All my life I thought I was good with money. I never had any debt, other than credit cards I paid in full each month. I never spent more money than I had. I never had to borrow money from friends or family. I liked nice things, but rarely bought them for myself because I didn’t like the financial strain they might put on me. And while all of this sounds good, there was a lot of things I was doing wrong with me money. It turns out I wasn’t as good with money as I thought I was.
Being Good With Money Requires More Than Spending Less Than What You Have
I opened my own bank accounts at 18 years old. I got a checking account that was tied to a savings account. I forget what the minimum balance was for that savings account, but I always maintained it. However, I set up overdraft protection, so that if I spent more than what was in my checking account, it would simply pull from my savings. I thought this was being smart with money at the time, but looking back, this is actually a very bad thing to do. Why?
Well, tying a checking account to a savings account specifically to avoid overdraft protection means there was a chance I would spend more money than I should. The problem is I didn’t view my savings account as saved money. I viewed it more as an addition to my checking account, meaning I could spend that money when the checking account ran out. I know now that that defeats the purpose of having a savings account. A savings account should maintain a purpose. It should be used for spending on something specific, i.e.: vacation, car, house, Christmas presents, emergency fund, etc.
Another thing that made me bad with money is that I never used the money I had to make more money. I didn’t know anything about investing until I took a finance course in college and even then, I was shocked to learn that people actually had money invested themselves at the age of 19.
I didn’t save enough money. I didn’t save money with purpose. I only had savings because I hadn’t yet had something to spend that money on. I didn’t set financial goals. I just didn’t have the right perspective when it came to my finances.
So, what changed? When and how did I become better with my finances?
If you follow me on Twitter, you may have seen my tweet asking who in your life has been your biggest financial influence. Some of the more common answers were parents, grandparents and bosses. For me, the greatest financial influence in my life by far has been my husband.
Before my husband and I started dating in 2011, I thought I was good with money simply because I never spent more than I had; however, there is a lot more to being good with money and I am so grateful for the impact my husband has had on my life financially (and otherwise, of course).
My husband and I met in 2010 when we were both senior account students at Marist College. It also just so happened that we both accepted internships with the same Big Four public accounting firm for the following summer. We started dating the following summer at the beginning of our summer internships. It was that summer that I accumulated about $13k from my internship thanks to lots and lots of overtime.
At that time, I had minimal expenses. During that summer I rented an apartment close to my internship for $500 a month for 3 months, totaling $1,500. After my internship ended, I moved back home to do a one-year MBA program before I would start work with that same Big Four firm full-time. I was fortunate enough to have school paid for by my generous parents. I had no car payment. My mom cooked a majority of meals for me. I was still on the family cell phone plan. So, that $13k didn’t really wasn’t going anywhere.
My husband encouraged me to open up my first trading account. I was scared and clueless, so I started small with just $1,500 at first. Even though I took multiple finance courses, I never really had the chance to apply any of the knowledge in real life, so I didn’t even know how to determine if a stock was a good buy. Obviously, when it comes to stock picking, it’s all kind of a gamble. But my husband taught me some major things to look at, such as the beta, PE ratio, EPS, dividend yield, performance outlook and 52-week range.
I know that in many relationships, money and finances are just not talked about until you’ve been together for a long time, but my husband and his father would openly discuss the stock market and it made me intrigued. I wanted to learn more, so this was the beginning of having open communication about finances for the two of us and I am so grateful for that.
Another important thing I learned from my husband was that rewards credit cards existed. My first non-store credit card was the Chase Slate. It was a silly credit card for someone like me to have because it offered 0% APR for 15 months, but being someone who always paid her credit card in full each month, that was not a perk I’d be taking advantage of. So, when my husband introduced me to the idea of rewards credit cards, I quickly opened a Chase Freedom card, which I still have and utilize today.
My husband and I didn’t have a joint account or joint credit cards until after we were engaged, despite living together for 3 years before our wedding. This was a huge step for us since we both really liked having control of our money. This led us both to creating and managing our first personal budget. Before our joint account, neither one of us used a budget for our finances because we both thought we were handling our money fine. What neither of us realized is a budget helps you track where all of your money goes and allows you to more easily see if there is any deficit or excess each month and to be more proactive with your money.
Together, my husband and I have created financial goals. We have a joint vision on what we want in life and we work towards that together. We are both debt averse. We discuss stocks at the dinner table. We sit down monthly and go over our budget line by line. We share the purchases we make and how things will affect us financially.
Our open discussions about money and finances from the beginning of our relationship has helped me become good with money. He made me passionate about finance and without him, I would have never had the knowledge to even start a personal finance blog in the first place.
So, I’ll end this with a big thank you to my husband and ask on here, who is the biggest financial influence in your life?