Hey ladies. Advice or encouragement needed here. I was going through my financial goals and budget for 2020. Admittedly I’ve only started being financially responsible recently (I’m 25) and (cont)

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You’re 25 just get on track now there’s still plenty of time. Many Americans don’t ask the questions you’ve asked until they’re 30 or 40. Save at least 10% for retirement and create some auto savings transfers to start.

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Set up your pay to automatically deduct (minimum)

10% to 401K
20% to emergency savings (try to have 6 months expenses saved up)
10% regular savings
10% Roth IRA

The rest:
15% fun money checking account
35% checking account for bills

It’ll be even better if those savings accounts are at a separate bank than your checking account. That way you aren’t tempted to transfer money.

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Hahaha where do you live? at least 50% of my income is fixed bills, not even groceries yet

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I was looking through my 2018 and 2019 credit card yearly statements. I spent $42k in 2018 - honestly how I managed to do that I don’t know, but according to the data it was a mix of splurging on food, ubers, and shopping. The 42k doesn’t include rent. So I basically had very little savings left over.

I’m super shocked at myself. For context, I absolutely hated my job and my life that year and had little financial knowledge (parents never spoke about money except with shame / conversations were always stressful, but they would splurge, and I think I picked up on this attitude unknowingly). So I used splurging and money as a way out of my bad emotions. I put paying off my large CC bills on autopilot and never spoke to anyone about what was a normal amount to spend because money felt taboo.

While luckily I’m not in CC debt (I had really low rent that year), I’m upset at myself for letting that money run away from me and costing me retirement funds, potential down payment for a house, etc. My 2019 spending was a bit lower (switched to a job with better W/L balance and the impulse online shopping went down), but it’s still higher than I’d like.

This past summer, as I began to realize this wasn’t right, I read a ton of financial literacy books: Rich Dad Poor Dad, The Simple Path to Wealth, the Millionaire Next Door, etc. and started listening to financial podcasts (Optimal Finance Daily and FIRE-type ones). All of these books have a theme: save as much as you can, especially while young. I’m really upset because I feel like I’ve wasted those 2-3 years of earnings straight out of undergrad.

In addition to poor financial literacy, I think another huge factor that led to the $42k snowball were my feelings of shame around money. I buried my head in the sand like an ostrich, and wish I had spoken to others sooner.

I’m almost 26. Do any of you have success stories or just words of wisdom about overcoming financial mistakes and getting back on track?

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That’s so encouraging to hear about your husband, and good for you both 😊 Thanks McK1 for the wise words.

It’s not much to add but in terms of savings, I use an app called Qapital that helps me put money away or save for trips/various goals better. I have it set you put a certain amount each week and it is link to any of my debit or credit cards to round up to nearest $1. It adds up pretty quickly depending on what you set to your weekly or monthly amount.

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Thanks! I will look into it.

Yeah set a healthy goal for saving and stick to it. But be careful that you don’t over index and start idolizing and find comfort in what you save too.

Otherwise don’t worry about the past years too much. For one, it won’t help. And second, you’re so young and have plenty of time to save. Seriously, plenty of people have debt and are paying it off before they can save so they start saving later. Yes, you’re probably delaying owning a house by maybe a year, but in the big scheme of things it’s not a big deal!

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Thank you!

Also, be grateful that you were able to spend $42k with fairly little consequences.

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You're so young, you still have a lot of time! Everyone's made those mistakes but it's how you correct them that actually matters.

I'd suggest-
1. Create a budget. YNAB.COM is worth that $11/mo subscription price. Makes you track every transaction in categories that you choose. My husband and I just started using it and it's been
incredibly helpful
2. Create a free account Personal capital to track your net worth. They'll even do a free consultation with you if you want
3. Read bogleheads - guide to investing book

And bringing these up as reminder -
1. Max out 401K for contribution (at least to get employer match)
2. Save 10% of your income in high yield savings (Marcus is great)
3. Spend time learning about tax management strategies like Roth IRA or backdoor/ mega backdoor
4. Remember that you're still young and will have strong income potential over the next 30-40 years

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Yes, personal capital is my favorite app and bogleheads is on my list. Thanks for the tips!

Wanted to give you a virtual high five for taking the initiative to dive into this and put yourself on track this early in your career.

If you can set up the good habits now, the returns will pay off and compound!

My husband and I recently went through a similar exercise where we analyzed 2019 after also being surprised with what we spent - we had our first baby that year and hadn’t been through a financial exercise in awhile - so it was a good reminder to be cognizant to what you’re spending.

We are in our mid 30s and were recently talking about how a lot of our friends make less than us but still seem to be living it up all the time and it worries me that they aren’t saving for their futures enough / refusing to miss out on stuff now will hamper them later in life so it’s refreshing to see this post!

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It sounds like you two have good habits! I can definitely see a baby increasing costs...

This was an encouragement, so thanks! :)

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