If you had looked at my resume or LinkedIn profile when I was 26 years old, you’d have thought I was an expert at managing my own money. I studied finance at Wharton, became an investment banker, and then worked in corporate finance. The reality was: I actually knew nothing about my own money.
Then, I had an 'aha' moment — looking at my ever shrinking bank balance — where I realized my current lifestyle was completely unsustainable. I decided to figure it out and shared what I was learning (and all the mistakes I had made) on my blog, the Fiscal Femme.
What happened next took me by surprise. Countless others reached out to share that they were struggling with the same exact issues. We don’t realize everyone struggles with money because it’s too taboo to talk about, even with our closest friends and family, even our partners. One-third of newlyweds don’t know how much student loan debt their partner has.
We end up sitting across from our best friends, feeling all alone, thinking that we’re the only ones who don’t have it figured it out.
We have a lot working against us when it comes to personal finance. Most of us don’t learn about it and we can’t talk about it, yet we have to deal with it almost every single day. It’s also extremely emotionally charged, a lot like food.
Us women have it worse. We have the gender pay gap which is $0.82 for white women, $0.68 for black women, and $0.62 for Latinas. There’s also the pink tax which is the nickname given to the pervasive price hike on products marketed towards women (and girls), so the things we buy cost us more than the same products cost men. Then, we invest less than men so the money we do have isn’t growing. And, we tend to live longer than men, so we actually need to have more money saved to retire.
Does this make you want to pull your hair out? Me too!
I share this because it’s no wonder we’re not flourishing in our financial lives. It’s important to know how much we have working against us so that we can have some compassion for ourselves rather than punish ourselves for where we are. Then and only then, are we ready to do something about it.
One of the first mind-blowing realizations I had in my own money journey was that we only get to use each dollar once.
An exercise to evaluate your 'joy per dollar' spent
One of the first mind-blowing realizations I had in my own money journey was that we only get to use each dollar once. It doesn’t matter how much or little we earn, that’s the unfortunate reality. This might sound like a no brainer but if we keep this in mind, it’ll help us to maximize the joy we get per dollar spent in both the short and long-term.
I started by keeping a money journal where I wrote down everything I spent and earned. Most of us have no idea where our money is going and it’s because most of our transactions are mindless. We swipe credit cards, hop in and out of Ubers without even paying, or click a button and a package shows up at our door. Writing it down helps us reconnect with our spending. When I did this, I found out that my $4.30 daily latte was costing me $1,570 per year.
There’s nothing wrong with spending money on coffee. The point of this exercise is to take an honest look at where our money is going and decide if we’re maximizing our joy per dollar. There are no right or wrong answers, and there is no judgment.
When I took a look at where my money was going, I realized I could reallocate that $1,570 to travel if I started drinking the coffee at work.
Many people who have taken my 30-Day Money Cleanse, find out they are spending thousands on coffee and consciously and intentionally decide to continue because it’s something they really enjoy. For me, that latte money had a high opportunity cost because at the time, I thought I couldn’t afford a vacation. Yet, when I took a look at where my money was going, I realized I could reallocate that $1,570 to travel if I started drinking the coffee at work.
So, that’s what I did. I let go of the Starbucks and took a trip to Barcelona with my cousin. Side note: We stayed in a hostel and got a great deal on flights because it was over Thanksgiving which kept the costs way down.
I got so much joy from drinking that work coffee because I knew what it was giving me.
Now it's your turn: Keep a money journal and calculate how much you are spending on your everyday expenses and see what it’ll cost you over the course of the year. What is the opportunity cost? Are you happy with where it’s going? Are there any ways you could reallocate your spending to make you happier?
Ashley Feinstein Gerstley is the author of The 30-Day Money Cleanse: Take control of your finances, manage your spending, and de-stress your money for good.
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