Episode Summary

Today, Neela and Mary Beth delve into their personal journeys and the financial wisdom they’ve amassed since their early twenties. From Neela’s credit card reckoning post-studying abroad to Mary Beth’s strategic dance with student loans, they’ll discuss the crucial early steps they wish they’d taken, like the timely kick-off of a Roth IRA and strategies for building personal wealth. Along the way, they’ll tackle the gender gaps in entrepreneurship, unravel the mysteries of paychecks and taxes, and underscore the transformative power of smart saving strategies. With a lens on the past and an eye toward the future, they lay the groundwork for financial fluency and success. Tune in and equip yourself with the know-how to navigate your financial world with confidence.

What You’ll Learn in this Episode:

• Some tips for all of us to help keep us financially on track and avoid the sidetracks
• How to address splitting the bill when going out with friends
• How to avoid the feeling of obligation if you are a higher earner
• How to start building your credit early (and how to continue to protect it)
• A few good financial habits that future you will be thankful for
• How to budget for events that come up that you want to attend
• If you have the support, how to lean on your family to make sure you stay on track financially
• One way to approach a career change, to include exploring entrepreneurship
• A few tips to take calculated risks in your career and in your finances
• How to establish a good financial foundation

Additional Resources:

• Retirement Savings Strategies for Every Decade of Your Life
• 401(k) vs IRA: How to Save for Retirement
• Your Greatest Asset: Investing in Yourself for Career and Financial Growth
• How to Negotiate Your Salary Like a Pro

Stay Connected:

• Connect with Mary Beth on Twitter, Instagram, and on LinkedIn
• Connect with Neela on Twitter, Instagram, and on LinkedIn
• Join the Abacus community by connecting with us on Facebook, Twitter, Instagram, and on LinkedIn

Transcript of the Episode

Neela [00:00:14]:

Hey there. Welcome to the If Money Were Easy podcast, the show where we teach you how to expand what’s possible with your money. We’re your hosts, Neela Hummel,

Mary Beth [00:00:23]:

and Mary Beth Storjohann,

Neela [00:00:24]:

Certified financial planners and co CEOs of Abacus Wealth Partners. Today on the show, we’re going to talk about what I wish I knew about money at 22. 

Mary Beth [00:00:33]:

Cue Taylor Swift song.

Neela [00:00:37]:

Right, I’m going to break into I don’t know about you. 

Mary Beth [00:00:41]:

There you go. 

Neela [00:00:41]:

I’m feeling 22. 

Mary Beth [00:00:43]:

I’m not singing. I’m sparing everybody. 

Neela [00:00:45]:

But in honor of Swiftonomics, we had to pick 22 because Taylor. 

Mary Beth [00:00:51]:

I love Taylor. So great Taylor. Although I was telling Neela offline, there’s a Taylor Swift war in our house that our eight year old is obsessed with her. And our six year old is not a fan because he thinks that Taylor Swift only sings songs about boys not being nice. And so we’ve had to bring him along.

Neela [00:01:07]:

And mom’s like, well, be nicer. 

Mary Beth [00:01:09]:

Be nicer. Trying here, buddy.

Neela [00:01:13]:

Well, I’m really excited to talk about this because there’s all kinds of sayings in personal finance about, well, if I could go back in time, what would I do differently? And going back to age 22 is kind of the beginning of a lot of people’s financial careers. So for us to dig into, well, if we could put ourselves back in our 22 year old shoes with our much more senior years behind us, what would we tell ourselves? 

Mary Beth [00:01:38]:

Well, first, let’s start. Where were you at 22, Neela?

Neela [00:01:41]:

22. So I just graduated college. I was working as a software engineer at a startup in Los Angeles.

Mary Beth [00:01:52]:

All right. 

Neela [00:01:53]:

How about you? 

Mary Beth [00:01:54]:

I was also, because we are the same age, just graduated college and was living in San Diego, working at a small financial services firm, getting ready to start my ladder hopping through the rest of my career, because that’s. Heck yeah. So, okay, 22, startup, where were you in your financial life at that point in time? 

