Why You Should Care About Your Finances...Like Now
Raise your hand if you’ve ever felt personally victimized by your bank account. Okay, you can put your hand down now. You’re not alone. In fact, 70% of Canadians aged 18 to 34 say they are embarrassed over lacking control of their current financial situation. It’s even worse for women, with 51% saying that they’ve lost sleep over financial worries.
While it may be easier to never check your balance and just cross your fingers every time you buy a $4 slice of pizza, making steps towards financial control is one of the most important things you can do as a young person. And for young women, it’s even more important. Women make less money than men, live longer, and face higher prices. Despite this, most financial services are designed by men, for men, and only 14% of American financial advisors are women, making it more important than ever than you have a role in your financial future. Here are three reasons why you should start caring now:
1. The decisions you make now impact Future You the most.
We’ve all heard of the magic of compounding interest, right? Well, the hype is true. Because of compounding interest, the savings and investments you make in you 20s are significantly more impactful than those you make in your 30s, 40s, and 50s.
Here’s a simple example: you start investing $2,000 a year at 10% annually at the age of 25. By the time you’re 65, that would end up being $556,197. Congrats! Now let’s say you started investing 9 years later, at 34. By 65 you would only have $328,988. That’s 41% less to spend on vacations, retirement, a down payment, or whatever else you want to do with your money.
2. Money leads to opportunity and freedom.
It sounds cliché, but it’s true: money = power. At the expense of sounding like a cartoon villain, power is great. Power, especially financial power, leads to opportunity and freedom to do what you want. When you have control over your finances, you’re giving yourself financial power and financial freedom, opening up a variety of doors.
Financial freedom leads to professional freedom. If your finances are taken care of, that’s one less thing to worry about if you ever decide to make a career change. Whether its starting your own business, working for a non-profit, or changing industries, knowing that your finances are in control allows you to pursue for fulfilling opportunities – even if it means a lower paycheck.
Financial power can also give you the personal freedom to leave undesirable relationships by reducing your financial dependency. And, financial control can simply increase your over all confidence, as you feel more competent about your financial abilities.
3. Understanding your financial situation allows you to be realistic about your goals.
You’ve probably read that we Millennials and Gen Z are destroying a variety of industries with our spending habits (sorry napkins and diamonds!), but it’s kind of true. We’re putting off major financial milestones like buying a car, owning a house, getting married, or having kids. That being said, we still have major goals to work towards: paying off student loans, going to grad school, moving out of our parents’ house, or even a big vacation. Understanding what your finances look like and the tools you have available to control them greatly increases the likelihood of you achieving your financial goals. Simply put: you can’t achieve your goals without a plan, and you can’t make a plan without understanding your financial situation.
Here’s the thing. I know you’re a student with limited funds. Trust me, I am too. No one is expecting us to be saving for retirement or investing in mutual funds quite yet. If you are, that’s great! If you aren’t, it’s understandable. But its important that you establish financial literacy and a habit of caring about finances now, so that when you get a full-time job with more stable cash flows, you’re willing and able to take control of them. For now, here are a few simple things you can do: track your spending, make budgets, and try to stick to them; know where your money is coming from and where it’s going; and read financial advice, it’s not as boring as you think.
P.S. As a marketing student with literally zero background in finance here are some websites I like to read that help me make sense of it all: Ellevest, The Financial Diet, GirlBoss, Wealthsimple. Also Refinery29’s Money Diaries is just fun to read.
About the writer: Tiana Vuckovic is a fourth-year Commerce student at Dalhousie University, majoring in Marketing Management and minoring in Economics. She is the President of the Rowe Marketing Association and is involved in a variety of student groups on campus. Tiana will be joining the Marketing Development Program at TELUS in the Fall of 2019.
