Knowledge is power. When you know more, you can do more. Young women have a certain type of stereotype – they aren’t familiar enough with money. That doesn’t mean all young women fall into this group, but the stereotype is that until a young woman is paying bills and held accountable financially, there is a lack of knowledge around financials. Why does this stereotype exist? Is it true for young men as well? When we’re young and first starting out professionally, certain financial habits start to form. Without any guidance, those habits can go south real fast.
For some, the first discussion around money was your allowance. This young adolescent life lesson was to show that to earn money, work had to be completed. This also showed a sense of independence. If you wanted the allowance, you had to do the work. You didn’t have to, but then you wouldn’t receive that allowance which also meant your independence.
As young professionals dive into their first jobs, what knowledge do they have from their previous experiences growing up? That could ultimately determine how they will handle their financial decisions going forward… if not taught of course. Again, knowledge is power. Without information around finances, who’s to say they are aware of what they don’t know?
When thinking about the most common misconceptions around money, we also must think of where those come from. Without resources and tool, young professionals wouldn’t have the opportunity to gain what they lack. And on the topic of misconceptions comes financial illiteracy. Not having the possession of skills and knowledge that allows individuals to make informed and effective decisions with their financial resources can create stress and chronic poverty. According to a 2021 study, 53% of adults in the U.S. are financially anxious with 78% living paycheck to paycheck.
The U.S. has a financial illiteracy problem. As young professional women start to enter the workforce, what can they do to stop the trend of financial issues in the future?
Here are some tips for young professional women just starting out in their careers:
Everyone loves a good budget going into each month. But nobody ever talks about budgeting YOURSELF. Mapping out a budget based off the numbers you bring home each month is nice, but what about your financial habits aside from what you need to survive? Birthday outings, dinner dates, weekend getaways, and more… everyone wants these, but can you afford them for real? Budgeting what you want vs. what you need each month will help with your overall relationship with money and prevent you from feeling like you’re limiting yourself from your own life.
Start an emergency fund
This one is the most non-interesting yet probably most valued as the years go. As a young professional, the last thing you want to do a put aside money that its sole purpose is to never be touched… especially if your first job isn’t providing much in your bi-weekly paychecks. But think of an emergency fund like your health insurance. It’s there if you need it, but if you don’t, you’re glad you have it. Life is unpredictable. Do you own a pet? One day they’ll decide to eat something they shouldn’t have, and you’ll end up with a $300 vet bill. Drive a car? You get a flat tire on the side of the road and need to call a tow truck, another unexpected $150. It’s called an emergency fund for a reason. But you’ll thank yourself later when you took out $50 a paycheck to put into it for those unpredictable life moments.
Create a debt plan
Data via the Federal Reserve states about 46 million Americans have student loan debt as of 2022. Most likely, if you attended college and took out a loan, you have that over your head until it’s paid off. Remember that flat tire from the car you may drive? Did you take out a loan there as well? Maybe you also took out a mortgage on a new house? Creating a plan-of-action for these types of payments throughout your monthly budgeting is key to tracking what is needed each month and what you still owe. Keeping a record of the timeline of when you started, where you’re currently at, and when it can be paid off will determine the amount allotted each month.
Ask for help
There is no shame in asking others around you or even an expert to take a second look at your financials. Money has always been a sensitive topic when it comes to sharing and being open with how much a person takes home, how much is in savings, etc. Nowadays, it’s less tabu to be open and honest about personal finance. This isn’t a sign of weakness but room for growth and opportunity. The more you know, the better you can help yourself. And when asking for some guidance from others, it’s up to you who you decide to bring into your financial history. Maybe it’s a family member or a close friend, a colleague, or a financial expert. Maybe the best thing for you is to invest early in a financial advisor to handle your larger financial decisions.
In the end, whether you choose to act on these early on or later in your professional journey, they will be useful throughout your entire career. The goal is to not be financially illiterate and to provide yourself with the security and resources for your future. The action item steps for young professional women can work for anyone and at any stage. Going back to our independence, finances are what make us just that. It gives us the ability to make choices and plan ahead.
Being prepared for the future is like telling a baby not to cry. Maybe it will work and maybe it won’t, but it’s unexpected. The future is an unexpected part of life. To be set up for success, having these in place can make the unexpected less worrisome.
Although you can find various forms of resources online, nothing beats asking question in real time. Are you looking for financial resources from experts and ask questions in-person or virtually? Check out Luminary for available programs and events that uplift, up-skill, and propel others forward through all phases of their professional journey.
A first-of-its-kind, Luminary is a membership-based global professional growth platform and collaboration hub created for women and male allies to address the systemic challenges impacting women across all industries and sectors. The ultimate career advocate, Luminary provides “real world” advice, tools, and resources to advance, build, connect, and develop through programming and networking opportunities.
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