Neela [00:02:18]:

So I was always a good saver. I think I made the joke before that. My parents said that they would match each dollar that I saved to buy my first car, and I took them at face value, and by the time I was ready to cash in, they were like, oh, we didn’t plan on you doing that. Right. They were basically like, they wanted to match $500 for, like, a scraper of a car. And so that ended up not working out. So I was a really good saver. I had studied abroad for a year, and so I’d taken on a decent amount of credit card debt in that time because I took out student loans to pay for that year. I went to a public school outside of that, and so was able to pay my own way and get help from my parents along the way. But I didn’t carry credit card debt from that year abroad, which was the best ever. So good habits as a saver, carrying that credit card debt, making a salary for the first time instead of working hourly jobs. I think before that, I was waiting tables, and so I think I had the habits of knowing that I needed to save, but not much more beyond that. 

Mary Beth [00:03:26]:

Got it. 

Neela [00:03:27]:

How about you? 

Mary Beth [00:03:28]:

I was working in the financial services firm. I’d been there for two years already. I started working there at the end of my sophomore year of college, and I was director of client services. So upon graduation, I was making probably about $40,000 a year. During college, I had taken out loans, so I had unsubsidized student loans. So on my financial journey, the unsubsidized student loans are the ones that accrue interest over time. 

Neela [00:03:52]:

They start accruing interest as soon as you take them. 

Mary Beth [00:03:54]:

As soon as you take them out? Yes. Sorry. Is that what I said? Is that what I said? That’s what I say, that? No. 

Neela [00:03:58]:

Immediately. 

Mary Beth [00:03:59]:

Immediately. 

Neela [00:04:00]:

Immediately they start accruing.

Mary Beth [00:04:01]:

They immediately. The minute the check is sent to me and that money is accruing. I remember being so debt averse and being so aware of the interest accruing. So I talked about this in the past, I worked during college, and I paid my interest off on those loans throughout college because I was so debt averse and so did not want that interest accruing, that I kept working and I would make payments on the interest as it accrued throughout time during college. But I did have the principal payments. I had the principal balances that I still owed, and I had gone to Europe. I did the after college, three and a half weeks, five girls all around Europe. And that was funded through my student loans, to be honest, because I borrowed, I had the money, and so student loans paid for that. And that’s where I was. I was debt averse, I was making payments. I paid off my credit cards. Even at that point in time every month, I was working on making my payments to pay off my student loans a little bit early, but nothing else. I was living with roommates, all of that stuff, trying to get by on my own, even though I was in the industry. I hadn’t yet even set up my own Roth IRA. That didn’t come until I was about 24. I mean, 22. You’re graduating college, your life’s ahead of you, and you feel like you’re supposed to have it all figured out, but you don’t have it all figured out. And so it’s such an emotional whirlwind at that point in time. And looking back, there’s so much now that you and I talk about. I’ve talked about with clients, I talked about with my husband. There’s so much more that I wish I had done. Because your finances would be in a completely different spot. 

Neela [00:05:30]:

Right. So if you could go back, what are the things that you would tell yourself? What did you do that you think were great moves? I mean, the paying off the interest while it was accruing is kind of bananas. 

Mary Beth [00:05:41]:

Oh, bananas. I just knew from how I grew up that was just one of the priorities, was no debt, which we’ve talked about my aversion to debt multiple times on this show, so we don’t need to go there again. So that was a solid move that I did that was just based on gut intuition, not wanting additional debt, not even probably the math involved. I knew some of that, but I wish I had started my Roth Ira a little bit sooner. I do wish I had done that. I’ve had a job since I was 15, so if I had known about Roth IRAs then and had started putting money away, that would have been wonderful. So I think the Roth Ira would have been a wonderful tool for me to utilize at that point in time. So that’s something for me, looking back, that I think would have been great in terms of building my own personal wealth. How about you? What’s one for you?

Neela [00:06:22]:

So, I think in the positive, because I graduated with credit card debt, some student loan debt, not a lot. Again, was lucky to have had support during college, but I did have some student loan debt, but the credit card debt was their problematic stuff for me. And so I think what I did that was good was I lived with my parents much longer than I wanted to, or that anybody probably would have wanted to. I stayed with them until I completely paid off the credit cards, amassed like an emergency fund, and made my first contribution to a Roth before I even contemplated moving out. 

Mary Beth [00:06:55]:

That’s amazing. That’s solid. 

Neela [00:06:56]:

Yeah. It was a sacrifice. 

Mary Beth [00:06:59]:

You’re dating, living at home with your parents. 

Neela [00:07:01]:

Kind of. 

Mary Beth [00:07:01]:

Okay. 

Neela [00:07:02]:

And going from college and then back to. Fortunately, my parents had a room that I could live in. 

