Personal Finance Advice: Being Broke Ain’t Cute- How to Take Control of Your Financial Life

Amanda of the personal finance blog Young and Broke, offers TBF readers advice on how to take control of your financial life.

A recent Chicago Tribune featured a page devoted to women and their money, and focused on what I think is an extremely important point for young women today: Control.  It’s amazing to me because, even though it may be 2006, I still encounter blantant points of feminine inequality on a daily basis, and one area where this stands out the most is money.  We still earn less than men, and I think we all know that the way we handle our $ (saving, spending, investing, perceiving), in comparison to men, is completely different.

Why?  Well, according to the article by Tara Swords, “women’s money attitudes are mired in gender roles”; we aren’t confident enough to tackle our financial future, in many cases, and we have been taught to “not be very good at the money stuff”. . Because we don’t think were are good at handling money, we often hand over control to someone else, and this someone else is generally male (father, husband, accountant…).  Even though we live in a modern age, a lot of women I know seem to still think that their knight in shining armour will one day come along, fix all the financial mistakes they’ve made, and take care of them forever… and what a mistake this line of thinking is.

The thing is, even if you do end up married to Prince Charming and are totally taken care of financially for the rest of your life (or even if you just let your dear old Dad take care of you instead), you’re doing yourself a disservice.  Empowerment comes from taking control of your life and owning all aspects of it.  Your money included.

The article points out a number of tips for women in different life stages, some of which I’d like to share:

Just entering the workforce? 
Negotiate your salary.  This shouldn’t just be for new grads, it should be a career-long effort.  Know what you are worth, and stick to it.
Get rid of credit card debt.  Once you do, pay your bill in full every month.
Pay yourself first.  The best financial lesson I know.  Your savings should be your first priority upon receiving your paycheck.
Open and contribute to a 401 (k) or other tax-deferred retirement plan.  At least enough to get your employer match.
Learn about investing.  Don’t be scared!  Women tend to be scared of risk, but as the article points out, you’ll never be able to keep up with inflation if you don’t invest accordingly.

Just moved in with your (non-married) partner?
Keep finances separate.  Your money is yours and you shouldn’t let loose of that control.
Expose yourself, financially.  Share your debts, figure out his.  Time to view each others credit reports.
Draft a cohabitation agreement of some sort.  You need to protect your assets.
Owning property together is tricky.  Be sure you understand all the legal implications before doing so.

Just married?
Keep some money in your own name.  This is what my husband and I do, in addition to a shared account for joint expenses.  It’s important for you to have money and credit in your own name, not just joint with your spouse.
Stay involved.  If you’re not that into planning finances, at least know about what’s going on.  I’m actually the primary finance person in our household, but that doesn’t mean that my husband is completely ignorant.  It’s an ongoing discussion.
If you file a joint tax return, read through it carefully.  You’re now responsible for everything your spouse does as well.

- Just single?
Maximize your income.  If you feel you deserve more, ask.  It doesn’t hurt.
If you have no kids or spousal responsibilities, you can save more.  The earlier you start, the easier it is.
Create a will.  If you have no spouse or children, who will receive your assets if you pass away unexpectedly?

The point is, your can never predict the future.  We all would like to think that ‘til death do us part really means that, and I’m not saying anything against marriage whatsoever.  But you can never know for sure what the next day holds, and preparing yourself for the unexpected is one of the best ways to prevent it.

You’ll also feel better about yourself, I promise!

Amanda is the author of Young and Broke,  a personal finance blog directed towards twentysomethings. Since it’s
creation 2 years ago, Young and Broke has been featured in national news
publications, including the Wall Street Journal and Chicago Tribune, as well
as on radio spots and magazine articles. Amanda lives in Chicago, IL with
her husband, and loves expanding her knowledge of finance, as well as
exploring the world, trying new foods, and watching interesting films!

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Comments

  1. Minimum Wage says

    1) Negotiate your salary?  I have NEVER seen a minimum wage job where the compensation is negotiable.  Take it or leave it!

    2) Pay yourself first?  If you earn minimum wage and have student loan debt, where’s the money going to come from? 

    3) If you feel you deserve more, ask?  See #1 above.

  2. TBF says

    1. Actually, I’ve held minimum wage jobs and have been able to negotiate. It really depends on the job market in your area. Also if you’re holding a minimum wage job and want to move up, you should looke at obtaining skills to allow you to be in a position to negotiate.

    2. Yes, you can pay yourself first, even if it is $10 a month into a simple bank savings account. It’s important to get in the bait of saving, rather than the habit of being a consumer and there are plenty of ways to find an extra $5 or $10 in your budget (first stop- get rid of cable, do your own hair or nails, shop thrift stores, take the bus, turn off the lights/use less electricity, buy generic, buy in bulk, etc)

    3. What’s wrong with believing in your self worth?  You never know the answer to a question if you don’t ask. In many minimum wage situations, the turn over is extremely high and finding good employees is difficult. If you’ve been an excellent employee, with a solid work record, it is cheaper and easier for them to keep you than to let you go.

