Holy Eff I’m Poor

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I’m a 20-something living in Manhattan. I work in finance, don’t have a drug problem and yet my bank account balance says $70 dollars and it’s only the 5th of the month.

How exactly did this happen? Tasti D lite, US Weekly, manicures and cabs. It all adds up.

How do I fix this? No, my suggestion isn’t to sell your soul and/or grow a money tree, but to make a few small changes to help you take control.

Why should you take my advice? I’ve had a bad month and a half. Between Sandy and Christmas and the fact that I am in my 20s (half adult, half child), I dropped the ball for November and December. However, in the past 8 months, I have paid off 50 percent of my debt and boosted my credit score out of the red. Further, as I am writing this, I have made a conscious decision to finish my December strong by cutting back on certain things. How? Baby steps.

1. Your financial health is just like your weight. For those good at keeping themselves into a size 2 dress, this is a good analogy. Managing your bank account is similar to managing your weight. Pending your body type/how much you exercise, you can only eat an X amount of calories for your body type to be at the weight you want. With your pesos, it’s the same situation. You only have a limited number of funds to play with to be financially stable. When you spend too much, you need to go on a diet.

2. Know your spending and living expenses. Lay it out in a spreadsheet. Don’t let the word “spreadsheet” give you fear. You don’t have to work in excel each day to put this together. Pinkyswear.

a. List out your debt. 
b. Make a list of your fixed expenses – your “living expenses”. Critique fixed expenses. Do you really need to pay $80 for a gym you go to once a week?
c. Save something. 
d. Calculate your play money – your “spending expenses”.  What’s left for fun? After debt, fixed expenses and money allocated to saving, you have your play money. Look at it per day, week and month. Remember to allot more pesos for the weekends (unless you are a Harriet Homebody, in which case we have other things to discuss).
 
3. Do the math. The little things add up. For example, if I buy a latte before work each day for $4.00. This seems like a small expense, but when you do the math: it’s $4.00 x 5 days a week x 50 weeks (take out 2 weeks of vaca I hope) = $1,000 on milk and espresso. That is a ticket to Europe or 1/100 of your future spawns college fund. Skip the latte and drink the coffee at your office instead. Or don’t if a latte is your thing. However, cut out another one of your “little expenses”.
 
4. Get a budget buddy. Saving money is the new spending money. Ask your BFF/roomie to work on this with you. Regardless of their money situation, give them a goal they are interested in (e.g. make them a list of the 10 reasons they should do a share house this summer or how much you want to have saved in 12 months). It’s good to have a spotter in this situation who will encourage responsible spending.
 
5. Have your savings taken out. IMO (In my opinion), it’s hard to save when you are actively trying to do it yourself. When I put my “savings” in a savings account, I always seem to remember at one point during the month that it’s linked to my checking. Solution: Set up your savings account so that it is immediately taken out with your paycheck and put in a separate account where you cannot touch it. Out of sight, out of mind.
 
6. Know your vices and steer clear. Mine are dresses. Especially dresses on sale. I don’t go near Bergdorf’s, Barneys or even Buffalo Exchange for that matter. Gilt Groupe? Unsubscribe.
 
7. Don’t splurge and quit. Everyone has a bad week or month (read opening paragraph), but don’t let that get you off track from your ultimate goal. Having good financial health has a number of benefits from reduced stress to access to funds for big-ticket items.
 
 
So what is the point of the story?  You don’t need a trust fund or huge salary to be financially stable. And remember kids, even people who have those things can still be in the red. It’s just about knowing your limits, being conscious and taking baby steps each day to help you reach your goal. Whether you are saving for a trip, an investment or for the future, having money is better than not having money.
Remember 20-something, you are in control here. It’s your choice, do you want to be in debt and skip out on the share house next summer or do you want to be share house captain? I leave it up to you.
 
 
So now what? Learn how to get back control of spending. Understand exactly how much you typically spend and how to get back on track with movenbank.com
 
Guest post written by Steph Vorhees of Crush New York, an insider’s guide to navigating Manhattan. This is our first of a series of guest posts by awesome experts and talented writers.
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