How to manage your finances (& make an impact while you do it!)
For most of us, thinking about our finances makes us squirm.
That fateful day each month when we need to log in to our banking account and check (pray!) that everything is okay is something that constantly gets moved to the bottom of our to-do lists…well, at least for me anyway.
Even as a finance major, and someone who actually likes working with numbers — when it comes to managing my own finances, it’s always a stressful topic.
But, what if I told you that your credit card bill didn’t need to be a sore subject? Or that you could actually work towards having investments — not only that will help you in the future, but our world at large?
I know, I know — it sounds impossible…but, maybe not crazy?
In this week’s podcast episode, I will be speaking with Teresa Orsolini, one of the original co-founders and current Director of Marketing at Swell Investing. Swell is a platform for millennials like us who are just dipping their toe into the world of investing (cough — while still paying off their student loans). Teresa walks us through the simple ways that we should be approaching our money. And then, how we can invest it in a positive, sustainable way.
Want to learn more? Let’s dive in.
Replace Your $4 Coffee With A Savings Account
I know we’ve heard it all before: Make incremental changes to your habits in order to start saving money.
And, I think this is true for the most part. Most of us enter the adult world from our days of scrimping by in college, and are blown away at this new found freedom. I found this especially true — I went from deciding if I should take the subway or buy lunch (NY was an expensive place to be a broke college student!) to purchasing $4 coffees each day as a “break” from work.
Crazy — I know. After a couple of months, I realized that I was dwindling money away on the smallest, silliest things.
I think that it’s really important to make small changes in your everyday habits when you’re first starting to save money. Substitute your daily coffee break with a walk instead. Make coffee at home and bring it to work. Or treat yourself with coffee versus lunch — not both.
Small decisions like this add up over months to thousands of dollars. Literally — by making coffee at home 4 days a week instead of buying it adds up to a savings of nearly $800 per year! Puts things in perspective, right?
So, the first step to start saving is analyze your small spending habits, and change them little by little over time.
Automate as much as possible
The second piece of advice that I found extremely helpful was to automate your savings as much as possible.
Out of sight, out of mind is the way I like to think about it.
If you set up an automatic deduction from your bank account each month right when you get your paycheck — say $300 — you likely won’t even notice that it’s gone.
This also should go for your 401k, if your employer offers this. Try to maximize your contribution before you even see your paycheck. There’s an exponential increase in savings if you begin adding to your 401k in your early 20s. Just remember: the earlier you start, the better off your are.
And, while it is important to start having a nest egg of savings before you start investing, it doesn’t have to be too much. Think of it like a rainy day fund (usually this means 2–3 months of rent, and 1–2 months of salary).
From there, you can begin to think a bit bigger, and invest the rest of your moolah wisely.
Investing is better than sitting in a bank account
While it seems scary to “invest” your money (what if the markets tank?!), and something unachievable for most young 20-somethings — nowadays it’s actually much easier than you might think.
At Swell, you only need $50 (less than brunch!) to open an account. And, the interesting thing about Swell is that every single company in their portfolio is on a high growth trajectory and having a positive impact on the world.
Some of their portfolios include clean water, and renewable energy. So, you’re investing in companies that are poised for big growth without sacrificing your values. That means no big oil companies that are polluting our waters…and have the potential to go under much more quickly than others.
Also, management fees at companies like Swell are minimal — they end up being less than that $4. For example, if you invest $500 via Swell, your fees come out to $3.75! That’s literally having professionals help you invest and keep track of your money, all for less than that fancy latte.
I think this is a really neat example of how we can keep track of our finances, in a fun and impactful way.
Most importantly, it doesn’t have to be scary.
2018 is our year for being smart about our finances, so let’s do it together. Any questions or thoughts?! Keep me updated!
*FYI — I am not advertising for Swell. I think they are a really cool example of how we can do good for both ourselves and the world. Check it out!