Everything I’ve learned about managing money.

With all of these blog posts that I’ve written about love, careers, friendships (the basics), one thing I haven’t talked about at all that so many twenty somethings are trying to navigate right now is money. And despite the title of my blog, managing money was in fact a major topic of conversation growing up for me. But no matter how much your parents try to coach you, it’s a whole new thing when you are out on your own trying to be self-sufficient and fiscally responsible for the first time.

Some brief background if you are new here (Hi!) or just need a refresher course, I am a 27 year old marketing professional living in Boston. So while I’ve been working part-time since I was 14, I have now been a full-time, salaried employee paying all my own bills for about five years… and living in a city like Boston, some of those bills (aka rent $$$) were a definite culture shock at first. Okay, everybody all caught up? Good, let’s get into it.

Let me start by sharing the most helpful pieces of advice I was given as I was leaving the nest of small town Rhode Island headed into the big city.

1. When you are first starting out, the only things you need to be able to afford are the basic necessities—rent, groceries and gas.

This one is pretty simple. Always, always make sure that you have enough in your bank account to, well essentially survive: shelter, food and transportation. Which I guess if you live in/near a city like me and pay for public transportation instead of owning a car, which I know many people who do, you can simply exchange the gas part of the list with “MBTA” charges (or whatever your city refers to it as).

When I started my first job and was looking at apartments, my parents told me to calculate my bi-weekly paycheck (which your math equation would be different if you got paid weekly or monthly), and then subtract it from my rent/utilities, and an average amount I would spend on groceries and gas. Did I have enough to cover it every month? Yes, ✅ Did I have a whole lot left over for anything else? Definitely not ❌… but I’ll get into that later in my post.

2. Start building an “emergency savings” with any extra income you have to help cover sudden and unexpected bills.

This one was a big one for my Dad. For him, the most important thing was the answer to this question: if you lose your job, do you have enough in your savings for three months rent? (The average time it may take to find a new job) And every day for the rest of your life, the answer should always be yes.

Then he also talked about all of the other stuff that may come up when you aren’t expecting it, and you need to be able to cover yourself if any of them happen—like your car breaks down and you now owe the repair shop $1,000 to get it fixed; or you accidentally fall while out for a run and now you have $800 in medical bills for your ER visit and the cast on your leg. These types of things will not be part of your planned budget every month, so you may initially think you have it all figured out; but then all of a sudden you just spent $1,800 you didn’t expect to, and that emergency savings account will really come in handy.

3. Building and maintaining your credit is EVERYTHING.

(Thanks for this one, Mom!) I would love to be wrong about this, but I genuinely do not think young adults know how important it is to have good credit, and to start building it as soon as possible. My mother’s biggest claim to fame—as she will tell me almost every day—is her “exceptional” credit score (seriously, her score is in the dark green section of the meter actually labeled “exceptional”). So naturally I learned pretty early on how far a good credit score can take you, and how deterring a low one really can be if you are trying to get anywhere important in your twenties.

I started building my credit in college when I got approved for my first credit card. I also had student loans to my name, which a lot of college students do not realize are also building your credit for you. Here is the number one, biggest contributor to maintaining good credit:

AUTOMATIC, ELECTRONIC PAYMENTS!! This is so easy and the least painful thing you can possibly do. Whatever app or site you are using for any of your credit cards or bills, you’ll never miss a payment if you simply schedule them to reoccur.

Obviously the next best step would be to pay off your entire bill every month, but that’s not as realistic when it comes to things like student loans or other large bills.

Lastly, don’t be afraid to have a few different credit cards open with different benefits. I have a CapitalOne card for cash back (which I then use to go towards the next month’s payment), and I also have a JetBlue credit card to help me earn some flying miles for travel. And of course the shop-aholic in me has a credit card with Express, which is totally contradictory to this conversation about saving your money, but the rewards are excellent, so don’t judge me.

The point of all of this though is that good credit will help you in a lot of ways. For example, you can get a lower interest rate on credit cards and loans and you can get approved for higher limits on those cards as well. You can also get better car insurance rates and easy approval for renting or buying property—which in my opinion is the most significant one for anyone in their twenties, as I know people who have been limited by or rejected for their credit scores.

……………

Because of the advice I was given above, I had a pretty good head on my shoulders when I was entering my twenties and starting making my own money. However, I have also learned a lot on my own since then based on my personal experiences, and I think it’s important to share those as well.

So here’s what I’ve personally learned in the last five years living on my own:

1. Don’t live above your means if you can help it.

This one I learned the hard way. Remember earlier when I said that I initially moved to Boston and I could afford to pay my bills but not much else? Well that was because I was living way above my means in terms of income vs. expenses. But I was a spoiled 22 year old who really wanted the nice big Boston apartment and thought I could make it work. And the truth is, I did, but I didn’t really save anything for the first year or so until I got a pay raise, and I just wish I had budgeted a little bit better during that time. So my advice to you is be realistic about what you can really afford and don’t overextend yourself. Your bank account will thank you in the long run.

2. Take all the hand-me-downs you can get. Your apartment doesn’t need all new furnishings.

Thankfully, while I had to have the nice big apartment, my roommate and I filled that apartment with a lot of used furniture passed down to us, or bought things like wooden barstools we found for $10 each at a thrift store. I got really lucky that the time I was moving happened to coincide with the year my family was downsizing to a smaller home, but I know it doesn’t always work out that way. So ask your relatives and close friends if they have anything in storage they don’t use anymore and offer to get it out of their hair (cause ya know, you’re really doing them a favor, not the other way around). And don’t obsess over the need to have everything match. It’s your first place and not everything has to be perfect, it just has to be functional. Besides, a little decor goes a long way in making a mismatched room come together. So just take what you can get and let your bank account start to fill itself until eventually you can afford to replace some of the old stuff with newer pieces. After all, isn’t anything better than the stuff they stick you with in a college dorm?

3. It’s so important to save, but when you can, don’t forget to splurge a little and have some fun.

Okay, with all of this responsible savings talk, I have to sneak in a reminder that it’s okay to spend a little too. If you are just starting out on your own, budgeting can take some getting used to, but don’t feel pressure to save every single extra penny you have on your future. Set some aside to treat yourself too. Want new clothes for work? Take yourself on a little shopping trip! Don’t feel like cooking dinner? Buy yourself some really good takeout from a local restaurant in your neighborhood (#supportsmallbusinesses). And please, please allow yourself to go out and have some fun. Buy nose bleed seats to a concert downtown or treat your friends to a round of shots at the bar on a Saturday night (just don’t forget to close out your tab!)

Remember that you are young, and while it’s important to save for your future, it’s also important to enjoy your present. I can honestly say my twenties have been the best years of my life so far, and it’s because of all the memories I’ve made living in a city that I love, enjoying it with people that I love.

So if you leave this blog with anything, let it be this: it’s okay to say no to things when you can’t afford it—don’t ever feel pressured to do something or pay for something that doesn’t fully benefit you. BUT, it’s also okay to say yes to things that you really want. I know it sounds cliché, but some experiences really are priceless. Besides, you work hard for the money (“…so hard for it honey!”). So reward yourself when you can, because your bank account will recover, but you will never get today back once it’s gone.