Understand Your Finances
Savings Diaries: What I tell my girlfriends about money – and what I’ve learned
This is part of Savings Diaries, an original series in which people share how they try to reach key savings goals during 2018. It is part of a broader Chase initiative to encourage more Americans to save money.
When I tell people that I'm a financial educator, I usually get one of two responses. The first is: "Girl, where were you when…" The second response is: "Girl, I need you now!"
While my friends' financial positions—and problems—vary, their needs are often very similar. Here are six of the most common suggestions I give them:
1. Start saving now
It's surprising how few people save money. Often, my not-so-affluent friends assume they don't make enough money to save, when the truth is exactly the opposite: they don't make enough money not to save. After all, the less you make, the more likely that a little nest egg can come in handy—and give you peace of mind.
Not that my friends who make a lot of money are much better: often, they don't save, because they assume that they'll always be getting a large paycheck. But I point out that no matter how much money you make, a nice savings cushion can provide security—and a lot of freedom when it comes to choosing your next job.
2. Start small, but be consistent
When our savings goals are too aggressive, they can be difficult to maintain, setting us up for defeat. Similarly, when our saving is inconsistent, we can view it as a special event, rather than a habit that we need to develop.
With that in mind, I advise my friends to start small and consistent, rather than aggressive and inconsistent. By routinely setting aside small sums of money, they can build the saving habit. Later, as more money becomes available, they can increase their savings amounts.
3. Resist the urge to splurge
When there's extra money left at the end of a pay period, it's easy to give into the urge to spend it on something frivolous. Instead, I encourage my friends to put their money toward their savings goals or a debt payment. After all, it's fun to treat yourself, but not when it comes at the detriment of your overall financial picture and goals.
4. Create boundaries
Splurges aren't the only thing that can get in the way of our savings: sometimes, friends and loved ones are also an impediment. I've found that many people are willing to help their friends and family members before they help themselves. The trouble is, when it comes to security, loaning money to a parent, child, or sibling has a higher risk than investing in the stock market. After all, your return is based on their performance.
If a friend or family member asks you for help with a financial problem, keep in mind that, while you may be the first or easiest alternative for money, they might have other resources at their disposal. I have turned down people who asked for private loans, and the majority of them found solutions for their issues that did not involve me.
5. Be responsible
While our friends and family care about our success and survival, we can't expect them to fund it. At the end of the day, you are the only person who is responsible for your financial well-being. While that may seem like a bleak lesson, realizing it can open doors for us, making us more committed to seeking out situations that empower us financially, instead of waiting for the universe—and our loved ones—to take care of us.
6. Learn from one another
One lesson I've learned is that we all benefit from money discussions. In my case, helping my friends encourages me to look at my own finances to make sure that I am practicing what I preach. At the same time, being clear and honest about my own struggles has given me a great deal of credibility. I, too, struggle with frugality, and I often have to talk myself out of visiting my favorite stores—just like them. I've never claimed to have all of the answers, but I have a decent amount of life experience, which has made me a better friend—and financial educator.
And this leads to the last thing that I always tell my friends, clients and myself: when it comes to money, you don't have to be perfect. You just have to be committed to the journey.
Tonya Rapley is a Chase News contributor. Her work has appeared Forbes, The Root, Essence, Refinery 29, and Mic, among other media outlets.