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One of my best friends called me “the money expert” the other day and I chuckled. I thought, “Me?! Girl, bye!” Truth is: My last name is Wise, but I was anything but just a few years ago.
As a recent college graduate in North Carolina, I thought I had everything in control. I had a job in my field, which some of my friends couldn’t say, and I didn’t have to depend on my parents for anything. That’s because I was depending on Visa.
My level of financial literacy was non-existent. Neither Mom, Dad nor my teachers had ever taught me about managing money. When I decided to take responsibility for my financial life a few years ago, here are some of the most crucial steps I took to organize my finances.
1. Started seeking knowledge.
Everything starting with Call Number 332 was fair game at the local library. I think the first personal finance book I checked out was Girl, Get Your Credit Straight! That title gets to the point, doesn’t it?! I needed someone to be real with me and break things down simply. Author Glinda Bridgforth explained how credit scores were calculated and what I could do to get caught up. I even ordered my first credit reports. The more books I read, the more resentful I became for not knowing all of this already. More importantly, I grew more confident in my money management and decision-making skills.
2. Stopped using bills as coasters.
Avoiding money problems leads to more money problems, so I stopped tossing bills on my nightstand like frisbees and leaving them there to collect dust. When I opened up the Bank of America, Old Navy and CFNC statements, I finally confronted the numbers and saw how reckless I’d been. I also found out my mom had maxed out one of the credit cards in my name. The balances seemed insurmountable at the time. But I had, at least, conquered my fear of knowing the numbers so I could make a plan to clear the balances.
3. Set up a bill calendar.
This was a big move! I used to forget bills were due because I didn’t have the wherewithal to make a calendar. So simple, right?! I got out a pen and paper to record the due dates and minimum amounts for the credit cards, loans, cell phone, rent and utilities. Seeing everything written down yielded tons of clarity. With this information, I could easily see how much money I needed to put aside each month to pay bills and set up autopayments for some of them. The BillTracker and Google Calendar app alerts have kept me on schedule and away from $35 late fees for years.
4. Separated money according to their purposes.
Setting up accounts at different banks is game-changing! I used to think I should be loyal to one bank. Boy, was I wrong! First of all, Bank of America didn’t care about me. That was evident with all of those fees they charged. I made the mistake of setting up a savings account and a checking account with B of A. Every time my checking account was running low, guess what I did. You guessed it! I opened the app and stole from my savings for something at Target. (It’s always Tar-jay, right?)
At the behest of The Budgetnista, Tiffany Aliche, I checked out www.BankRate.com and opened up online checking and savings accounts with Capital One 360. One savings account was a sinking fund specifically for the car insurance payments due every 6 months. Each pay period on the 1st and 15th, I automatically transferred 1/12 of the bill from my Bank of America checking account into the Cap One account so I’d be ready when the bill was due. Set it and forget it!
Then I opened up a savings account at a local credit union that only allowed me to make 3 transfers or withdrawals within a quarter. I didn’t attach a debit card to this account, so I really had to think of a good reason to dip into my savings account if that meant driving out of the way to visit that bank. I downloaded the direct deposit form from my company intranet, allocated $53 per pay period to the credit union savings account and designated the rest to my Bank of America account. Why $53? I realized the amount I’d save in the 52-week challenge was $53 per pay period. Having that savings account allowed me to stash cash without ever touching the money. It was out of sight and out of mind. It took 5 minutes—5 minutes well spent.
5. Started budgeting.
At my first job out of college, the company paid us once a month. My next job paid on the 1st and 15th, which threw me for a loop. Here’s where the bill calendar came in handy. I tried to make sure the first paycheck covered expenses through the 15th and the second paycheck handled the rest of the month’s bills. Most of my bills came out before the 15th, which took up the whole paycheck from the 1st. To remedy that, I realized I needed to save more money from the second paycheck and save it in a separate account to make each pay period feel more evenly split. It was the most basic budget. Without doing Steps 1-4, I wouldn’t have been able to get back on track.
When you’re just started out on this journey, you feel overwhelmed. You’re thinking, “Where do I begin?” I hope these simple steps will help you take steps in the right direction.
I’m no “money expert” as my friend says, but I do take pride in learning and turning my losses into lessons. Thank goodness for growth!