Mary Beth [00:07:07]:

Which is very on brand now for generations. Right. You go from college and move back. Some people aren’t even leaving home. 

Neela [00:07:09]:

Wait, doing it before was cool. 

Mary Beth [00:07:11]:

You did. You started the trend. 

Neela [00:07:12]:

Yeah. So I think that was a positive. I think what I wish I could have gone back is very much what you said is starting the Roth IRA when I started working at 15 too. Right. When I was at the shoe store, when I was at the pasta store, when I was at all the different retail jobs, even if it wasn’t a huge contribution, but just to build that habit, what I did do when I finally funded my first Roth, which I think was 24, is probably sounds right. I didn’t invest it. 

Mary Beth [00:07:39]:

Yes. 

Neela [00:07:39]:

I put the contribution and it was like, good. I did the thing. I did the Roth IRA contribution and let it sit in cash for a couple of years, because the Roth IRA is just the house and you need to fill it with the furniture. That is the investments. And I didn’t understand anything about investments. 

Mary Beth [00:07:54]:

Yes. And still, I think even today, clients get confused, especially new clients coming in between the investment and the retirement account. 

Neela [00:08:01]:

Right. 

Mary Beth [00:08:01]:

It’s the same thing. I’m like, no, it’s not the same thing. That is a classic issue in terms of leaving things in cash. And my husband with his TSP, when we first started dating, we were 27. At that point in time, of course, we done the show all two dates in because I’m like, let me see your finances. 

Neela [00:08:17]:

I want to know what I’m getting.

Mary Beth [00:08:18]:

I wanna give you some advice here, sir. And saw that his TSP is sitting in cash. It’s sitting in the G fund. So not cash, but G fund is basically cash. So we had to reallocate that. But years it’s sitting there, you think you’re doing the right thing. And if you don’t look at it, and that could be very much the case for your 401Ks, depending on what you’ve elected and making sure that you understand where it’s going. But that’s a classic mistake, I think, for young people. One of the things that I learned at 22, I’d say probably 22, 23, was the idea of negotiating, advocating for yourself, especially as a young woman in a male dominated industry. My first job in the industry. And I think we feel like we need to take what we get, be grateful, be grateful. And Gen Z, and hopefully Gen alpha, have a lot more confidence and value in their worth, but kind of take what you get. And so I remember explicitly going in, asking for raises, being told no, and then making the decision to leave that company and go somewhere else. But I think the idea of we’re so meek, we’re waiting to be rewarded. And so one of the lessons I wish I learned sooner and had confidence in is the idea of leaving to go to somewhere else if you’re not getting what you believe that you’re worth. There are risks in understanding culture and benefits and all of those financial trade offs. But I for so long, based my worth, my income earning potential, off of what men valued me at. We’re in a male dominated industry, and I worked for small firms, and so it’s two men who are like, this is what we’ll pay you. It was a job. And so that’s what I thought it was. Who am I to say something else? And so that was the pattern throughout my career until I launched my own company before coming to Abacus. But my worth was constantly set and determined by men. And so one of the things I wish I learned earlier was being able to do the research, understanding, talking to my peers, learning negotiation skills. Yeah, negotiation skills, I think are so valuable with your career, but also working with clients in so many areas of life. Yeah, they’re underrated. 

Neela [00:10:16]:

When you were talking about you and Brian doing the tell all, from a financial standpoint, that made me think of one of the most important financial decisions you will ever make is who you decide to partner up with. 

Mary Beth [00:10:28]:

Yes. 

Neela [00:10:29]:

And I think the corollary of that is making sure you have the emergency fund to know that when you are out there dating that you have enough money socked away so that you don’t end up in a situation that you do not want to be in. Because if you partner with the wrong person, who doesn’t support your professional goals, who isn’t on the same page, you will pay a lot of money in terms of foregone opportunity cost, not even to mention divorce and all the price along the way. I was in a relationship when I first moved back to LA with somebody who was not the right fit, really terrible fit, in fact, where, as I was breaking up with him, I said, would you rather be with me knowing that I’m unhappy? And he said, yes. And I’m all, wow, thank you for making this so easy. But we were living together and I mean, we’d been living together for, like, literally three weeks before I broke up with him. 

Mary Beth [00:11:24]:

Oh, that’s usually how it goes. I have one of those, too. 

Neela [00:11:27]:

Do you? 

