Recently a new college grad asked me if I had any advice on “getting rich”.
First thought, getting rich, seriously? What does “rich” even mean anymore?
Second thought, getting rich has never been a goal of mine. My goal has been to be financially secure enough that I can make life choices based on my values.
Then I thought, there are many things wise women have shared with me that changed my view of money and forever changed my life for the better. So I will change the question and answer…
What should every woman know about money:
1. Money is a tool (it is not inherently good or bad).
2. Know yourself and make choices based on your values.
3. Every loan or credit card purchase has to be paid back, ensure you only borrow for investments in your future (useful degree, affordable house, etc. not clothing-vacations-cars).
4. Live below your means (starting out this might even mean roommates, a bike instead of car, used furniture, learning to cook cheaply).
5. Let others pay the retail price (ebay, consignment, craigslist are your friends, even today my designer wardrobe is mostly ebay. I will not pay $500 for my DVF dresses when I can buy them with no sign of wear on Ebay for $100).
6. Save first. From my first paycheck out of school I maxed my 401k contribution. I also set up direct deposit for my savings (which is how I bought my first house at 22). The trick is, if you never see the money, you can’t spend it. My budget (house payment, car choice, entertainment budget) is based on the post-savings income.
7. Don’t waste money on taxes. Max your401k, look into a Roth IRA, Flex Spending Account (FSA), donate items and keep the receipt.
8. Read the fine print. If something seems too good to be true, it probably is, always read the fine print before signing something with a financial component.
9. Don’t procrastinate. Too often procrastination costs us money. Read the fine print, know the deadlines and take action well ahead of time (to allow for errors and delays). Keeping one calendar and to-do list helps.
10. Don’t rely on someone else to meet your financial goals. You need to know your financial picture whether on your own, married, or with billionaire parents. There is no knight in shining armor to rush in and save you financially. Knowing what is happening with your finances and making decisions puts you in position to use money as tool and not be caught surprised down the road.
So none of my advice is flashy or ground-breaking. It doesn’t have to be, money is in reality pretty simple and I love simple.