Guys (and girls). People. Whatever. Remember back in college when some well-intentioned adult told you that you should start saving early to take advantage of the power of compound interest? And remember how you were like “yeah, yeah, I’m 21 years old, I’ve got loads of time. Besides, I’m living month-to-month, how do you also expect me to save?” And then remember how you kind of forgot about it all?
Check out this chart:
Raise your hand if this was your reaction to the title of this blog post: “Yes, I get the concept of paying myself first, but after taxes, mortgage/loan payments, credit card payments, and life expenses, there’s not really that much left.”
That was my reaction, and I’m betting at least some of you had a similar one. I have always said “I’ll start saving seriously, once I pay off my student loans”, or “this month was a really expensive one, but I’ll save some more next month.” Of course, with that approach, I never saved anything substantial.
Then I came across this worksheet from my new favorite author, David Bach.
I heard a quote on a podcast last week that has really stuck with me: “If you don’t have a plan for your money, somebody else will.” Maybe I was a little harsh in my last post. After all, it’s not really fair to blame my friends for my own inability to plan.
I’ve (obviously) never planned ahead financially. When it comes to my student loans, I’ve always just paid off the minimum each month, thinking “What difference does it really make if I put $200/month more towards my loans?” Instead, I used that extra $200/month for nails/clothes/drinks/travel/you name it.
Turns out, that $200/month would have made a LOT of difference, if only I had understood the power of forecasting.
I have never been good at keeping track of my spending. My father is the type of person who saves all of his receipts and then spends a few hours in front of the computer on weekends tracking everything somehow. I think, when I was in college, that he may have tried to show me how to create a budget and track my spending in Excel, but I just wasn’t interested. However, Step 2 in The Richest Man in Babylon is all about budgeting, so I knew this was something I would need to master before I could move on to more complicated things.
When I told my friend Kat about my goals for this year, she immediately recommended the book The Richest Man in Babylon, by George S. Clason. She said her dad gave it to her when she turned 18, and she found it incredibly helpful in shaping her perspectives about money (she definitely listened to her dad). So I picked up a copy and decided to follow it, step by step.
Austerity Kate 