I always had felt a ton of anxiety evaluating my own money situation. There were no classes on personal finance in school. I come from an immigrant family where The Great Recession wiped out my family’s savings and our house so of course we never discussed it. I would be afraid to look at my bank account at the end of the month. I would be worried that I would hate myself for spending too much one night on a dinner or buying a pair of shoes. Worse yet, I was so afraid to take what I was earning and put it towards anything outside of my bills and paying off my minimum amounts on student loans.
The funny part is, I know personal finance very well. I’ve made a career of it by working at places like Morgan Stanley and Wealthfront. I’ve even passed my licenses (Series 7 & 66) that allowed me to provide advice on wealth management.
However, I really thought managing one’s finances was for the very wealthy and you had to hire a financial adviser with his/her squad of people (like me!) who would help align the funds to the individual’s aspirations. As I started learning more about how money can help drive dreams, my courage for overcoming my fear began to grow.
There are a few lessons I learned along on this journey and I hope they can help empower you.
1. Small steps lead to big changes –
I would feel so anxious about looking at my bank account at the end of the month. One of the things I started playing around with was to round up my purchases. If I was buying groceries, I would put a few dollars aside as though it was part of my grocery bill. This started to change my attitude and feelings about looking at my bank account. I would start to get excited to see how much I had saved. This small habit led me to save over $10,000.
2. Set a finance date night –
One of the biggest sources of fear for me was not knowing how much money I will need for my long term future. Is it okay for me to take the trip to Cuba or do I need to put that funds away for my retirement? I knew I had to save for retirement but everything between now and retirement isn’t a straight line. I don’t personally have my life planned out on a 3, 5, 10 year trajectory. The small little action of saving what I can by adding a little bit to my piggy bank every day, turned into me spending a few minutes every month looking at how much I spent. This evolved into a monthly practice of pulling up my accounts for a quick check on how much I’ve spent in comparison to my budget goal, how am I on track to some of my near term goals and enjoying a glass of wine for taking the time to check on my financial health. Every 6 months or so, I take a look at my credit score and my investments as well.
3. Don’t forget about the 8th wonder of the world –
Throughout my career, I have helped individuals invest large sums their money in the stock market. I was used to conversations on the power of diversification but I never thought I could invest myself. What’s the point of investing so little I always thought. I don’t have enough to make a difference and I was afraid that the money I was saving would be lost. Once I started feeling comfortable with where my money was going month to month, I had to wonder what else I could do because saving isn’t going to cut it.
After I had enough set aside for my emergency fund, I started to play around with this calculator to see how much I could grow my money over time. I started reading more about the power of compounding and really seeing how investing around $700 a month for a 6% rate of return could help me retire as a millionaire. You can see how much you need to investment monthly here. I automatically investment my money so I don’t look at it everyday or even monthly, so when I do look at it every 6 months or so, I am pleasantly surprised. I intend on using the power of compounding for my far, distant future.