When I was a little girl, my mother taught me two principles about managing my money that have stuck with me.
1. When you earn money, immediately put it in three buckets. Put a percentage of your earnings into your savings account – you must save for a rainy day; give a percentage to your church – it’s important to give back; and with the rest, pay your bills. Whatever remains is for pleasures.
2. Don’t mess up your credit. Pay your bills on time.
As a young couple starting off, my parents didn’t have much, and with seven children, I watched my mother manage our money diligently. She ensured we had food on the table and we paid our bills. She made it look easy: She was a patient spender. She waited for things, and she knew how to separate needs from wants. I remember her putting clothes on layaway at Kmart – she made small payments over time, until paying off the balance. I remembered when she purchased our first upgraded car, a Lincoln Continental, Mark V. She proudly walked out the dealership with a big smile on her face because she got the loan, based on her great credit score.
During my college years, I worked and began to earn money. With my scholarship money, my cashier’s job at the local grocery store and the money I earned from internships, I graduated college debt-free, unlike most of my classmates.
After graduation, I landed my first professional job with Texas Instruments. Like my mom, I proudly bought a car on my own – my first one – and I didn’t need my parents to co-sign. Mom taught me to have the car payment automatically withdrawn from my bank account, on time, every month, so I would never miss a payment and keep a good credit rating.
In my mid-twenties, I found it easier to spend money than manage money like my mother had taught me. I traveled, furnished my apartment and kept my wardrobe up-to-date. It seemed all the things Mom taught about credit card debt, giving back to the church and saving money each paycheck, went in one ear and out the other. I then realized that what she made look easy, was actually very difficult. Unable to pay my credit cards on time, the interest kept building up, and I found myself living paycheck to paycheck. I discovered how easy it was to get to this place and how long It would take to get out, if I didn’t get some help.
This challenge led me to the realization that it’s not all about how much money you make (of course we all need a sufficient amount to live), it’s about how you manage what you have. Now I understood how some of the richest people could go bankrupt.
Fortunately, I had help. My husband, who is a trained auditor, took charge of the finances. By leveraging his strength and watching him manage our money, I learned financial maturity and discipline. We also hired a financial planner to help us consolidate our earnings, set budgets and make good investment decisions. Turning to an expert for advice, especially with stock, which was unfamiliar to us, helped us make good financial decisions, which will benefit us as we age.
Here’s the advice I’d give to my younger self and to others taking the financial journey of earning and managing their money:
1. Use a debit card. Don’t get into credit debt. Learn to be patient and wait on things out of your budget.
2. If you have to get a credit card, pay it off monthly so you don’t accrue paying interest.
3. Leverage financial planners – seek advice early.
4. In a partnership, consolidate finances. The sum is greater than individual parts.
5. Set a budget and stick to it.
6. Invest in 401K or retirement fund.