At nearly 28 years old, with absolutely no savings and a hefty student debt, I’ve never had any interest in my personal finances. No offence to my Mum, but she is also terrible with her finances. She is 62-years old, with no savings or assets and relies heavily on my Dad to live.
“Financial independence is paramount. My mom always says that when a woman is financially independent, she has the ability to live life on her own terms.” – Priyanka Chopra (Actress, Producer, Philanthropist & Singer)
This year, I’m embarking on the expensive journey of going back to University to study my Masters, whilst also trying to juggle multiple jobs to afford rent. As excited as I am, I’ve come to the realization that to be a strong independent woman I need to understand basic personal financing to be fully independent.
I will probably never be rich, but I want to at least understand how to be financially secure. I’ve been gathering basic advice from multiple sources to take the steps to finally be financially savvy; below is what I’m going to be working on this year.
Note: We all have the right to learn about finance, with or without money. Since it’s not taught in depth in high school, tell everyone!
1. Use a budgeting app
Keeping track of my own money by looking at my bank account is something I actively avoid. I find it boring and occasionally shameful to know how much I’ve spent on random crap. My income also changes month to month as I have multiple jobs that I freelance on. This however is a terrible habit as it means I have no concept of my earnings or spending habits, therefore can’t budget efficiently.
There are multiple apps available that can link to bank accounts and are specifically for ‘normal’ people to understand their personal finances. I’ve previously tried Money Brilliant which was very good (but I only used the desktop version). I am going to set it up again this year and download the app on my phone to make it easier to read. It’s commonly pitched as the easiest budgeting app to use for read-only financing.
Once I’ve got a handle on what’s going in and out my account, I will then be able to take it a step further and look at areas to reduce spending to save and achieve my financial goals.
Helpful tip: Check which apps are best for the country you are based in.
2. Get a better (more ethical) bank
My current account is with a bank I specifically selected because it’s rated more ethically than others. I also have other cards with one of the big four through one of my jobs, which I can’t change. One of my finance savvy friends recently switched to my bank after she realized the savings account had high-interest; I had literally no idea what she was talking.
Not understanding where my money lives is a bad trap to fall into and therefore I’m vowing to take time to understand what my banks are actually offering me. If I have a high-interest savings account, then I need to know how much I can save and if there are any fees. When I was younger I had an account with HSBC and I was being charged huge amounts every time I went over my overdraft as a student. They were also incredibly unhelpful and had no benefits. Looking back, I could have saved $1000s if I had been in the know and switched. F*ck you HSBC.
Helpful tip: Shop around and see what different banks are offering, combined with how ethical they are.
3. Invest, invest, invest
“To make the most of your money and your choices, educate yourself on how to make stock investments confidently and intelligently, familiarize yourself with the Internet resources available to help you evaluate stocks, and find ways to protect the money you earn.” – Stock Investing For Dummies
I have never understood the concept of investing in stocks , but this year my aim is to find out. Apparently, if you’re money is sitting in a current account, you are technically losing money each year with inflation. According to my very smart younger brother, now is either the best or worst time to get into investing in the stock market. Here’s a cheat sheet for stock investing for dummies.
There are lots of stock (investment share) apps for beginners, starting with low-risk investments. I’m going to start with the app Acorns, which links to your bank account and rounds your expenses up to the nearest dollar and invests the extra money into stocks based on your preferences. I don’t think I’ll be making millions, but at least I’ll be stepping into the stock world.
So there you have it, my basic three steps that I’m taking this year to be financially aware and independent. Once I get the swing of the basic steps, I’ll be able to take things further and look into debt consolidation and more extensive saving.
For me, education is the best currency.
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