Our beloved Carrie Bradshaw, the sweetheart of New York City and the ultimate single girl was, unfortunately, terrible with money and constantly broke. For those of you serial watchers who have the DVD set like I me, you can recall Episode 16 of season four when Aidan and Carrie finally break things off after a rocky engagement. Aidan had bought her apartment and the place next door with plans to knock out the wall behind her bed and create for them a spacious and humble abode. Their breakup left Carrie with a hard decision: buy her apartment for exactly what Aidan had purchased it for or find a new apartment within 30 days. She had barely $1,000 in savings and was forced to figure out what to do. At brunch both Miranda and Samantha offered up $15,000 to help her buy her place back, but Carrie declined. The worst ensued when Carrie then threw a ridiculous fit over the fact that Charlotte hadn’t offered any money to help her. In the end, Charlotte ended up giving Carrie her 2.71 diamond Tiffany wedding ring from her failed marriage to buy back her apartment. Great friendship, right?
The thing is, if Carrie wasn’t blowing every paycheck on Manolo Blahniks and packs of cigarettes, she wouldn’t have been in the predicament she was in. Miranda actually calculated that at $400 a piece, Carrie had spent around $40,000 on just shoes alone. She could have used that, huh? Carrie was a successful 35-year-old columnist and she couldn’t even get a loan from the bank to keep her apartment.
So where do you come in? Here’s the thing, you’re still young and have time to establish great credit and spending habits! To help you, I’ve compiled a few key tips for the savvy Collegiette to prevent you from ending up like Carrie Brokeshaw in the future.
1. Separate Needs From Wants
You’ve got to learn that tampons are a necessity while vanilla lattes are a want (even though some of you will say otherwise). Sometimes when we’ve only got five dollars in our pocket, it’s easy to roll through Chipotle instead of buying our allergy medicine or getting socks. When you’re spending money it’s important to think about what’s important and what you need before you go spending frivolously on things. Lists are always a good start. Begin by writing a list of what you need for the week, and once you’ve got what you need THEN you can think about splurging. Tech savvy and need to physically see what you’re spending and budgeting? Get online banking or use a site like Mint.com, which is a free web-based personal financial management service. You can enter all your bank information and track how much you’re spending and saving. Or you can do it the old fashioned way and keep a money journal (or a checkbook, but barely anyone uses checks) where you write down everything you spend so you know what you’re spending your money on.
2. Create a Budget and Stick to It
Budgets are forsure easier said than done. It’s hard to tell yourself you can’t afford something when you have the exact change sitting in your checking account. When you know exactly how much money you get monthly, weekly or bi-weekly, it’ll be easier to give yourself a limit. So figure out what your income is whether it be from work-study or your job. Then I personally like to divide it into three categories: Required, Save and Splurge. Weird, I know, but it works! The Required section is for things like sorority dues, oil changes, books, school supplies, etc. Things that cannot wait or are important. Save is for things that you want to work towards and there should always be something to save for whether it be a new purse, an impromptu visit to NOLA with your friends or studying abroad. It’s always good to keep a little nested away. Last but not least, Splurge is for those things that aren’t by any means essential but you really really want them! It could be a new dress for a birthday dinner, a bottle of wine from the nice part of the store or even just grabbing Panera after class. But don’t confuse these with the Required section. Remember your needs from wants. Panera isn’t a need but an oil change is.
3. Take Control of Your Credit
For those of you who already have a credit card monitored by your parents, that’s great! Don’t overcharge. Only use it for emergencies or when you’ve gotten permission or clearance to use it for something. Credit card debt is nasty and hard to get out of. The last thing you want to do is come out of college with more debt than you already possibly have in student loans. Just because it’s your parent’s card doesn’t mean you can spend whatever you want; that’s not fair to them and it won’t help your behavior in the future when you have a card of your own. So pretend it’s really yours. If you can’t pay it back, then don’t spend it. Thinking of getting a credit card? Shop around and find a card with a low annual percentage rate that you feel good about. Consider getting a card that’s secured by a bank deposit, meaning that you have enough money in a savings account to equal the credit limit on the card. A secured credit card can help you get used to handling credit while building a good credit history. So you get the card. Never charge anything you can’t pay for right away and always pay more than the minimum due at least a week before it’s due to keep your late fees and interest rates down.
4. Quit the Bank of Mom and Dad
When you’re ready, it’s good to slowly start weaning yourself from your parents. They love you and they’ll always want to help, but learning to be independent and financially responsible is the best thing for someone entering their twenties. Whether it is getting a part-time job, babysitting or even just sticking to your budget, try to become a little more financially independent bit by bit. Stray away from constantly asking for money because so that when they aren’t there, you’ll know how to budget and survive even if that means surviving on less. You have to remember to live within your means even if that means you can’t go out one night in order to stick to your budget. Your bank account will thank you later!
5. Build a Rainy Day Fund
Oh the Rainy Day Fund. For middle-aged adults this is just in case a pipe breaks or you lose your job or a retirement fund, but for us Collegiettes it simply means in case some big happens to you. I like to think of it more as a Goals Fund that you can use for saving for anything big, like a trip or vacay. It’s also great to have this fund for unexpected birthday dinners, presents and holidays. Christmas always creeps up on me and having my fund makes it easier to get nice gifts without feeling a huge pinch in my wallet. And for those of us aspiring to be the next Carrie Bradshaw and get the heck up out of Florida after graduation, living in NYC (or LA) ain’t cheap. If you start saving now, making the move won’t be as detrimental as you think.
All in all, these tips are going to help you jumpstart a great financial career and hopefully accomplish so many things in your twenties and the rest of your life. Being in our twenties is going to be an adventure and it’ll be better without being broke! To quote Ms. Bradshaw, “When you’re determined to reach your goal not even obstacles can scare you away.” She’s right; you can do whatever you put your mind to, Collegiettes, and I know that includes being strong and financially responsible.