Fiscally Responsible: A Post About Money

[source; via AMC's Breaking Bad]

Last Friday I met with my two good friends, who also happen to be a couple (making for an even more interesting conversation), for happy hour and much of our evening turned into a discussion about money- everything from how we budget to what money actually means to us. When we left we joked about how old we felt, our tequila shooting evenings turned into something Suze Orman would appreciate. But in truth I really enjoyed our talk, as it's rare to find people that you can honestly discuss something so controversial and sensitive as money. It made me see my relationship with the dollar a little clearer and forced me to articulate things that had been bouncing around in my brain for years.

This post isn't meant to give advice, but to instead let me ramble on about something that I think about often and enjoy, albeit the stress it sometimes brings. I know that everyone has different experiences with money and is in different phases of their lives, so don't feel this is a blanket post for all. 

The Financial-Talker Types

I think so many of us are a bit squeamish about talking money with others, since it really is a very personal thing. My hesitancy often comes from motive, though. I feel like there are usually five types of people: those that are complainers, nosy, private, nervous, or open. The complainers may focus on their lack of money, their hatred of taxes, or how the spending habits of others bother them. Nosy people love to pry either because they need some sort of ruler to measure their own bank accounts against or because they relish in the details of other people's lives. Some are private, feeling that they don't owe anyone anything, while others are perhaps embarrassed, in denial, anxious, or disinterested. And then there are people that read like an open book- they'll happily provide you their most recent tax returns if you ask for them nicely.

Personally, I'm a combination of a few types. There are certain people, like my husband and some super-close friends that I'm very open with. At our happy hour conversation specific figures were even thrown over the table, and I didn't feel the slightest bit intruded on. I have no problem telling my students about how much my student loan or car payments are, or how much I spend on utilities (I don't go into how much I make, my mortgage, or how much my wedding ring cost, but instead practical things that may help them realize that the real world is expensive). There are some people, though, the nosy ones and people I don't know well, that I completely shut off around. I don't go out of my way to tell my family how much I make or what I spend on vacations or "luxury" items, nor would I hide the information if asked. Money does cause my a great deal of anxiety, though, evidenced by my semi-strict budget and constant second-guessing before purchasing items that are deemed necessities.

Products of Our Environments

Like so many other things, our backgrounds influence our financial paths. Some inherit money from rich parents, while some may take responsibility for a family's debt. Some parents go out of their way to teach their children about money, while others may remain tight-lipped on the matter. Some of us use our parents as financial idols, wanting to replicate the solid nest-eggs they built, while others of us learn what not do by their examples. Personally, my family had no extra money left when growing up- my father was the primary source of income and after he died my mom had to compensate so that we could keep our house and survive month to month (no easy task with four kids, two of which quite small). There wasn't anything to fall back on and extra expenditures were incredibly stressful. This has obviously shaped my spending habits and need to save as an adult. It also has made me incredibly independent; I refuse to accept financial assistance from others and feel uncomfortable when people give me money or high dollar gifts. It's simply not what I come from.

Safety in Money

Nest egg, cushion, rainy-day fund- all terms that imply safety. A savings account may not buy happiness in some senses, but in a way it can. Having x amount in the bank provides some of us with a feeling that if those tragic "what-ifs" come true there's something to fall back on. This of course implies that there is a danger, to those people (myself included), of not having a certain amount saved. A danger of what, I'm not sure, but that's the point- I don't want to find out. Knowing that I have what I have in my savings account makes me feel better, it provides a comfort that if something happens with my health, job, car, or home I could probably make it through for awhile until a more permanent solution was found. 

I also am a firm believer in saving. I think there are a lot of people out there that believe that since they can't afford to save a lot that it's not worth the trouble. But let's say you won't miss $20 a month (that four mochas at Starbucks)- that's nearly $250 for the year. After four years of doing that you'll have $1,000, not counting interest. And maybe that's not enough to retire on, but it is the means to fix a car, hop a flight to New York, or just let keep growing.

Making Your Money Work for You

This topic definitely took the bulk of our conversation. Money should make money, if you're investing correctly. You should diversify your funds and choose where to place your money depending on your age, income, and end goals. Personally, I'm horrible with this. My retirement is through the teacher's union (which needs to get it's shit together with the state, so that it still exists in thirty years) and my savings is in a high-interest savings account. That's it. I guess the house is a long term investment, but other that that I have been way, way too conservative with my money. Some people excel at investing wisely, and have the balls to do so. They see the long-term picture, knowing that the market will go up and down and will probably always correct itself with a gradual upward motion. They don't panic when they lose a few thousand dollars and they don't get too attached when they gain. My reluctance to invest undoubtedly goes back to my upbringing; we never knew when something bad was going to happen and the idea of not having the  money  readily available, or losing any of it for "no reason," is too frightening for me. Interestingly, I adored playing stock-market games in high school and loved playing around with $500 I threw into some stocks a few years ago (but then sold when I got in a car accident... for a slight profit!). Bottom line- there are different types of saving styles.  

Budgeting 

I love to budget (given that I have money coming in). My husband and I keep separate accounts for all personal, recreational, and luxury expenditures, and a household account that is for our mortgage, utilities, groceries, pet expenses, and eventually for baby costs. Student loans, car payments, gas, books, video games, travel, meals out, etc... come from our own accounts- we take it a whole step further and even pay separately when we eat out. While some think we're crazy, it works perfectly for us. I can count the arguments that we've had about money in ten years of togetherness on one hand. There is no resentment, secrets, or issues with overdrawing. That's the key, though- you have to find a way to manage your monthly budget that works for you. I know exactly, within $50 usually, how much our household account needs each month, so we each deposit half of that. When it comes to my personal account I subtract my regular bills, allow $100 per week for gas and weekly expenses, and then usually split the remainder in thirds- a part for savings, a part for paying down a car or student loan, and a part for something "fun." This is of course flexible; I've been madly trying to pay off my car for the past year (and just did yesterday!), so everything extra has gone to that. I'm not a big shopper, either, so I don't buy a lot of clothes or "things." I am, however, more lenient when it comes to doing things- I'll drop $50 or $75 on a great dinner a few times a year, go to concerts or other events, or spend money to drive to cities to do new things with friends. Personal prefrence. I also tend to use my Amazon credit card for everything I can- I save the points and use them for Christmas gifts, paying off the balance each month (or sometimes each week, if I'm being really on top of things). Again, it works for me. 

I understand that a lot of people live paycheck to paycheck, or are seriously in debt, whether they're students, laid off, or manage in a single-income family. But there's power in being honest and aware about your financial state, even if it's just to yourself. 

Thoughts?