  3. says

    I think the key point of this article is to encourage women to be more accountable for their own financial situation. I’ve had low paying jobs where it never occurred to me to ask for more money. Who knows? Maybe I would have been accommodated because of my hard work. But I’ve also had high paying jobs where I spent money like I was a Hollywood A-lister. I’ve since learned to be more responsible with my money, which is something that we all should be committed to do to secure our financial future.

  4. Bethany says

    Minimum Wage,
    If you have student loan debt, that means you went to college for at least some period of time. So, why are you working a minimum wage job? I never settled for minimum wage when I was in college. It sounds like you are putting yourself on the same level as people who have never gone to college, and typically don’t have the motivation to go to college. I agree with TBF, don’t sell yourself short and just because you live in America doesn’t mean you _have_ to have all the crap we think we need. Cable and trips to the salon are not necessities.

  5. kim says

    It’s actually 2007, not 2006 ;)

    And I don’t agree with your point about keeping separate accounts when married; at least, I don’t think it’s key to financial health. In some cases, where you’re concerned about a potentially irresponsible spouse, it may be the ideal. But in other cases, like mine, having joint accounts has produced quite a healthy financial picture for both me and my spouse—especially since one of us is currently putting the other through medical school!

  6. says

    I think that maintaining some form of separate credit – it doesn’t have to be a traditional bank account – is extremely important for women. Rather than have sep. accounts, if you’re not into that, just keep your credit card in your own name, pay it off every month, etc. It helps you maintain some autonomy in case you are single again. I’m not even suggesting divorce – uncomfortable a thought as it is, you could become widowed, and having your own credit is essential.

    Thanks, TBF, for including my post!

  7. TBF says

    Joint vs separate accounts: I’m always reminded of something my mother said- give 99%, but always keep 1% for yourself. Having your ow account is important, if for no other reason than you can spend it anyway you like. My mom always had what she called a “mad money” account, which she would often deep into to buy special treats and things for us that my Dad would have balked at. I have a mad money account and I use it for a variety of reasons- like to purchase Mr. TBF a special gift that I don’t want him to know about

    That doesn’t mean that 99.9999% of your money can’t be a in a joint account, it just means that you’re keeping a little for your “mad money” account.

  8. Sasha says

    If you can only get a minimum wage job after graduating from college, you’re not doing something correctly. 

    I agree that couples should keep some seperate finances.  My mother is a realtor, and some of the divorced women she works with are not in a good position financially because they never had anything in their own name.

  9. Rebecca says

    My husband and I both work.  We have separate accounts but each put 50% of our income (before taxes, etc) towards the monthy living expenses. (I’m fulltime, my husband is parttime so our salaries are quite different.  However, the 50% rule still stands.)  Anything left over from our living expenses goes into a joint savings account.  The remaining 50% is our own.  About 20% of that is tax, then I tithe 10%, save 10% (in my own savings account) and use the remaining 10% for whatever I like.  This has worked exceptionally well for us.  I don’t have a lot of money to play around with, but our savings is growing rapidly and when absolutely necessary I can dip into my own savings.  My husband suggested this system and it took me a while to get used to it.  Now can’t imagine any other way!

  10. Jenny says

    My husband and I give a set amount of our salaries to a joint account and I swear by our system.  We have been married for 6 months, owned a house together for 2 1/2 years (and have followed this system the whole time) and have never argued over money.  He makes about $20K/year more than I do, so he set a fair percentage (he puts in more than I do since he makes more) for each of us to put into our joint account from each paycheck that covers utilities, groceries, entertainment, eating out, dogs, etc.  Whatever is left from each paycheck after that is our individual money… so we can put that into our own savings, spend it, etc.  I like to shop, he likes to play golf… so we each have our own spending money to do what we want with!  The “joint percentage” also includes enough to build up a nest egg in case we have an emergency or a house repair or car repair.

  11. Aahirah says

    While I agree with alot of the advice in the article, I do want to say that it may be difficult to save 10 dollars when all your money goes to bills (and I don’t mean the hair salon, I mean Con Edison), I often try to save 10 dollars only to have to spend it becuase i have NO food.

    Also, why do people assume that because you graduated college, you’re going to have an awesome job?  A number of my friends recently graduated from NYU with honors, and a lot of them don’t have a job, specifcally since they don’t consider a minimum wage job with no benefits, but I have bills to pay, I’ll take whatever, and I’m one of the few with a job. 

    This advice may be for the Young and Broke, perhaps I am a little too young, and a little to broke for the book to help.  Perhaps I need the book that advises me to stock up on candles for when your lights get shut off?

  12. SisterOfNight says

    Hey, come on now, let’s not criticize other women for having a minimum wage job. We don’t know what their circumstances are, so it’s not fair for us to judge. How about we try to help instead?

    Maybe we need to talk about living within our means, which a lot of young women (and, let’s face it, Americans in general) completely fail at. How many people write out a budget for themselves and actually stick to it? If you’ve never done it, I’d suggest monitoring your expenses for a month or two and analyzing exactly where you’re spending your money. Then you can compare that with your income and determine whether you’re living within your means. If not, you can then make changes and allocate some of the $ you were spending on unnecessary items to your savings (i.e. paying yourself first).

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