Mom Advice Part 2: It's All About the Money, Honey

Yesterday I posted a list of advice to young women. I mentioned taking care of your finances, and then said that would be another post. So here it is. 1. Take control of your finances. Don’t let anyone else touch them. They are your responsibility. You can certainly seek advice, but write your own checks. Or nowadays, keep your pin to your self.

2. Pay your bills on time. Rent first, then utilities, then the rest. I know some advise paying yourself first, but you gotta pay the rent and your bills and necessities like food and transportation. Otherwise there won’t be anything for yourself to live in or a way to get to work. When you get your bills paid, then take care of your savings and debts. 3. Don’t go into debt. The only exception at this stage is student loans. (and if you’re American, medical bills) Be careful with student loans. People can get into a lot of trouble with these loans thinking they’ll pay them off when they’re rich. Work for your education as much as possible without putting your grades in jeopardy. Don’t keep starting over without finishing off. Don’t be changing majors all over the place. Get a degree or certificate or whatever, and then make a decision if you need something else. But get something first so you can get a job and pay off your student loans.

4.Don’t buy a new car. You don’t need it. Use public transportation. If you decide you need a car then buy a used one and pay for it outright. Don’t buy a new car until you have a healthy emergency fund, a house, and you can buy that car outright. A new car is not a necessity. Used cars with regular maintenance are just fine.

5. Credit cards are a useful tool, but they can be dangerous. Just like knives. Or fire. Use them only if you know that you can pay them off each month. Sometimes you might need them for an emergency and you can’t pay them off - such as an emergency plane ticket, or repairs on your car. If that’s the case, then pay it off as soon as possible. Credit cards help you build a credit score. You can’t rent a car or a hotel room or buy online without one. So treat them carefully. Just like knives. Or fire.

6. Keep shopping to a minimum. If you must buy clothes - for instance you got a new job with a dress code - then choose good pieces that last a long time. You don’t need a hundred pairs of shoes. This is not the time in your life to gather stuff. You will likely have to move a lot. Just buy what you need with an “occasional” splurge. And honestly, a fifty dollar handbag looks as nice and does the same thing as a several hundred dollar designer bag. There’s also deals to be had at the thrift store. Look for designer labels there. Check the seams and watch out for stains or signs of wear.

7. Keep your spending as much as possible to self-improvement and worthwhile experiences and only if you can afford it. Take the class, go on the trip, see the play, go to the museum. Hint: the bar scene is over rated and you might not even remember it. Instead invite friends over, go on hikes, find inexpensive things to do that don’t involve spending money on getting drunk and then more money on cab rides home. Think in terms of bang for your buck. Are you going to get more satisfaction and have more fun going to a ceramics class, or on a camping trip, where you can learn things and make memories, or going to a bar where you can get drunk, have a hangover, spend all your money, and forget what you did last night and wonder where that ugly tattoo came from - or wonder who that guy is snoring in your bed?

8. Have an emergency fund so you don’t have to dip into credit cards. You actually need two emergency funds. One for immediate use - your car broke down and you have to get it fixed. And one for longer term - you lost your job and you need to pay the rent. I would say your immediate fund needs a couple of thousand. Your long term emergency needs 3-6 months of living expenses.

9. Pay off your debts as fast as possible. Do this by keeping spending to a minimum and putting as much on your debts as possible.

10. Save, save, save. The younger you are when you start saving, the younger you will be to financial freedom, the more money you have when you are older. Don’t think that older is far away and some day. It’s not. It's like tomorrow. Youth is fleeting. I wish I had done this. Then I wouldn’t be scrambling for money now that I’m tired and no one wants to hire me. If you regularly put even a modest amount away, then interest compounds and you could be a millionaire by the time you’re in your fifties. Believe me, fifty isn’t that far away.

11. Do not have an addiction. Not only do addictions steal your personality, your health, and your soul, they steal your money too. If you smoke, quit. If you gamble, stop. If you drink, get help. If you shop too much, give yourself cash only and when the cash is gone it’s gone. If you don't have control of your addictions then you don't have control of anything else, especially your money.

12. It may seem to make more sense to buy a house than to rent, but that’s because you’re comparing mortgage prices to rent prices. What you’re forgetting is taxes, maintenance, and repairs. When you rent if something breaks - like the hot water heater, or if the roof leaks, you call the landlord and he/she has to fix it. When you own a house, if something breaks, you have to fix it or live with rain coming down on you in your living room. It’s good to own a house, but only when you’re ready. That means a good job, no debt, and a healthy emergency fund as well as your down payment. You can go into debt for your main home. But don’t buy a vacation home until you paid off the first and can buy the second outright. Remember, you want to avoid debt as much as possible.

13. When you are seriously dating someone and considering marriage, know how the other person handles money. Know what his debts and obligations are, how much he makes, how he spends. Does he have children he has to provide for? (Note: If he has children and is not paying his child support - run. You don’t need that kind of guy). Is he helping to support his elders? Is there a vacation home he is partially responsible for? Does he have his own business? If he won’t tell you then he’s not ready to be serious. Know what you’re getting into financially before you say “I do”. You both need to be on the same page when it comes to handling money. You can’t have one person doing all the earning and saving and the other doing all the spending or gambling it away. Well, you can - but it isn’t good for your marriage. When you are married, you can certainly share finances and bank accounts, but still have your own checking and savings account and your own credit card. Women get hooped when they don’t do that. Also know what your finances are. I lived with a controlling husband who wouldn’t let me even know what he was making. He handled all the money. If I asked it turned into a fight and so it was easier and more peaceful to just let him. He destroyed my financial life. Don’t do what I did. Even if your partner has the job of paying the bills, you still need to know what is happening. That’s why it’s so important to know how he handles money before you say I do. And there you have it. Once you have a good job, your debts paid off and a healthy emergency fund, then go seek guidance in how to invest your savings. Take it from me. You do not want to be me. I don't want to be me. Oh! Do not under any circumstances go to those payday loan places. Once they capture you, they never set you free!