Mary Beth [00:11:27]:

Yes, I have one of those. 

Neela [00:11:29]:

But I had saved up that money before I moved out of my parents house. And I had enough money to basically be like, just leave. I’m going to handle it. And so I covered rent for a month by myself. I paid all of the breaking the contract fees because I was like, I just need this to be done. And that got me out of an awful relationship before I found my husband three years later.

Mary Beth [00:11:50]:

Yeah, something similar in terms of what took three weeks of living together to realize, this is absolutely done. 

Neela [00:11:56]:

This is horrible idea. 

Mary Beth [00:11:58]:

And the relationship was. We talked about my aversion to debt. I was in a long term relationship, and there’s no shame on debt, but our financial values were completely misaligned. Mismatched completely. I had a debt aversion. His car ended up getting repoed while we were together. 

Neela [00:12:15]:

Two ends of a spectrum. 

Mary Beth [00:12:16]:

Two ends of a spectrum. Right. So then we’re sharing a vehicle, letting this person, this guy, drive my car. And then I worked with him to call the credit card companies to create the debt payment plan, which he followed to his credit. Like, follow, worked, get out of debt. But again, the money values were so disconnected. And I often think like, whoo, if I had stayed in that relationship, what could that have looked like? We moved in together, and then I was like, okay, you got to go back out. Same thing, right? You got to go back out. I’ve got this. I’ve got this. Don’t think I need. Yeah, we discovered those things about each other. 

Neela [00:12:46]:

But that is the point of an emergency fund, what some people would call a liberation or independence fund. That’s a financial move that protects your peace and, honestly, your future. 

Mary Beth [00:12:59]:

Yeah. And you’d want to know before you get married about what is happening in terms of credit card debt. You have to have the financial conversation prior, because some couples do not have it prior, and that’s when it all blows up. And also, will you keep separate accounts? Will you merge? What if you earns more or less? What are those values? Having those conversations prior to early on is really important, and I think it could have long term, drastic impacts on your financial well being. 

Neela [00:13:28]:

Right. Yeah. Thinking about your relationship? Thinking about my relationship. Both had a lot of ambition early on, and if we had been with partners who were not comfortable with that, that would have totally changed our trajectory and probably would have changed our relationships. 

Mary Beth [00:13:45]:

Completely! I think often, would I have started my own business if I hadn’t been married to Brian? If I had picked a different partner, what would my life have looked like in terms of support, in terms of the other people that I had dated throughout my life? Would I be here where I am? And I absolutely do not believe that I would have had the support in the way that I do have it through Brian to be here. And that’s not to say that you can’t do it on your own without a partner. But when you do have a person that does not support your choices or your ambition, it does impact you differently in terms of emotional and psychological well being. 

Neela [00:14:13]:

Hugely. 

Mary Beth [00:14:13]:

That’s just it. 

Neela [00:14:14]:

One of the great benefits that I got from studying abroad was a Spanish phrase that they said, mejor solo que mala companello, which translates to better alone than with the wrong person. And financially, that is absolutely the right call.

Mary Beth [00:14:28]:

Absolutely. So one of the things, and I was telling you this one offline, getting older, I want to go back to 22 as well. But even as a financial planner, as I was getting in to my own finances and thinking things through, and this is more money psychology, I think, than anything. But I remember going back to the debt aversion, Brian and I had our first mortgage together and I’m putting money into my 401k and then I’m wanting to pay off the mortgage early because I hate debt. And we all know the math doesn’t make sense with the interest rate on your mortgage versus what your potential returns are in your retirement and investment. But the numbers don’t make sense to do that. The emotional, psychological may have made me feel better, but I did opt to stop putting extra towards the mortgage and reallocate those funds towards investment accounts. But those are one of the things that you’re thinking about. I was such an impulse move of like, oh, just do something so I feel better because I’m putting a little bit more towards this debt and it’s going to be paid off ten years earlier. Still, the numbers don’t necessarily add up if you’re not maxing out some other accounts first. So that was a thing where clients still come with that one as well. That’s always the one that I’ve caught with younger clients of what do I do? I have 1000 extra dollars per month. What accounts do I put it towards? Should I do a little bit into everything? And it really is what’s the most impactful thing to do with your dollars? Is it debt, is it retirement, emergency fund, et cetera? 

Neela [00:15:46]:

Right. So one thing that you talked about with negotiation, we should touch on jobs. So you launched your firm early on. 

