal right to obtain a copy of your credit report (for free) once each year from any credit rating company. Check out your report to see what future landlords, future employers, and others see when they examine your credit habits.
6. Understand your student loans or other debt. If you just graduated, you will likely need to start paying off your student loans in the very immediate future. If you have credit card debt, you will need to start paying off that debt as soon as possible. Understand what you owe overall and what you need to pay per month, and consider strategies for making this process easier for yourself.
Advanced Bucket List Items
1. If you want to build credit, research a compatible credit card with your life needs.
2. If you can start saving for retirement, consider opening a retirement savings account.
3. Read a personal finance book from front to back, even if you (1) are intimidated or (2) think you know everything.
4. Start one conversation about an element of personal finance with a close friend or relative.
As always, please use me as a resource if you encounter any challenges or insecurities with your personal finance journey. My mission will always be to empower those around me with the confidence to pursue the life they want and need. Speaking from personal experience, taking care of your financial health can do wonders for your emotional and mental health, all while helping you feel more in control of your life. Starting with this bucket list paves the way for bigger, better, and smarter endeavors down the road.
Go forth and conquer! See you guys in two weeks as we talk through ~investing~ from my perspective as a financial coach.
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