Twenty-something money management

My Story: Woulda, Coulda, Shoulda

contributed by K. M. Frost

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I didn't become a frugality freak until recently. I came late to the job world, and it wasn't until my late twenties that I found myself really, truly and unavoidably on my own. Cut loose from my parents' credit-funded child rescue service, I was in a tailspin. I'd majored in English lit and theater in college, but left before getting a degree. Without strong employment prospects, I took whatever office and temporary jobs I could find. Unfortunately, I had a huge sense of entitlement about my standard of living. On eight dollars and fifty cents an hour, I had to have a car and a one-bedroom apartment close to my job in the high-rent downtown district. I ran to the bank each payday to cover checks before they bounced, then had no money for the next two weeks. Saving was a foreign concept. I moved to the suburbs where rent was cheaper, but I was spending more for gas. I well recall a certain evening on the day before payday when I realized I had no money to fill my empty gas tank, and I had to spend the night in the infirmary in my office.

Eventually I just got fed up, and I changed my life. I'm grateful for the many improvements I currently enjoy, including stable employment, all of life's necessities as a matter of course, and a few affordable, planned-for luxuries every now and then. I often wish I had been more money conscious when I was younger. Here's what I would like to tell the younger version of myself, or another twenty-something today, about managing money:

  • Forget cars and live small. Lattes aren't the problem. The two largest areas of your budget are housing and transportation. Shaving those expenses way down will leave you plenty of breathing room financially. Take the bus and live in a studio apartment, or with a roommate, for as long as you can stand it. You can expand later on when your paycheck does.

  • Compress your closet. Beyond basic hygiene and a reasonable degree of attention to dress, it doesn't matter what you look like. Buy the best-quality clothes you can find that will satisfy your minimum requirements for your job and personal life. Buy a few good-quality basics in dark colors (they look more expensive), and use accessories to vary the look.

  • Eat cheaply but well. You know that eating out regularly, even at fast-food places, can cost hundreds of dollars a month. Shop for groceries and make easy, healthy meals for yourself at home. Easy is important. I love The Three-Ingredient Cookbook by Sondra J. Stang.

  • Avoid the evil twins, credit and debt. They require precision management, and can easily become thieves of wealth. If you charge only what you can pay off each month, you can have a credit card. If not, jettison the cards. You'll never acquire wealth if you have to spend your prime earning years paying off credit card debt.

  • Squeeze in some college classes. In one of my low-level jobs, I was given the task of typing up a chart that listed every employee in my department, along with his or her educational background. Every person on that list who had a college degree was given a raise. (Guess who didn't get one?) Yes, a degree is just a piece of paper, but so is your paycheck. School isn't necessary for success, but as my grandmother would say, it couldn't hurt! And it'll probably help.

  • Save something, anything! Ten percent would be great, but any amount works, even if it's only two percent of your monthly income. Throw pocket change into a coffee can, or set up a monthly auto-withdrawal into a savings account. Do whatever it takes. You need some kind of cushion and the peace of mind it'll bring you.

  • Have a treat occasionally. Experts keep telling you to give up the four-dollar coffees at Starbucks and invest the money instead. I say have some coffee, but continue to save. These things are not mutually exclusive. Enjoy the occasional, affordable treat that your new money management habits make possible. Financial responsibility is not about deprivation, after all. It's about fulfillment.
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Debt from my past is preventing me from saving for my future! Tell us: Yes, debt is hindering my ability to save! or No, debt is not a problem but I am trying to get ahead financially!

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