Mary Beth [00:15:54]:

Yes. 

Neela [00:15:55]:

What would you tell your younger self about making that move from being a salaried employee to launching your own business? 

Mary Beth [00:16:04]:

Okay, the first thing, we did it right in terms of we had an emergency fund, so don’t launch without having an emergency fund in place. I had a startup business plan in terms of what are the expenses going to be? And then I also worked part time at the firm that I was leaving while I was launching my business. So I had part time income. That was what worked well for me, was making sure I had all of those safety nets in place. And that is the best financial move that you can do. And that’s what I advise all of my clients who are looking to start businesses or make a transition is making sure you have these buckets in place, or if you’re getting funding or financing, just making sure that you have a plan for your personal support in addition to the business expenses as well. So mine was a service based business, so it was much easier to get it up and running. Leveraging technology and being virtual if you’re starting brick and mortar, if you’re starting a bigger tech company, those are different things in terms of funding, but it is making sure you have those things crossed off and not jumping into it, because it’s much harder to build something when you are feeling the personal financial pressure yourself as well at home. And so that was the thing. I gave myself that peace of mind, at least having those buckets crossed off. And I’m also a workhorse, though. And so I was going to be running no matter what. 

Neela [00:17:15]:

But the idea of launching, you had a cash reserve, and then it sounds like you ramped up over time so you still had some consistent income as you were building your business. And then at a certain point, that piece dropped off when your business was earning. 

Mary Beth [00:17:28]:

Yeah, it dropped off. I think I did the part time income for maybe three to six months just to get a solid footing to understand what I was doing. It wasn’t like a break even point, but during that time, I had built in my referral network of who I was reaching out to. I was also getting compensated for writing, and so I was able to find other income sources during that time as I was building my brand to supplement. And so that was one of the things for myself. I always say I’m quite scrappy. I will find a way to earn income. I know that about myself. And so that’s what I would say for other people, is just making sure you either have the cushion at home or you have a way to continue to build income, or you just know how much runway you have and you’re aware of plan B. When do you call it, and how much are you willing to put of your own personal net worth on the line? 

Neela [00:18:08]:

Right. 

Mary Beth [00:18:09]:

When you’re younger, you can just afford more risk, let’s be honest. But it looks like taking risk at 22, 25 is different than what it looks like at 40, we don’t have families. You don’t have all of the additional responsibilities at that age that you might have at this point in life. 

Neela [00:18:23]:

I think we should also say is what you had done over your working years is you had developed the credentials and skill that you could then take elsewhere. You really invested in your own education so that you weren’t launching something that didn’t know anything about. You had the career capital that you could then just pivot. 

Mary Beth [00:18:44]:

Oh, yes. I mean, that’s the biggest thing. I didn’t want to throw shade. Is that what we say these days? Throw shade? 

Neela [00:18:48]:

I don’t know what they say. 

Mary Beth [00:18:49]:

All of the young men that I’m sure are listening to the podcast, but a decade of experience in the industry before I launched the business, and most of my peers, my female peers who were also launching businesses, had decades of experience. I remember one of my close friends who is now a small business owner, she’s CPA, had been a CPA for a decade, also called me before we were friends and wanted to know if I thought she was ready to start a business. And this woman is brilliant and also was a CFP. Yeah, you’re ready. Whereas I’d have these 22 year old men calling me, wanting to know how to start their own firms. Still to this day, it’s really interesting to me that it’s the men who are straight out of college who want to launch their own firms and start working with clients right away. And I’m like, whoa, whoa, whoa. You got to get. 

Neela [00:19:35]:

Give it a minute. 

Mary Beth [00:19:35]:

Give it a minute. You got to get some experience. And it’s really always been such an interesting visual in terms of how it plays out where women, we feel like we’re not ready at all, and men just jump in. 

Neela [00:19:46]:

Need more education, need more experience, where it’s almost. It’s never the right time. 

Mary Beth [00:19:51]:

I did do all of those things. And let’s be honest, even when I launched, I felt like I was still not ready. It’s still scary. You take the jump to start your own business, and it’s terrifying in many ways. You don’t know what you’re doing. You’re learning on the job, but it’s still exhilarating in different ways. And where I am now. 

Neela [00:20:08]:

I love it.

Mary Beth [00:20:09]:

One of the questions I have, when did you start to look at your paycheck and your pay stub? Were you interested in it ever? 

