Pay yourself first
A former mentor of mine said, “manage your money or it will manage you.” Truer words have never been spoken. Money is such a complicated thing, and figuring out how to plan for your future, enjoy your present, and learn the industry can be intimidating.
I was talking with a few friends this weekend about childhood habits and how they’ve influenced our personalities. My family struggled when I was growing up, and so many of their associations with money are still ingrained in me. Money was a source of fear and stress, mostly because we just didn’t have any, but also because no one taught my parents what to do with it. Phones and lights being cut off, not being able to put gas in the car, parsing out my mom’s paycheck to ensure we could all eat before she got paid again. All of these emotions were center stage for most of my life. The stress of money reduced me to tears and I had no idea how to manage it. Maxing out my 401K? A Roth conversion from your 401k? Backdoor conversions? Choosing between stocks bonds and mutual funds? How could I possibly know any of this if no one taught me? Where do I start and how much can I afford? Worse yet, how could I learn about it when people are so hesitant to talk about money?
People will tell you it’s rude or uncouth to discuss money. Just ask someone how much they make and you can literally feel the elephant lumbering into the room. How do you think people learned to make their money work for them? They had someone to help them. Unless you have the means and resources (hell, even the mental space and wherewithal) to seek out finance guidance, you’re going to learn this from your network or someone who is willing to talk to you about it.
Side note, but very closely related topic: I am honestly convinced that our refusal to discuss money holds us down. Before the days of a quick Glassdoor search, we had no way of knowing whether we were being fairly compensated for our labor based on average pay in our role/industry. If no one is willing to talk about it, and you have no frame of reference, a company can (and will) pay you the lowest common denominator, and you’d be none the wiser. Lydia Fenet, author of The Most Powerful Woman in the Room is You shared her early 30s discovery that she was being paid nearly 4X less than others in her industry for almost a decade of her career. Why? Because she was told that the prestige and glory of the job should be enough. That is a LIE. It makes me recall a time in my 20s when I mustered up the courage to question a meager raise I'd just received, knowing I made substantially less than my colleagues. My boss at the time told me I should stop being so focused on my income. I instantly felt ashamed and guilty for even bringing it up, and slinked back to my desk. What terrible advice from one woman to another.
Our labor, skills, value, and time deserve adequate compensation. We do not work for free. We work because we want to be compensated. Especially as a woman, it’s frowned upon to ask uncomfortable questions, advocate for ourselves in our careers, or even celebrate our financial success. We shy away from saying we want to make more money, or that making money is an aspiration. I loved an article I read in the Wall Street Journal in which Reese Witherspoon cast aside that notion, refusing to play small, and speaking openly about her ambitions for entrepreneurship, financial growth, and a seat at the table. It’s such an inspiration to see women in the spotlight unafraid to demonstrate their desire to be financially powerful, too.
My point is that you can and should advocate for yourself and know your worth. In this case, I actually mean your dollar amount. You can accomplish this by
1) doing a kick ass job at whatever you’re doing for a sustained period
2) doing research to understand the market value for your role and industry, and
3) engaging in tactful, well-prepared negotiations the next time you have the opportunity.
I kick myself in the ass that up until my most recent role, I had not once negotiated my starting pay. Not once. You know why? Because I thought it was too aggressive, and I’d been told I should just be thankful for the opportunity.
I could go on about that, but want to circle back to managing your funds. Let’s get brutally honest here. No one is going to support you when you’re ready to stop working. Unless you’re inheriting a grand fortune, and in that case, good for you. As for the rest of us, we're on our own. We *have* to develop sustainable, realistic financial goals. We *have* to talk to each other and lean on one another’s intel and best practices. I credit so much of my financial stability to close friends who were willing to share their experiences, knowledge, and resources. Yes, it’s uncomfortable to hear how much someone else has put aside for retirement and realize your finances look nothing like that. Let me say that we are all on our own path, especially when it comes to finances, but what an illuminating conversation to learn what is possible and if you share similar aspirations.
If no one teaches you these things, how will you learn? Financial literacy across socioeconomic bands vary so greatly, and so much is lost when young people don’t learn how to manage their money and advocate for their worth. It’s simple math and compound interest-- the earlier you invest, the more long term earning potential you have. How much is squandered as a result of not having that type of education early on? That being said, it is never too late to learn and build better habits.
This is my I’m-not-a-financial-advisor advice to you: Figure out what you’d like to see for yourself financially. Talk to people around you. Ask your HR department if they have any discounted or free services for money management. Talk to your family, your friends, your friends’ parents (I am a huge fan of that one) and learn what worked and what didn’t. And never be afraid of how people will see you. How will you ever learn if you don’t ask?