How I Took Control Of My Finances
Talia Koren, our guest blogger this month, shares her financial journey. She didn't know what an IRA was. She spent $4,000 on cabs and Ubers over 20 months. But now she's saving 20% of her income. Let's listen to Talia's story.
Growing up, my parents refused to talk about money in English.
Every time the subject came up, they automatically slipped into Hebrew, which they both spoke fluently, so my brother and I couldn’t understand.
I’m not a parent, so I don’t know why anyone would shelter kids from money matters. But I do know that the predisposed unfamiliarity of money didn’t help me when I started college and my adult life.
When I graduated college in 2014, my dad gifted me $1,000. He said, “put it in an IRA.” I had no idea what “IRA” even stood for.
Learning about money was intimidating and overwhelming and that’s why I put it off for so long.
LEARNING ABOUT MONEY WAS INTIMIDATING AND OVERWHELMING AND THAT’S WHY I PUT IT OFF FOR SO LONG.
I was scared of making mistakes with my money due to insufficient knowledge.
My dad didn’t feel like explaining it to me and urged me to figure it out on my own. So I put it off and tossed the $1,000 gift in my savings account.
OK, so I didn’t know the first thing about investing, but thanks to my mom, I knew how to make a budget. (Sticking to it was a different story.)
A week after I graduated school, my mom set up a Mint account and budget with me. I had a job and an apartment already, so I knew my salary and rent and how all the financial puzzle pieces would fit together.
I knew the life I could afford -- kind of. I was certainly in denial about being cut off from the money tree that was my parent’s bank account. After graduating, my parents no longer paid for my food and clothes. Up until then, I had a credit card linked to their account, using it as needed, paying little attention to how much I was spending. That’s a dangerous habit to develop. Thanks, mom and dad!
Even though I had some bad habits from their “teachings,” they did give me one crucial money tip: always pay off your credit card balance in full.
When I turned 20, they urged me to get a credit card and start using it once a month. And like they told me to, I paid it off monthly in full. But at the time, they failed to tell me why that’s so important!
BY THE TIME I TURNED 22, I WAS TIRED OF THE EMOTIONAL ROLLER COASTER RIDE I TOOK EVERY TIME I LOOKED AT MY BANK STATEMENT.
Looking at my bank statement was the same every time. First, I heard the nagging voice in my head, “You need to check on your money, Talia.” And I’d put it off.
Then, on a Sunday morning after an expensive night out, I’d reluctantly open my Mint account. I would feel nervous as my information loaded.
Looking at your bank statement is like looking at yourself in the mirror of a dressing room; you’re not always going to like what you see.
But after looking, there’d be that wave of relief. My spending was never as bad as I thought.
After using Mint for a year and a half, I finally felt comfortable enough to dive deep into my spending history. I started to see some costly patterns. For example, I had spent $4,000 on cabs and Ubers alone in a 20 month time period. $4,000. Less than two years. Yikes!
It was then that I realized something had to change, or I’d be living paycheck to paycheck forever.
INSTEAD OF ASKING MY PARENTS FOR ADVICE, I DECIDED TO HIT THE BOOKS AND EDUCATE MYSELF.
I searched for books that could break down personal finance in a digestible, friendly way.
The language around money is intimidating in and of itself. Before actively looking for books that could explain money management in a language I could understand, it all pretty much sounded like Hebrew.
After searching for the perfect resource, I settled on a book called I Will Teach You To Be Rich by Ramit Sethi, and it changed my life.
Immediately after reading it, I automated all my accounts. I opened up an online savings account with a higher APY that didn’t have any maintenance fees. I negotiated some of my bills and canceled memberships I barely used. I made a plan to stop spending so much on cabs and restaurants.
Instead of reacting to money, I got in control of it.
I figured out how to “pay myself first” and stash 20% of my income.
I started making $100 monthly contributions to an IRA for the past few months. It’s not at $1,000 yet. Yeah, I’m kicking myself for not educating myself earlier when I got that $1,000 from my dad two years ago. Because if I had opened an IRA back then, I would have been farther ahead financially.
You can control everything but time. Start now, not later. And that’s the number one lesson I learned in the past year from educating myself about personal finance.
What an inspiring story. I'm glad Talia can now finally "see" (financially). I wish Talia's dad taught her the basics of an IRA. But perhaps he realized he's not an expert? Talia felt scared of making mistakes with her money. She was on to something. Studies show that middle class folks lose billions in avoidable expensive mistakes.
Educate yourself. Don't be afraid to seek expert advice.