Things I Wish I Knew About Money
Three lessons to get started
I was recently invited to give a workshop on personal finance to students and their mentors as part of the Student to Scholar Program. It was a great experience.
My presentation, "Things I Wish I Knew About Money in My 20s," reminded me how much I missed discussing personal finances. During the session, I realized that while there's so much information available online, finding trustworthy sources can be incredibly challenging when you're just starting your personal finance journey.
You have to consider:
Who can you trust?
Who's sharing information versus selling something?
And who speaks your language when it comes to money?
Here's a summary of our discussion. If you want more content on this topic, please leave a comment!
Personal Finance is Personal
I've learned that newcomers to personal finance often seek quick guides to building wealth, gravitating toward financial to-do lists. I understand the appeal – it's easier when someone tells you exactly what to do and how to do it. However, this approach overlooks your personal goals. Instead, I encourage you to invest time in understanding your financial "whys":
Why do you care about wealth?
How much money would make you feel secure?
What lifestyle do YOU want to live?
These simple questions help you start thinking meaningfully about money. Without clear personal goals, you'll chase wealth accumulation for its own sake – and that's a pursuit without end. You'll never feel financially secure because there's always more to accumulate.
Track Your Money
There's a quote that goes, "If you can't measure it, you can't improve it." Another variation of the exact quote goes, "If you can't measure it, you can't manage it." I agree with both.
The first step in your financial journey should be tracking money flowing in and out. I've been tracking my money for decades, and I'm still surprised when I review my spending each month.
There are many programs available for tracking. I personally use Quicken. Try different options to see what works for you, but keep in mind that once you commit to a platform, there's a switching cost.
Various features should be considered when choosing a platform. If you're interested, I'd be happy to share what I look for.
Learn the Language of Money
Feeling confident in the personal finance space and knowing which questions to ask requires comfort with financial concepts. Unfortunately, developing this confidence is hard when society treats personal finance discussions as taboo. Moreover, money conversations often trigger feelings of guilt and failure. This happens because some benefit from keeping you guilty and uninformed about personal finance.
I would love to share more about personal finance here, it would help me if I knew more about your questions. What are your money questions? I'd love to continue the conversation!
The first time I sat down with a financial "planner" (turns out he wasn't a fiduciary and simply wanted to sell me some high cost annuities) he asked, "what are your financial goals?" I was 30. I had no idea how to answer. After I hemmed and hawed for a few moments, he brushed the question aside and moved on with his presentation.
I didn't purchase an annuity that day (or any other day), but I did come away thinking about that question. I really wasn't sure how to answer it. A few years later, I met with a couples therapist who recognized that I was always stressed over personal financial matters. Though she wasn't a personal finance expert, she was the one who helped me understand what "financial goals" are, and how to set them.
TL;DR, personal financial advisement isn't just about the numbers. It's mostly about the people and helping them realize their priorities.
Very good advice. Especially from an economist! Many forget that all investment starts with savings and all savings starts with tracking consumption. Saving is such a great habit for significant wealth creation.