Smart Girls Know: How to Educate Yourself Financially

I’ve been wanting to write a post about money for a while now. While I know that I got a great education, the extent of my financial education in school was a couple of high school class days devoted to how to balance your checkbook, tipping properly at restaurants, and how to tally your groceries in your head as you shop so you’re not suprised when you get to the register. I’ve never, ever, done the third one by the way. I headed for the liberal arts hills as fast as I could once math classes were no longer a requirement.

While I had a strong work ethic and the examples of my parents to influence me, for the most part, I felt woefully unprepared to manage my own money properly as I got older beyond the basics of a checking and savings account. When a recruiter told me that my client service experience made me an ideal candidate for the finance industry, my first reaction was to laugh at her, get nervous, and ask if I should explain that I “can’t do math” in my interviews.

Long story short, while my job isn’t always perfect and I certainly think about what direction I want my career to take in the next few years, I really value the exposure I’ve gotten to different financial vehicles and how it’s affected the way I plan for my future. That being said, I do work in a highly regulated industry which frowns upon me giving advice outside of the context of my firm so I’m going to have to keep this post pretty general. While it’s not my intention to tell you what to do (always consult a professional kids), I think it’s important to know what’s out there and have a plan for yourself. Here are some easy ways to brush up your financial knowledge so you feel slightly more qualified to make some decisions.

Check Yo'self Before You Wreck Yo'self, Ladies

Read Something: No one wants to spend their time reading annual reports and earning statements. However, if you make a commitment to read something related to finance on a regular basis, you’ll start to increase your knowledge base and focus in on what’s important to you. Sites like Yahoo Finance and CNN Money have regular posts in their Personal Finance Sections (here and here) that cover saving for retirement, real estate, and other financial topics that are great for gaining a better understanding of the basics.

Art by Elizabeth Fraser

Get Some Real Numbers: Everyone has financial goals they want to achieve. Whether it’s building a rainy day fund, paying off debt, buying a house, starting a business, or saving for retirement, you have to have some real numbers to work towards. There are all kinds of calculators out there. Just ask Google. While they aren’t perfect, even running simple scenarios will give you something concrete to evaluate. For example, running a retirement calculator based on your current income, expected retirement age, and current savings will give you an idea of what your monthly savings should look like and what your “number” is. From there, you can decide if you need to scale up your savings or scale down your spending expectations for the future. This one from MSN Money is a good jumping off point.

Here’s another for Real Estate

Here’s another for Paying Off Debt

Pay Attention to What’s Happening With Your Money: As we’ve talked about before, a key part to getting organized is getting your accounts online and out of your mailbox. The next step is to pay attention to what’s happening in all of them. Personally, I use Mint to keep an eye on my accounts. It’s a free online tool which aggregates all of your accounts (bank, loans, 401k, etc.) and tracks them in one place. It takes 10-20 minutes to set up. Again, like everything, Mint isn’t perfect but it’s a great place to start if you’re not used to looking at your complete financial picture at once. You can track your spending, set savings goals, and keep an eye on your investments.

Check out similar tools here

It’s About Quality…and Quantity: Who knows what the retirement landscape is going to look like as our generation gets older. What I do see is the rapid disappearance of pension plans and a government that seems unwilling to make any radical reforms to the Social Security System. With the tides turning towards completely self-funded retirements, starting a plan early will only make things easier down the road. The upside to all of this doom and gloom? The earlier you start saving, the better off you are and the less you’ll have to save as you get older. It’s all about the compounding.

We all have to worry about saving for the future. Even if you feel like you’re still starting out or not making as much money as you’d like, it’s the habit that counts. Put aside something small each month and increase it every six months. Look into direct deposit options with your employer so the money goes directly into a savings account and you get used to not seeing it as part of your spending money. Above all, enroll in a 401k plan if it’s an option for you. The money goes in pre-tax and having your employer match your contributions is free money. Take it!

I’m going to wrap up this monster of a post now. It goes without saying that I wasn’t compensated to plug any of the websites I mentioned. I just wanted to share some of the resources that I’ve found helpful. I know money is a really touchy, personal subject but I’d love to hear your thoughts and questions. I’m no expert but it always helps to start a dialogue and get things out in the open.

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