This Week In Your Wallet: Learn From My Mistakes
“If only. Are there two other words that have the ability to make you feel so wistful or guilty about something you did in the past?”
That’s how I started my essay for Refinery29 on money mistakes twentysomethings should avoid — and I thought it’d be great to share a few of them with you here. Oh, and did I mention that these money mistakes were my own?
Here, a few of my favorite excerpts from the piece…
On “Taking The First Offer”
“At no time [during my own job search] did I ask the all important question: “Can you do better?” What’s more troublesome: Women still don’t. The New York Times recently reported that freshly minted women physicians are earning an average of $20,000 less than their male colleagues for doing the same work. So do your homework by using the pay-oriented websites to figure out what someone in your position should earn, then get up enough nerve to talk to at least one or two other women about what they are earning, and finally ask the person in charge of hiring you. The biggest problem with not getting what you’re worth in your 20s is that every salary that comes down the road will, in some way, hinge off the one that preceded it. In other words, selling yourself short now can have ramifications for years.”
On “Ignoring The Details”
“As I started reporting on personal finances, I picked up knowledge and confidence. I began walking the talk. And after I got divorced a little over a decade ago, I became even more vigilant. The thing is, no one cares as much about your money as you do — and no one ever will. If you can’t get yourself to pay attention to everything, try asking and answering these three questions once a year: “What do I earn?” “What do I own?” and, “What do I owe?” The answers to the first two should be moving in an upward direction. The latter — unless you’ve, say, bought a house and taken out a mortgage or borrowed for an important line item like a car or education — should be moving down. Stay in those parameters and you’ll be on track for a solid financial life.”
On “Being Too Hard On Myself”
“What I’ve come to understand — thanks, in no small part, to a lot of great research in the field of behavioral finance (which looks at why smart people make pretty dumb moves with money) — is that human beings are biologically inclined to make money mistakes… Today, though, there are all sorts of workarounds — some people call them hacks — that enable you to use technology and automation to do the right thing. The 401(k) or similar retirement plan you have at work employs these brilliantly. At many companies, you’re automatically puts in a plan unless you opt out (you shouldn’t). Then, your employer automatically pulls money out of each and every paycheck. It automatically puts that cash to work in a target-date retirement fund, designed to take an appropriate amount of risk for you, based on your age… If you don’t have a 401(k), you can rig up a similar system for yourself by having money pulled out of checking and deposited into a target-date fund in an IRA or Roth — and by setting a calendar alert to remind you to increase your own contributions once a year. There are other things you can automate, too: bill payments, credit checks, and by using an app like Digit or Acorns, saving every time you spend.”
For three more money blunders to avoid, head to the full essay here.