Neela [00:20:15]:

The first time you get a paid job, we’re actually getting a paycheck. You feel completely cheated. 

Mary Beth [00:20:21]:

Why are they taking all of my money? 

Neela [00:20:23]:

Yeah. Who are these people? Who is CA SDI and why are they stealing my money? Because you calculate in your brain. You’re like, okay, I make $10 an hour, and I’ve worked 70 hours, so I should make $700. And then you get your paycheck, and it’s like, actually, you made $540, and you’re like, so you start getting into that. You start seeing it, and then you file your first tax return. You start to see how those pieces all work together. So I feel like I noticed immediately because it felt like an injustice had been committed. And I’m like, I believe there’s been a clerical error. So I worked 70 hours, but I’ve somehow only been paid for 55 and a half. 

Neela [00:21:03]:

And we’ve got a problem here. So I think that got me interested in how it all works and started peeling it back. So I think early. Very early. 

Mary Beth [00:21:13]:

Yeah, same. The injustice. Like, just the total injustice. I’m like, why? I feel like I work so hard. I want to go spend this all. 

Neela [00:21:21]:

I didn’t opt into this federal tax thing. I’m not interested in that. 

Mary Beth [00:21:24]:

I try to explain that to the kids now. I’m like, these potholes are still here, even though our tax dollars… we are paying in for taxes. 

Neela [00:21:31]:

Which I think talking about opting in versus opting out. I think it goes without saying, if you have access to a 401K, if you are just getting started, opt into that. Because just like what we were talking about with the Roth IRA. Yes. That money comes out of your paycheck. No, it’s not going to be dollar for dollar what you put into it, because you will get a tax deduction on that money that goes in. But any money that you put aside early is like rocket fuel for your future self and the benefits. Einstein said, compound interest is wasted on the young. 

Neela [00:22:03]:

So get that money in early. It doesn’t have to be a lot. You save future you so much more because you let that money work longer. So can’t opt out of federal income tax, but you can opt into the 401K, golden Goose, if you have that at your employer or a Roth IRA. 

Mary Beth [00:22:21]:

Yes, I think that’s one of the interesting things. Now that we’re talking about it. I don’t think I knew at 22 to even ask about benefits. I didn’t care about benefits necessarily. At 22, I’m on my parents health insurance still. I’m not really worried about retirement, so I’m not looking at any of that additional cash that could come in. I’m just looking at the compensation, the salary only. And that’s one of the things, looking back now, I wish I had known. I wish I had known to look for, at least for the 401K and if there’s a match, I think it’s very important. Health insurance might not come into a little bit later, depending on where you are, if you’re not 22. But the retirement and the match, I think is a great one because Roth IRAs are great. But you also have to take the initiative then and set those up on your own. So you do have to be able to learn about it. 

Neela [00:23:06]:

Takes a little more work. 

Mary Beth [00:23:07]:

Takes a little more work to understand. And so there’s a lot more resources available today than there was for you and I back then. 

Neela [00:23:14]:

And I think what we’re really getting at here, as we talk about emergency funds, we talk about Roth IRAs, we talk about saving, is at this age you are starting to form habits. Don’t get so hung up on the dollar amounts that you’re putting aside, but focus on doing something often because those habits are going to be the pieces that you’re able to add on as time goes on. You can always increase the amount, but build the habit that you save out of every paycheck for future you, for short term you, and just build that habit, even if it doesn’t seem like a lot of money. Just get started. 

Mary Beth [00:23:49]:

When did you start having separate accounts for different things? 

Neela [00:23:52]:

I’m going to really date myself here. So ING Direct. Anybody else remember that? 

Mary Beth [00:23:58]:

I do. Right? 

Neela [00:24:00]:

Which has since been bought and sold like four different times. I think now it’s Ally.com. but that’s when I started, is that I was mystified by the four and a half percent interest rate, which seemed like a joke up until a couple of years ago, but now we’re back there. But that was what captivated me. And then I started doing the buckets and I started saving for. I really love to travel, obviously no kids, much easier to do that, but none of the money to do so. But I started saving into buckets so that I could take some good trips. So I started that…23. 

Mary Beth [00:24:32]:

Yeah, the buckets are huge. I think having the buckets is actually really impactful in terms of being able to not put your savings all into one account. And that same thing started probably around 20 something. For me, I wish I had done it earlier because I think everything just was going to one account, but travel, emergency fund, everything else. That was a big one. 

