When it comes to money, I spent the first several years of my adult life behaving like the proverbial ostrich. I kept my head buried in the sand, hoping my money fears would pass me by. Once I finally drummed up the courage to pop my head out and look around, I learned that there were lots of resources available for people just like me. I learned that taking the first steps in my financial journey might not be as terrifying as I feared.
I’m incredibly fortunate to have graduated from college with no debt and to have a well-paying job. I’m living proof that it can be easier to make money when you already have it. That said, the best money decisions I’ve made in the last few years didn’t require more money. Instead, they were about making better choices with what I already had.
These tasks were not hard. They did require research and follow-through and were definitely a pain in the ass. But so are lots of things in life. I wish I’d taken my head out of the sand sooner, and done three things with my money years ago:
1. Rolled over old retirement accounts
When I started my current job, I was automatically enrolled in my company’s 401(k) program. This reminded me that I had retirement accounts from previous jobs, and everything I was reading recommended doing something called a “rollover” — moving money from the old accounts into my new one. This was excellent advice, but I ignored it for over a year because I assumed (correctly, as it turns out) that it would be annoying.
Financial institutions do not make it easy to get your money. Partly for security reasons, and partly because they don’t want to lose your business. Each rollover required two sets of paperwork: one from the place I was rolling over from, and another from the place I wanted to rollover to. I had to get one document notarized and another one had to have a “Medallion signature guarantee.”
To make things extra fun, I couldn’t just roll everything over electronically. Once I got all the paperwork filed with the from institution, they mailed me a check (what is this, the Dark Ages?). But the check wasn’t made out to me — it was made out to the place I was rolling over to, so I had to put it in an envelope and mail it along with my paperwork. It was insanity, and took weeks of my life.
There were so many times I wanted to give up and leave everything where it was, but I knew that rolling things over was the best choice. I wasn’t contributing to or actively managing the old accounts, and by getting it all in one place, I’d be able to make my money work harder for me. Was this an incredibly troublesome process? Definitely. But was it the hardest thing I’ve ever done? Not by a long shot. All I really needed to do was decide it needed to be done. The rest was interpreting paperwork and licking envelopes. And now I have thousands of extra dollars in my 401(k).
2. Put together an actual budget
Ugh, this took me so long. I tried multiple times to make a budget spreadsheet, but couldn’t stick to it. I’d get so bogged down in futzing with the document to make it work for me that I’d burn out and abandon it. Having a budget you ignore is the same as having no budget at all, and a fancy spreadsheet doesn’t mean bunk if you don’t learn from it.
Then last year, I found EveryDollar. I’m not Dave Ramsey’s biggest fan, but I love this app. It makes it easy for me to track how much I’m actually spending and compare that against the budget I set for myself. I’ve gone from “Oh shit, I forgot about this spreadsheet” to “Let me enter this receipt real quick,” and have stuck with it for almost a year.
At first, I was afraid that setting budgets would make me lose my mind — once I have a goal or plan, I pursue it with a tenacity some would call intimidating. What if I set X dollars for a particular category and went over?
This happened a few times, especially in the beginning as I figured out exactly what my typical spending is. And I did go a little crackers. But I chilled out when I finally realized that being financially responsible does not mean depriving yourself. Having a budget has been freeing rather than restrictive. I’m able to see what I’ve budgeted, what I’ve actually spent, and how much discretionary spending I’m able to do. It’s even helped me realize I can afford to be more aggressive with my savings goals.
You can get EveryDollar Plus for an eye-popping $129/year (it lets you connect your bank accounts), but I’m sticking with the free version for now. The only reason I’d upgrade is if Plus offered reporting. Right now, all you can do is look at one month of data. There’s no in-app way to compare your spending across months or year-over-year. I’m still working through how I can use my Mint and EveryDollar accounts together to get a good overall picture of my spending.
If keeping your budget in a spreadsheet isn’t working for you, I recommend switching up your platform. Maybe you need an app, or a paper notebook, or a combination of things. Keep trying different methods until you find what works for you.
3. Opened a high-interest savings account
Any guesses on how much interest I earned in my savings account in 2018? Less than five bucks in an account that has multiple months of expenses. Even if I knew nothing about inflation, I’d still think this was crap. Unfortunately, crummy interest rates on savings accounts are par for the course for traditional banks. For most of my adult life, that hasn’t mattered a lot — all I’ve needed until this point has been emergency savings, and it’s okay if that doesn’t grow by leaps and bounds every month, especially once it’s fully funded. It just needs to sit there and be available in an emergency.
These days, though, I have Big Girl financial goals (like buying a house), and a piddly interest rate isn’t going to get me there fast enough. Inflation will always be higher; by the time I save enough, house prices will have gone up again and I still won’t be able to afford a down payment.
I’d heard about high-interest savings accounts, but they felt kind of fishy. Most of the banks that offer these are online-only and obviously haven’t been around as long as brick-and-mortar institutions. Could I trust them with my money? After reading a lot and hearing positive things from other TFD-ers, I decided to pony up and actually research my options. I did some comparison shopping, made sure the place I chose is FDIC insured, and dumped money into the account.
Thanks to the higher interest rate and a good chunk of seed money, this new account earns double digits in interest every month. It won’t make me a millionaire, but it’ll get me a house down payment a decade faster than my old savings account.
Make good choices
Sir Francis Bacon got it right way back in the 1500s, when he said, “Knowledge is power.” Making big decisions with money can feel impossible until you arm yourself with information.
You are the best steward of your money. The decisions that were best for me may not be the best for you. But the point is to figure out what you want to do…and then get to it!
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