Financially Fit Round up: Q’s and A’s
  • October 2, 2015
  • Disclaimer: The advice provided in the Financially Fit series is general advice only. It has been prepared without taking into account your objectives, financial situation or needs.

    Reader,

    It’s been a hell of a summer for personal finance. We’ve talked about how to budget and save, why to invest and how to make the most out of your credit cards. We’ve found and tried new apps and talked about how to spend smart on runcations. Oh, we also dealt with a market crash (that was fun, right?).

    Personal finance is a life-long journey. It’s certainly not something that I’m perfect at, but I’ve enjoyed working at it with you this summer.

    We started this series because not only is personal finance something we all have to deal with, but it’s important to our mental health. Money stress is real and can be difficult; our goal was simply to make it easier for you to start taking baby steps in the right direction.

    That said, there’s a lot that we didn’t get to cover. I encourage you to ask questions and continue to learn – boosting your personal finance skill set is something your future self will thank you for. I’m bidding you all adieu with a mixed bag of questions I’ve received with answers and resources to help you continue learning on your personal finance journey.

    Fill in the blank: it’s never too early for a 20-something to start saving for ___________.

    Retirement. I know it sounds crazy, but the earlier you start (even in nominal amounts) the better. Also, any big purchases or investments you plan to make in the next five-10 years (such as a condo or a wedding) will be easier to manage if you start creating good saving habits now.

    Alternatively, what should be my biggest financial priority in my 20s? 

    Retirement. Seriously. Obviously there are also many other personal priorities, such as paying off student loans (or that wedding or condo I mentioned before). I know I sound like a broken record, but just saving early in general is unbelievably helpful because time is the most valuable part of the savings equation.

    Who do you think owes Rihanna money and what do they owe her money for? Do you think she charges interest?

    I don’t know but I wouldn’t want to be that person. She probably does because she’s a #bosslady.

    I have some extra cash money right now. What should I do with it?

    One of the biggest mistakes people tend to make is to splurge every time they run into some extra money. Don’t get me wrong, you don’t have to be boring and save it all – you can certainly spend some of it on something that you really want. However, it suits your future interests to save or invest a portion of that money and continue to spend like you don’t have it. (Read as: don’t go buying everyone Cornish game hens when you host dinner because you feel fancy now.)

    What are the guidelines on determining a treat yo’self splurge vs. a want vs. a need?

    Alongside writing Financially Fit posts this summer, I’ve attempted to minimize a lot of my stuff. I donated more than five bags of clothes to charity and cleared out all of the excessive products I no longer use from my bathroom. And somehow, after all that “minimizing”, I still feel like I have a long ways to go.

    It’s surprising how much stuff you think you need but you don’t. My general rules before buying are asking myself the following questions before my purchase: (1) Do I have anything else like it, and if so, do I use it? (2) Will I need or want it a week from now if I don’t have it? (3) If it’s a splurge, is this an impulse decision or something that I have planned out ahead of time? (4) Why do I want/need this in the first place? (5) … Can I get it cheaper on Amazon?

    Budgeting seems boring. Can’t I just kinda guesstimate how much I spend each month on various stuff and things?

    You can, but it won’t be nearly as effective. Plus, there are now websites and apps that can take data from your credit and checking accounts and make budgeting really, really easy. It forces you to be conscious about how much Uber is costing you every month and can help you develop more healthy spending habits. I bet you would be surprised by how much you actually spend (or don’t spend) in certain categories each month.

    Looking for sugar daddies: good idea or bad? 

    Sugar daddy < Beyonce-style independence

    via GIPHY

    Does anyone write checks anymore?

    Yes, but they still work the same way as cash or debit cards – you aren’t really getting anything in return for doing it. Growing up, I remember many adults telling me that I should never use a credit card because they “ruin lives” – but that isn’t true if you use them responsibly. They can certainly be dangerous, but if you spend them the same way you would spend on a debit card (as in, you don’t spend more than you have every month) they can boost your credit score and help you gain other rewards.

    Help me understand retirement options.

    Here’s what you need to know.

    Find out from your employer if they have a 401(k) match. AT LEAST set aside what your company will match (if you can). If you don’t have a 401(k) through your employer, find out what you do have or look into getting an IRA (individual retirement account).

    The main differences (there are others) between retirement options (Roth, Traditional, 401(k), IRA) are contribution amounts and how they are treated in your taxes now and later.

    There are many resources at your fingertips to help you decide if a 401(k) or IRA is right for you (or if both are) and if you should be looking to invest in a Traditional or Roth retirement plan.

     

    Thanks for letting me be part of your personal finance journey this summer – you’ve helped me out a lot, too! As always, feel free to leave questions or your own thoughts in the comments.

    About Cass Gunderson

    Cass hails from the southwest suburbs as a proud White Sox fan and a graduate of University of Illinois. By day, Cass is an associate at ParkerGale, a small private equity firm that buys profitable technology companies. Raised as the youngest in a family of older brothers, Cass grew up a tomboy and remains active in sports. To her mother’s satisfaction, Cass learned how to embrace her feminine side in college and has developed an interest for fitness activities that require spandex as opposed to knee-length basketball shorts. In her spare time, she runs a lot (sometimes for hours and hours) because it is cheaper than paying for real therapy. The rest of her spare time is spent convincing herself that pizza and donuts can be part of a healthy lifestyle and balanced diet. Cass is hoping to complete her fifth marathon in 2016 and can still be found on the basketball courts in Lincoln Park wearing knee-length basketball shorts.