Neela [00:24:50]:

Banking it for the different reasons. And almost it’s a mental accounting system, but it makes it look easier to track.

Mary Beth [00:24:57]:

The habits are really important, just in general in terms of building foundations. So either setting the fixed percentage or setting a fixed dollar amount on an ongoing basis to set it, forget it. Reviewing your finances on a monthly basis. I wish I had done that. Less impulse. At 22, there was a lot of impulse spending as well. It was always within means, but it was probably some pointless stuff, to be honest, that I splurged on. Looking back, and then one of the things that just pops into my mind, and this is really to the benefit of technology at this point in time. There’s apps now, like Splitwise splitting bills. We used to have to sit around and put ten credit cards on a plate when a group of you would go out to dinner after college and barely tipping, probably. I’m so sorry for any past service. Now there’s an app where one person can pay. Everybody sends out at one time. But I think just being able to get into the habit of. You can do that for yourself. If you’re great at paying off your card and collecting the points, you can be strategic there, but also making sure that you are being mindful of not getting into habits of paying for other people as well. Because sometimes when you’re the friend that does have a salary or earns more, you start to feel obligated. And that can also create negative habits for your own personal financial situation, which I think happened a lot at 22. I very much recall in my early 20s going out with a group of friends from my hometown, and one of the girls had said to me, well, you make more than all of us, so you should pay for us. That was very salty, and so we had to have conversation about that. 

Neela [00:26:25]:

Don’t you should me. 

Mary Beth [00:26:26]:

Yes, exactly. But very interesting in terms of assumptions that money values that your friends carry as well. So being able to, again, have those habits and be able to have some of those conversations. But the habit building is really important in thinking about 22. What does money mean to you? 

Neela [00:26:41]:

Right. Yeah. Where you’re spending that money. I mean, I had an entire budget category for happy hour because that was just something that you did. 

Mary Beth [00:26:50]:

So true. 

Neela [00:26:51]:

And I think about going out with my best girlfriend, and we always talked about money. We’re both scrappy, we’re both hustlers. And so we would find, like, the best happy hours, and we would split it 50/50. But we were, to your point, about getting on the same page so that you’re not in these sticky situations where you’re maybe spending more than you want to, but the much dreaded dinner out at 22 and everybody looking around being like, well, who’s going to pay for this? How is this going to work?

Mary Beth [00:27:18]:

Yes, exactly. 

Neela [00:27:21]:

One more thing. Credit. Talk about, like, building credit. Not having a good credit score will hurt you for so many years to come, and so your 20s is a great time to start building that credit, if not before. What does that look like? That looks like taking out a credit card, paying it, not charging more than 30% at any given time, paying it off in full before the due date, and starting to build that credit so that you have the ability to. We talk about debt, but you ever get a mortgage or a car loan or anything like that, not having good credit, you will pay so much more. And so starting to build those healthy credit relationships, which also help build better financial habits so you don’t find yourself in credit card debt that you can’t really get out of. 

Mary Beth [00:28:06]:

100%. And checking in an app like credit karma, being able to check the score. I know my 19 year old nephew is constantly texting me now as his credit score moves on credit karma, just in terms of being proud of himself and being able to track that progress. But it’s really important because this is also the time when people break their credit scores and it takes them years to fix it, because at colleges and there’s still credit cards and there’s rules now against the preying on college students. You get access to a credit card and you don’t use it responsibly, it can hurt you and your score and your financial situation in terms of what you end up paying in interest for car loans and everything else for years to come. So being able to get that credit card, being very mindful and very strict with how you use that is incredibly important, especially at a young age. 

Neela [00:28:52]:

Yeah. 

Mary Beth [00:28:53]:

The one thing I wanted to ask before we wrap up, and this is probably a little bit older than 22, but it’s in your mid to late 20s, how did you handle all of the weddings and the bridal showers and the engagement parties and all of the things that bachelorettes and all of those things that happen, and there’s baby showers, those phases of life that are really pricey that I know 20 somethings and 30 somethings you come up against. There’s a lot depending on your group of peers or friends that you end up shelling out. How do you navigate that? 

