The coulda, shoulda, woulda’s… I COULD have started my 401(k) sooner. I SHOULD have saved more. I WOULD have used my credit card more responsibly.
Our younger years are the years for making mistakes and learning from them. These are the experiences that help shape better financial decisions and money management for the future. That’s why we’ve asked five leaders at Desert Financial to share the biggest money lessons they’ve learned. See what our leaders would tell their younger selves about money!
The Satisfaction of Security & Learning to Cook
– Tyler Woodward, Director of Marketing Strategy and Product Management
The sense of satisfaction in paying down debt/seeing savings grow is way larger than buying whatever I “need.” Even if it’s painful, pay yourself first (savings or debt payoff), as nothing is more satisfying to me than the security of savings and the reduction in stress from debt being paid off.
I would have also learned to cook sooner. I used to eat out a lot. Outside of the health reasons not to do this, I spent so much more money on eating out than I do now to make a meal. The food is much more enjoyable, healthier and less of a burden on my wallet than when I was eating out so often.
5-Step Budgeting + Bonus Tip
– Michelle DeFrane, Regional Director, Retail Sales & Branch Operations
Make a budget!
Before you start, calculate your spending over the last few months and follow these steps:
- Determine what you need each month for your bills (mortgage, utilities, etc.)
- Determine your more flexible expenses each month (meals, entertainment, gas, groceries, etc.). A good way to determine what is necessary is to review bank statements from the past several months and average these expenses.
- Open two checking accounts: one for bills only and one for flexible expenses.
- Open a savings account to help you prepare for any emergencies or large purchases.
- Direct deposit appropriately!
- Bills: If you get paid twice a month, direct deposit half of your paycheck for what you need for the month.
- Flexible Spending: Deposit an average of what you spend (see step 2).
- Savings Account: Put everything else in your savings account. Emergencies, car registration and vacations come up faster than you think!
Bonus Tip: Don’t dump everything into a checking account. It makes it way too easy to spend what you have today. Instead, consider a budget model like the ones above so that you can manage all levels of your financial obligations, not just the most immediate.
Cautious About Credit
– Christina Mijares, Assistant Vice President, eBranch
As a young adult, it can be really exciting and very tempting to take advantage of the many credit offers you’re receiving for the first time. Credit cards, retailer credit and even loans can offer you the power to buy things that you want. You get the convenience of paying for it a little at a time and you are building your credit. Sounds awesome!
What isn’t always understood is how quickly all of those monthly payments and accompanying interest can add up. So many young adults don’t realize how much interest accrues on credit cards and how fast all of those little payments can add up to a lot of money each month (and a lot of debt overall). In addition, many people don’t realize that in certain circumstances, having more credit isn’t necessarily good. As a young adult, I wish I had better understood that more credit doesn’t equal a higher credit score. Building strong credit is a process that consists of having a variety of credit in manageable quantities.
Plan for the Future, Now
– Christina Bridwell, Senior Director, Payments & Operations Processing
- Retirement: Start your 401(k) early. This one is very cliché, right? But oh man, it is so true and important. I specifically would go back in time to tell myself I don’t have to start at the 3% level that is often encouraged and matched by employers. In my younger years, that felt like a chunk of change I could not survive without. A better solution? Start with something more comfortable — even 0.5%. Then bump it up to 1% the next year when you get your annual merit increase, then 1.5% and so on. It’s OK to start small and work your way up — something is better than nothing! Once you start seeing your 401(k) funds accumulate, it will likely spur excitement and grow your comfort level. Your funds will increase to a higher contribution percentage before you know it.
- Vision: Create a vision for the life you want in the future. Then before making a purchase of any size, pause and ask yourself whether it will get you closer to your vision. While my vision of where I am headed has certainly changed over the years, it took me longer than I wish it would have to curb impulse buying by learning this simple guideline. Note that I called it a vision, not a goal. The word “goals” in my younger years would have sounded so formal and I would have run the other way. Creating a vision gives you something broader to picture yourself in, without making it feel scary and too absolute. Perhaps I would even tell myself to create a vision board to help me figure out what I want in the future.
- Treat Yourself: This goes hand-in-hand with #2. Find meaningful ways to treat yourself — ones that are not tied to your wallet/account. Your life will become richer in so many different ways.
Skip on the Small Things to Save More
– Lara Smith, Internal Communications Program Director
I have always been good about my long-term savings (setting up a 401(k) and contributing regularly). I was late to the game on more immediate savings needs. I would tell my younger self to save those Chipotle and Starbucks runs to build up a healthy emergency savings and rainy day fund. When life happens, and it will, it’s better to rely on a rainy day fund than a credit card.
At Desert Financial, we believe in sharing success — as well as experience and knowledge — to help put you in a good position financially, now and for the future. Take some notes and time to reflect on your spending habits and money management. What could you change or improve today that’ll set your future self up for financial success?