Notes on my financial routine
Before anything else, let me state this: I know that I come from a place of financial privilege, and because of that, the advice or insight I give might not be applicable to everyone. I’m also certainly not a financial expert, but I did want to share some of my best practices.
Although I don’t have a trust fund or 1%-like parents, I definitely grew up in a household that was comfortable and financially literate. I graduated from a state school without any debt. I’ve always been frugal and I’ve always liked earning my own money: before I got my first “official” job as a grocery store courtesy clerk when I turned 16, I cleaned vacant houses for my mom’s property management company. All of that has made it much easier to be in the financial position I am now: namely, not holding any debt, a decent amount in savings and a 401K, and earning a regular salary on top of occasional freelance income.
When I think about it, there are two things that are most important in my financial routine: credit cards and automatic deductions.
First up is credit cards! One of the things I hate the most is having to spend money on fees: I’m fine with spending my money on goods and services, but things like ATM fees or overdraft fees are actually my nemesis and I refuse to pay them and thus go to incredible lengths to avoid them. So: my credit cards are always immediately paid off. My attitude toward credit cards is way less about buying things on credit–if I don’t have the money for something, I don’t buy it–but more about using them to build an excellent credit card and take advantage of them for points.
I currently have and use three credit cards. My very first credit card was a Discover, and it’s still one of my favorites (the fact that it’s pink and monogrammed doesn’t hurt!). Discover offers 1% cash back on all purchases (and sometimes 5%), and you can use that reward money to pay your bill or cash it to gift cards. You often get a few extra dollars when you cash it to gift cards (say, $45 in rewards will mean a $50 gift card), which basically feels like free money to me. I always use it for Sephora gift cards, which is basically how I fund all of my skincare and makeup. Since I moved to New York City and joined the JetBlue TrueBlue program, I also have a JetBlue Barclaycard: I earn frequent flier points by using the card, including 3x the points when I buy JetBlue flights with it. And I juuuuust joined the Chase Sapphire Reserve club, which is basically the premium card for travel rewards. It has a hefty annual fee (some of which is refunded if you spend enough in the first few months), but I received 100,000 travel points upon signup as well as regular airport lounge access. Bonus: both the JetBlue and the Chase Sapphire Reserve card don’t have any foreign transaction fees, which is super important when I’m traveling.
I’m definitely not a credit card points guru, but that’s one area that I’m hoping to improve in 2017! The biggest thing I would say to keep in mind when choosing a credit card is to look at the annual fees and examine the benefits–and choose one that makes the most sense for YOU. Look at what airlines you regularly fly or what benefits are most important to you (cash back, frequent flier miles, etc.) and decide based on that. Sites like The Points Guy or NerdWallet can be super helpful there!
Secondly: I find automatic deductions incredibly valuable to not only keep my regular and retirement savings on track, but also to make sure I’m not spending beyond my means. It’s way easier to feel like you “can’t” save money if you’ve already spent a bunch of it–so I try to make sure I only have funds available that can actually be spent. To that end, I have a regular amount transferred to my savings account every month–and I try to increase that amount by about $100 each year.
And when it comes to retirement savings, I’m passionate about the power of compound interest. I also have an automatic deduction set up for my Roth IRA: you’re allowed to contribute a maximum of $5,500 per year, so instead of paying that in one lump sum at the end of the year, I have my Vanguard account set up to take $458.33 from my checking account every month (on the same day as one of my paychecks). When I’ve worked for an employer with a matching 401K, I’ve always contributed the max to take advantage of that (free!) money. When I’ve worked for start-ups that don’t offer it (like now, ugh!), I still set up my automatic deductions to take 6% of every paycheck to go toward my 401K. Lastly: I also have automatic charitable donations set up to give to Planned Parenthood, ASPCA, EMILY’s List and my high school’s scholarship fund every month.
Basically, all of these auto deductions mean that I have way less money to spend every month–which makes me both more frugal and more selective about what I do spend my money on. One thing I’m working on is to stop saying or thinking that “I can’t afford that” when I don’t want to do something that is also expensive, and instead remembering that I simply don’t value it enough to spend my money on it. Along with that, I must note that I am notoriously frugal (my parents and husband often call it “cheap” but I beg to differ). I do a lot of things to save money in my everyday life–i.e. pack my lunch, ride my bike or take the subway, endure crazy lines at Trader Joe’s–so that I can splurge on things that I do value, like plane tickets or once-in-a-lifetime travel experiences.
And lastly, a couple of notes on finances as a newly married person. I find it incredibly important as a woman to remain financially independent: I take a lot of pride in earning my own money and being able to contribute equally to our relationship. When we first moved in together, we opened a joint checking account that we use for rent, household bills, going out for dinner, etc. We now try to use a credit card for most of those purchases so that we can earn shared points, and then just pay off that credit card with our joint account money. We’re also opening up a joint savings account so that we can start saving for our common goals (aka buying a house). And although we’re pretty fluid about “our money,” we both still have our own individual checking, savings and credit card accounts. To us, it’s more important to be able to have open conversations about money, what we value and how we’re spending than to literally combine all of our funds.
And although I do feel like I’m in a good position financially, I definitely know there are still a lot of place I could improve. A few financial things that I want to work on this year: investing in the stock market, diversifying my portfolio, increasing my freelance income and setting more aside specifically for a house down payment.
And to that end, I also want to educate myself on what exactly all of those things mean. I find Gen Y Planning to be a really helpful resource (like this explanation of a mortgage), and I’d love to hear any book or website recommendations you might have!
What’s your financial routine like? Do you have any tips to share?
