I graduated university two years ago and the most valuable knowledge I gained didn’t come from my course load. It gradually seeped in, every other Friday, after I joined the professional work force.
“Seventeen percent of adults are not able to pay all of their current month’s bills in full,” states a May 2019 study, by the Federal Reserve. “Another 12% of adults would be unable to pay their current month’s bills if they also had an unexpected $400 expense that they had to pay.”
Money is as fleeting as it is taboo.
I quickly realized that if I didn’t learn to be smarter and less passive with my financial choices I would be one overdraft fee away from the cycle of burying myself deeper than I can dig myself out. And it isn’t because I wasn’t working.
“One in 10 adults are not working and want to work...Two in 10 adults are working but say they want to work more,” the study continues. “Three in 10 adults engaged in at least one gig activity.”
So, only a couple months into earning steady, monthly income I made the conscious decision to create a budget and stick to it. I began aggressively attacking my student loans from highest interest rate down, picked up a side job or “gig,” cut my expenses to include less consumerism crap and focus more on what I absolutely need and stuck to that budget as strictly as I can.
We live in a society where credit scores and savings accounts are lifelines, yet we aren’t taught about either. We don’t begin to understand the gravity of all this until after we graduate.
Using different credit cards for each of my largest monthly expenses, and paying each month’s balance in full, allowed me to build up my credit, earn the occasional cash back and monitor my expenses in real time, all while staying within the confines of my budget.
“Those with less access to credit are much more likely to report financial hardship due to income volatility,” the Federal Reserve study states.
After about six months I discovered I was over budgeting on most of my expenses, though a few months prior I felt like I was struggling to pay all my bills. The remaining difference I have left over each month, I pile onto my loan payments.
“Over half of young adults who attended college took on some debt to pay for their education,” the Federal Reserve study continues. “Among those making payments on their student loans, the typical monthly payment is between $200 and $299 per month.”
By holding myself accountable, in a year’s time, I managed to reach my emergency fund goal and establish the groundwork to pay off my student debt in substantially less amount of time, all while living off a journalist’s salary (I know, incredible.).
Oh, but I didn’t stop there. I kept saving, and that proved critical. See, life has this funny way of knocking you down when you least expect it, and hardships often form in clusters.
You could be driving home, following the speed limit on the same route you always take, and one time the snow drifts across the road in a way that sends your car into the guardrail.
This could happen a few months after your dog develops an ear infection, prompting an emergency vet visit, which happened a few weeks after CDL sent a pebble into your windshield, but not before you drove over a glass bottle and were left with a flat tire.
While dealing with the emotional burdens life surprises you with, the last thing you should have to worry about is how to foot the bill.
Yes, I’m speaking from experience. And yes, I was able to recover financially because two years ago I started saving.
Each time I faced one of life’s beautiful curveballs, I dipped into my emergency fund and promptly worked to build it back up. Some weeks I ate nothing but peanut butter sandwiches and Ramen, but the point is I stayed afloat.
I provided care for my dog (son), paid for the windshield replacement and the other vehicular issues. Maintaining the financial security I built myself alleviated so much of the emotional burden.
No class taught me this. There wasn’t a course on personal finance throughout any of my schooling. I had to recognize somewhere I was vulnerable and learn to alleviate that on my own.
The terrifying reality is that children aren’t raised to understand financial literacy. Money is such a taboo topic and I understand why, but it is setting future generations up for lives dictated by loan payments.
If our society remains in debt, or one paycheck away from catastrophe, we can’t buy homes. We can’t raise children. We can’t enjoy life and feel safe at the same time.
I’m okay. I’m going to be okay. But if I ever have non-canine children, I’m going to do my best to educate them so they can enter the workforce one step, one savings account, up from their mom.
Hopefully by then we’ve reformed our education system to include more financial literacy and less pre-packaged Ramen recipes.