Financial Literacy 101

The health and wellness space doesn’t talk about financial wellness enough, but it’s so important to discuss this topic as a lot of people are stressed out from their financial situation. Stress is one of the most common catalysts to more serious health issues, so if we can work to get our money right ladies then we’ll be one step closer to alleviating some of that financial stress.

From a young age my Dad instilled in me the importance of being financially literate. He would give me finance books and teach me about inflation. For my 16th birthday he actually took the money he was going to spend on a gift for me and gave me 2 stocks to watch and see how the money would grow. Needless to say, I wasn’t very happy at the time but I grew to understand and appreciate the lesson he was trying to teach me about materialism (but that’s another post for another day).

While there are so many nuances to finances, I want to start at the beginning and layout where you can start to understanding how you can manage your coin to establish your financial future.

Now you’re probably asking a few questions in your head. How should I spend my money? How can I start to think about savings now to set myself up for the future? How can I afford that $35 spin class without going broke?!

Here’s how I was taught to break my money down:

Needs (50% of your income)

  • Housing

  • Food

  • Transportation

Wants (30% of your income)

  • Whatever brings you joy like movies, books, a boxing class, getting your eyebrows done, or a ticket to the Museum of Sex (don’t knock it until you try it)

Savings - 3 sub groups (20% of your income)

  • Near term emergences; ie. 6 months worth of living expenses

  • Intermediate term goals; ie. wedding money, down payment of a house, getting out of loans debt, etc

  • Retirement: about 12% of your total savings

Special note on savings: I can’t stress enough how important it is to start saving early on. Whether it’s $5 a month or $800 a month, no amount is too small to start setting aside for your future. Yes, I’ve now realized my Dad’s messages continue to resonate in my head and I can’t forget it.

The biggest piece of this monetary pie is the the needs, so this can be a challenging one to manage particularly if you live in a big city with higher rent, higher car insurance payments, etc. Focus in on some ways to cut some costs here; for example, shop around for car insurance to get the best deal or go the extreme route and get rid of your car (like me). Take note of how much you’re truly spending in your “needs” bucket.

To get started, I would take a look at your bank statement (I know this may be painful) and take a couple hours to sift through what you actually bought over the past month. Categorize your expenses into the above buckets and make sure you’re honest with yourself about what you’re putting in each bucket. No getting a manicure isn’t a need.

If you still feel like you need help, I can’t recommend The Financial Gym enough as I have used them before to help me get my finances in order. They take in person clients in NYC and they also can work with you over Skype. Tell them I sent you!

What’s the best advice about money you’ve received?