Neela [00:29:27]:

Those ones are so hard. I think you can do it a couple of different ways. One, like we talked about with the buckets and figuring out what your budget is for travel, what have you, and then being able to stick to that. You might get invited to the really elaborate wedding with a couple that might have a very different budget for you. And those are ones that you can either decide that, like, hey, this is where we’re going to spend our vacation money, or we’re kind of going to go all in here, or those are the hard ones where you’re like, my budget won’t allow me to do that, but they can really add up. I’ve worked with people, and then I remember just being that age and being like, my entire travel budget for a couple of years is weddings. That’s it. And I’m not doing anything else because I want to go to these. 

Neela [00:30:10]:

Especially if you’re in them and you’re buying all the things that go with it. It’s tough. And be sensitive if you’re in that position, too, that all those events add up. If it’s not your wedding, those are costs. What are the things that you can maybe shell out for to ease the burden on other people? Because everybody’s got different budgets and is playing a different game. 

Mary Beth [00:30:29]:

Yeah, I completely agree. All right. Anything else we missed? 

Neela [00:30:33]:

I think the only thing to highlight, you talk about when you decided to launch your own business, something you said about, it’s easier to take career risks when you’re young and when you have fewer obligations. So I found myself in financial services as an unpaid intern just to kind of see what it looked like. But I could do that because I was living at home with my parents and had actually very few obligations. But that gave me the opening into a career that I loved. And I might not have had that opportunity if I did that when I was older and had two kids, a dog and a mortgage. So it’s always easy to do those things earlier. Not to say you should never do them, but know that you have that opportunity to try something different, try a different career, try a different industry, because who knows?

Mary Beth [00:31:21]:

Yeah. After that job I had in college, I hopped to three different firms. In the matter of twelve to 18 months, I went and I was like, no, not this one. No, not this one. No. Okay. Moving back here, hopped my way from San Diego all the way back up to LA. But I was able to take the risk. It was just me, the clothes on my back situation, the box of stuff that was maybe in my dorm, that I moved from one apartment to another small apartment. And when I decided to make the move from San Diego back up to LA, I had just signed a six month lease on an apartment in Carlsbad, one bedroom apartment, living on my own, but I moved three months into it. And you know where I moved? I moved back in with my parents also. So for those three months I moved back in until I found a friend to live with. But I moved back home, was able to go back, got my job, commuted 45 minutes each way to my new job, but then I moved back out after that. But I was able to have that flexibility during that time and handle the costs and navigate. So there are benefits of being able to have families. You can go back home, too. Not everybody has that. But the flexibility of being able to be more nimble when it’s just you is much easier. 

Neela [00:32:28]:

Love it. So get started saving and investing early. Build that emergency fund. Take care of your credit. Be aware of taxes and focus on building good habits and focus on growing your career. 

Mary Beth [00:32:40]:

Take calculated risks. 

Neela [00:32:41]:

Take calculated risks. I love it. 

Mary Beth [00:32:43]:

Thanks so much, y’all. 

Neela [00:32:44]:

Thanks. 

Neela [00:32:48]:

Most people have formed helpful and harmful habits around spending, giving and investing. Head to abacuswealth.com/quiz to take our financial archetype quiz and learn your three dominant money types. You’ll receive personalized guidance that helps you have a healthier, more balanced relationship to money. 

Neela [00:33:30]:

Abacus Wealth Partners is an SEC registered investment advisor. SEC registration does not constitute an endorsement of Abacus Wealth Partners by the SEC, nor does it indicate that Abacus Wealth Partners has attained a particular level of skill or ability. This material prepared by Abacus Wealth Partners is for informational purposes only. It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security strategy or investment product. Opinions expressed by Abacus Wealth Partners are based on economic or market conditions. At the time this material was written. Facts presented have been obtained from sources believed to be reliable. Abacus Wealth Partners, however, cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. Abacus Wealth Partners does not provide tax or legal advice, and nothing contained in these materials should be taken as tax or legal advice. Economies and markets fluctuate. Actual economic or market events may turn out differently than anticipated. No investors should assume that future performance will be profitable or equal either the previous reflected performance or that of the reference benchmarks. The historical performance results of the comparative benchmarks do not reflect the deduction of transaction and custodial charges or the deduction of an investment management fee, the incurrence of which would decrease indicated historical performance. The S&P index includes 500 leading companies in the US and is widely regarded as the best single gauge of large cap US equities. The holdings and performance of Abacus Wealth Partners clients’ accounts may vary widely from those of the presented indices. Advisory services are only offered to clients or prospective clients where Abacus Wealth Partners and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Abacus Wealth Partners unless client service agreement is in place.