Financial Advice Women Would Give Their Younger Selves
If you had the ability to go back in time and give your younger self money advice, you would probably have many financial tips. That’s why GOBankingRates decided to speak with real women about the biggest piece of financial advice they’d give their younger selves and why it matters for your future self.
Open a Roth IRA
Many women I spoke to would advise their younger selves to start investing ASAP. Speaking coach and strategist Laurie-Ann Murabito said she would have advised her younger self to open a Roth IRA account.
Get into the habit of contributing 10% to 20% to this account as soon as you’re employed and pay taxes.
“This is paying yourself first and having your money make you money,” Murabito said. “It adds up quickly and the magic of compound interest and growth can never be replicated years later. You’ll find starting early will decrease financial stress later in life.”
Learn About Compound Interest
Speaking of compound interest, Lana Hinds, accredited financial counselor (AFC) at Lana Hinds Finance, would go back to her college years and teach the younger version of herself about compound interest.
“I’d tell my younger self that compound interest is basically a slick way to double dip in the interest pool, and get paid off of the money saved and the interest earned,” Hinds said.
Hinds said she would then instruct her younger self to invest the roughly $15,000 scholarship overage checks.
“The phenomenon that is compound interest would allow me to cash out roughly $40k by age 40,” Hinds said. “Or I could do the smart thing and let it continue to grow.”
Conduct Financial Due Diligence When Choosing a Partner
A recurring theme among many women I spoke with was that they would tell their younger selves to exercise financial caution in relationships.
Melinda Satterlee, principal owner at Marathon Wealth Management, said to do some due diligence once you believe you have found the one.
“I went into my partnership assuming we both would work and contribute to paying the bills,” Satterlee said. “Sadly, I married someone who was cute and fun, but unable to hold down a job. The signs were there, but I ignored them.”
Try to step outside your love bubble and do a bit of due diligence. Ask yourself if the person you love has demonstrated the ability to contribute monetarily. You can also objectively ask how important it is that your partner is able to financially contribute to the relationship’s lifestyle.
“I know from experience that whom you decide to ‘hook your wagon to’ can greatly affect your lifestyle and your ability to build a solid financial foundation,” Satterlee said. “Before you dive in, do some objective reflection because I believe the person you choose to partner with will influence your finances more than any other event in your life.”
Live — and Budget — Within Your Means
Trae Bodge, smart shopping expert for TrueTrae, would tell her twentysomething self to live within her means. This is especially true when using credit cards.
“I was new to credit cards in my early twenties. I acquired several credit cards and used them liberally. Had I known what I know now about compounding interest, I would have only spent what I could pay back when the statements arrived rather than carrying balances,” Bodge said.
In order to live within your means, Bodge recommends creating a budget for yourself. A helpful budgeting tip is to avoid spending traps. One sneaky spending trap can be your phone and cable providers.
“We often stick with one carrier, like a mobile phone or cable, for decades,” Bodge said. “We think that it’s too much of a hassle to change or are afraid to have a gap in service and as a result, end up overpaying for years. Evaluate these regular changes once a year and do not be afraid to change.”
Create an Emergency Fund
Lattice Hudson, founder of Lattice & Co, said to create an emergency, or rainy day, fun. This fund may be used to cover unexpected events that can occur at any time.
“Aim to cover roughly six months of living without a paycheck when putting together a rainy day fund,” Hudson said. “This money should be saved in liquid assets so that it is easy to access.”
Be a Conscious Spender
Sometimes Hudson thinks about how her younger self chose to spend thousands of dollars on coffee from coffee shops. She could have easily made most of these drinks at home for half the price.
“A lot of young women assume they are doing everything right when budgeting,” Hudson said. “The truth is that six dollars of coffee every morning is proof that you aren’t budgeting as well as you think.”
Know where your money is going by becoming a more conscious spender. Over the years, Hudson has made little conscious changes that have allowed her to save more money and minimize her recurring monthly expenses. This helps save even more money in the long run.
“Making these small changes helps level up investment prospects while also allowing you to invest bigger and earlier,” Hudson said.
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