The Importance of Investing in Your Financial Future and Three Ways to Start Now
By Katie Walsh
Our lives revolve around dollars and zeros. When we become adults and live on our own, we start exploring financial independence. Buying a car, moving to a new city, starting a job; all of this requires savviness with personal finances.
I could be alone on this, but I think the transition is pretty messy.
It's exhilarating but also terrifying. You realize that you are free to do what you want with your money. Simultaneously, you are free to lay waste to your money. It is a wonder to me why there is no emphasis on post-grad financial readiness in college. As I begin my post graduate career, I want to be structured with my spending. I want to be confident in my money-managing skills.
Whenever I research ways to organize my money or create a budget, I get completely overwhelmed. I’ll start with a neat excel sheet with the intention of entering in every single purchase I make, and then I find it untouched three months later. Instead, I resort to working up the courage to open my Discover app periodically to monitor the damage. Checking my bank account is my least favorite thing to do.
There's terrific books, Youtubers that claim to be experts, and an infinite supply of Investopedia articles on this subject, not to mention advice from your parents, siblings, co-workers, and friends. Learning how to manage your personal finances is tricky. It’s personal. It’s not something you want to ask anyone about. If you are like me, it’s something you ignore until you have to pay rent or your credit card bill.
So I've committed to taking a realistic mindset and routine.
1. The first step is to think of yourself as a business. You have income and assets. But you also have debt and expenses, and that's ok. This thinking gives life to all the investments you've made. The money you spend should be in line with your personal goals and vision for the future. You are building a company that represents who you want to be and what you value.
A sample breakdown for a post-grad woman may look like this:
Income: salary from post grad job, current checking + savings account, investments
Expenses: rent, gas, groceries, insurance
Debt: college debt, car payment
Physical Assets: phone, computer, books, work clothes, furniture, car (paid off)
Make a list of all the aspects of your business so you can analyze them. You can even
come up with a fun name for your company. Write down your goals, assets that you want
to buy in the future, or any changes you want to make moving forward.
2. Businesses are complex, this is why following a budget is so challenging. One month you
might have a vacation. One month may be especially expensive because you are a wedding guest. During another month, your car may break down and you have to cough up $500. Because of this, I like to break expenses down into two categories: recurring and variable.
Recurring Expenses don't change much month to month. These include rent, gas, groceries, gym membership, Netflix, Spotify Premium, insurance payments, and maybe a weekly allowance for clothes/wellness items/takeout. Some people have a separate credit card for these expenses because they know their monthly payment doesn't fluctuate and it is easier to monitor.
*Note: rent and car payments are not usually paid on a credit card but can still be included
in this category to track expenses.
Variable expenses can be unpredictable. This is why I don't like budgeting, as I get frustrated when each month is so different. Variable expenses include travel, gifts, fancy dinners, fun clothes, Amazon purchases, and emergencies. These expenses can be dangerous, because they add up quickly. Having a different credit card for variable expenses can help you stay on top of your discretionary spending.
3. Businesses have meetings! Invest time in yourself and your own company. Schedule time
weekly or monthly to sit down, uninterrupted, and go over your current state of affairs. You
deserve it!
If this means tracking every purchase in an excel spreadsheet, so be it. Or, if it just means taking time to examine your spending, set goals for the next month, and factor in
upcoming purchases, that is awesome too.
Imagine if you spend 1 hour each month researching what type of investing fits your goals for
the future, instead of scrolling on Tik Tok. Call one of your parents and ask them for advice instead of watching tv.
It is easy to let these things pass by. It all sounds boring and grown up. But your future self will thank you. Maybe even with a celebratory Aperol Spritz in Europe.
Katie Walsh is the founder of the k’tea & co, an editorial website that focuses on positive and inspirational media. She works in finance in Cincinnati, Ohio, and you can find more of Katie’s work on @the.ktea.co
Photo via Poosh
