NORMALIZED MONEY HABITS THAT SHOULD NOT BE NORMAL

A note: This post is informed by my observations in real life as well as research from women’s groups and forums online. 

Influencers have definitely impacted consumer culture in a most profound way. Not only do we willingly subject ourselves to advertising, we look forward to it because our favorite influencers are doing the product pushing. We go on instagram, admire other people’s lives and a small voice in the back of our heads tell us that if only we dressed the same way they did or did our hair the same, we too could be living in a neutral modern organic McMansion with a white marble top and farmhouse sink with our perfectly imperfect families. The thing is, although this does sound like a wonderful thing to have, by unnecessarily consuming such advertisement and living an excessively consumeristic lifestyle, we get farther behind our goals of achieving financial prosperity that would afford us our dream McMansion (or better yet, a modest yet tastefully decorated home). 

Here I made a list of money habits normalized for young women in our current culture that should definitely not be our own normal:

Afterpay. This and other services of its kind should never be an option for us when we purchase things. If it is not a matter of life or death, if we cannot afford it twice over, we can’t afford it, periodt. Most women use this service for fashion purchases. I know clothes are very important, but if you need to borrow money to buy clothes when you have so many in your closet already, you may have the following problems:

One. You buy very trendy pieces that won’t be in trend next season. In this case, pick more classic styles for your next purchases. 

Two. You have a shopping habit. In this case, pick a different, less expensive hobby.

Three. You have fallen prey to the false notion that if you buy certain things, you will achieve a certain level of general contentment (as advertised). In this case, go on a social media diet.

Taking out loans for college majors with low ROI prospects. Perhaps the biggest mistake young women make is taking out college loans for majors that doom them to underemployment and consequently, wages that won’t keep up with loan payments and interest. I am of the opinion that while certain fields of study are definitely important, we don’t need young people going into debt to study them and in the end, not even practice in the field and still saddled with debt for a degree they don’t even use. While many graduates do feel that their studies provided them some utility, our current student loan crisis is evidence that taking out loans for a low-ROI undertaking is simply not a wise thing to do. If we must borrow to go to school, let us do our due diligence to make sure that what we are risking our early financial life for is worth it.

Not saving/investing. From what I gather from many young women, it is quite difficult to save when there are debts to be paid. I totally get it, but we need some liquidity at all times to cover whatever life throws at us without going further into debt. Dave Ramsey recommends having a savings of $1,000 at all times, then after that we can continue to attack debt. I’ve seen women online humble-brag? about not having any savings sort of as self-deprecation but also to highlight that they live in a HCOL (high-cost of living) area with astronomical rents and prestige. Not having a savings is not a personality, and honestly, it’s so not cute. 

Not having one’s own financial house in order is dangerous. It puts us in uncomfortable/dangerous situations having money would save us from: for example, leaving unsafe relationships or stagnant jobs or unsafe neighborhoods. If you cannot save yourself, you’ll have to settle for whatever Prince Charming comes through the door, no matter how un-charming he may be. 

Getting a massive car loan. I’ve toyed with the idea of getting a new car, but after adding up the costs, it just doesn’t make sense for me now and I’d rather put the money away every month (Full disclosure, I was gifted a car). When then time comes, however, if my trusty steed chooses to depart from my reins, I already have a plan: buy a 2-3 year old used luxury SUV with 50% down at <1% interest. I have a dollar amount I’m comfortable owing interest on, knowing I can pay it off at any time but I’d rather it sits in an ETF gaining more interest than I’m being charged for the loan. We have to keep in mind that a car is not an investment (for the most part); it is a liability. And as such, we would want to pay the least amount as possible to gain the highest satisfaction. This means that if you want luxury, expect to pay more, but find the cleverest way to pay the least. Car values typically experience a sharp drop after the first two years so it is much wiser to buy them at that time. The car will still be almost-new but we wouldn’t have to pay the premium to drive it off the lot.

What is also my biggest concern is that we are young, and hence, time is on our side. And time, ladies, is our biggest weapon in the game of investing. Compound interest favors those who have time. So if we sink our capital now in a depreciating “asset” aka liability such as a car, we are not taking advantage of time. Sure, we do get use out of the car and that has its worth, but do we need to pay so much for transportation when we know we could be paying less? Do we need a $50,000 car when $20,000 would do? That $30,000 difference would come out to $520,000 in 30 years if left untouched in an ETF (historical returns). 

Focusing on saving without increasing income. Perhaps it is because I choose to live in abundance that all this talk of saving and investing is not limited to only saving and investing. These two things are directly tied to increasing income. There comes a point when one can only save so much. If you find it difficult to keep up with your current situation and you are not in a transitional stage (school, temporary assignment or arrangement) to begin with, things will not get better on their own. You will have to come up with something to increase your income, and that is non-negotiable.

Maybe the reason why we are less inclined to be responsible with money is because we are social people and we cannot show off financial independence like we can fancy clothes or nice cars. But financial security is what helps us sleep well at night, what sets ourselves up for the future, and what will truly put us at peace. Forgo the noise for now, and stack your coins in peace. Find a group of likeminded women you can trust and discuss money moves with. You’d be surprised how much inspired and informed you will become. 

Let us live in abundance. 

This we manifest. 

Elle.

3 Comments

  1. Valerie

    Yeah when you start thinking of the cost of a couple shirts from even a fashion fashion brand each month….it’s like “damn could have spent that on a class to learn a sport like tennis, charity, a membership to my career association, out of pocket health insurance possibly?” 🥺 oh I love the money posts Elle. Thanks!

    Like

    1. Elle

      Exactly! Money spent now is money not compounded. I try to remember Warren Buffett’s $300k haircut every time I make a purchase. Really helps put things into perspective. Thank you for the kind words 🙏🏽

      Liked by 1 person

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