When we started the BudgetBakers blog, we were clear about one thing — we wouldn’t offer unsolicited advice or preach about the one-right-way to manage money! Why? Because, we know that there is no such thing. We respect each of your money management systems and what we offer are simple, yet intelligent solutions to make this process easier for you.
We believe that a lot of learning happens by asking the right questions. So here’s presenting our new interview series, Talking Money, where we seek out the best minds in the industry and ask them questions we know you’re eager to have answered.
This time around, we have millennial money expert, blogger (Broke Millennial) and author, Erin Lowry, who speaks about how to go from being a broke millennial to a financial badass! Here are some tips from her to get started on your path to a richer, financially independent life. Excerpts from our conversation:
What was your call to start this blog and reach out to help millennials manage their money?
I grew up getting to learn about money from an early age. It wasn’t until I was in my early twenties that I realized just how important these early lessons truly were. I wanted to be able to help my friends who were struggling with the high cost of living in New York City with our low, early-twenty-something paychecks. So, like anyone in 2013, I started a blog!
What was the best personal finance lesson you learnt as a child?
My parents started helping me learn to curb impulse spending early on by requiring me to pay for 50% of anything I wanted. I never got to ask for a toy and just get handed a toy. I had to determine if that purchase was worth $5, $10, $15 to me, which as a kid, is a lot of money.
What is your number one advice to millennials who still don’t have their finances together?
Keep exploring to find a budgeting system and a learning style that works for you. There are so many ways to learn about money these days and so many styles to money management, that something out there will suit you.
What, according to you, are the biggest mistakes that millennials are making when it comes to their finances?
Failing to even face the numbers to begin with.
It’s so easy for us to just bury our heads in the sand and ignore a situation as it continues to get worse.
Despite the bad rap they always get, millennials seem to be doing much better than their predecessors when it comes to debt or owning assets. Do you agree?
It’s a time honored tradition to mock the generation that comes up after you. Millennials will probably do it to GenZ. I find all the cliches and stereotypes to be trite and old now, but some of them were certainly rooted in a bit of truth. Millennials do seem to be a bit more aware of consumer debt than previous generations and less likely to amass credit card debt, but our student loan debt burden is worrisome.
I’ve read that you’ve never been in debt. How did you manage that?
I picked a college that offered me academic scholarships instead of picking my dream school, in order to graduate debt-free. Once I left school, I just always made sure to stay within my budget in order to avoid credit card debt.
What are the top 3 finance mantras that you never let go of?
You control money or money controls you. You can be in control even when you don’t make much, but it requires you to know exactly how much is coming in and how much is going out of your account. Pay yourself first. It’s cliche, but incredibly important.
Could you briefly tell us how you do your finances?
I’m still old school and like pen and paper! I sit down every Sunday for 15 minutes and crunch my numbers by checking in on all my credit cards to ensure I’m not over spending and I’m still on budget. I never carry a balance on a credit card and pay it on time and in full when the bill comes in. I run a net worth update once a month (which I don’t advise for people who are skittish about drops in the stock market). I also tuck away 40% of each freelancer paycheck I receive to account for taxes and then have leftovers to put into additional retirement savings.
What’s the advice you would give a younger you?
Start investing earlier!
Any financial mistakes and what you learnt from them.
There’s a balancing act between being focused on your financial goals and letting those goals consume you and keep you from living your life today.
Don’t go into debt due to FOMO, but also let yourself live a little. I wish I hadn’t been so restrictive in my early twenties. I said no to friends a lot in order to pick up extra shifts or work on side hustles.