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Things I Wish I Knew Before I Made Money
14 Plays3 years ago
In this week's podcast, I discuss things I wish I knew before I made money. I share a little bit about my upbringing as it pertains to money, some of my mistakes, and what I learned.
If you want to send me an email you can email me at [email protected]
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Transcript
Introduction to the Podcast
00:00:00
Speaker
Welcome to the Eliana Nita podcast, the podcast created to inform, challenge and empower you. Now let's get down to business.
00:00:23
Speaker
Hey guys, welcome to the Alion Amoeba podcast. I'm your host, Alion, and I am so excited to have you join me for this week's podcast.
Series Introduction: Money Matters
00:00:32
Speaker
If you have been following along with me for the last few weeks, I have been in a series called Things I Wish I Knew Before. So I talked about career, I talked about relationships, and now I'm going to talk about money.
Childhood and Money Education
00:00:49
Speaker
Money is a very touchy filly topic. It is a very sensitive topic depending on who you're talking to and money is a very important conversation that you need to have. I grew up poor. We wasn't dirt poor, but we didn't have money.
00:01:08
Speaker
And so my parents did not train or teach my brother and I how to manage money. Money was a very tight conversation that would happen in our household. So my parents didn't like to talk about it because we really didn't have money to talk about.
00:01:30
Speaker
When I reached adulthood and I started making my own money, I didn't know how
Discovering Budgeting with Dave Ramsey
00:01:38
Speaker
to manage it. I didn't know how to take care of it. I didn't know how to budget it. And so I found myself
00:01:45
Speaker
really, really broke all the time because I did not know what to do with the money that I made. And it took for someone to give me, this was, I wanna say, I had to be about 26 or 27 when someone gave me a Dave Ramsey kit. And in this kit, it had, this is back when they used to make CDs.
00:02:12
Speaker
but it had a case of CDs and it had his workbook, his actual book, and some tools that you needed to be able to manage your money. I remember I was at work and I was listening to the Dave Ramsey CDs and this was the first time I had ever had anybody explain to me how to budget money and why debt is wrong and how to get out of it.
00:02:39
Speaker
And it was revolutionary to me because I had never heard anybody talk about money like this. I never heard anybody's story being told like this. And I never had tools on what to do with
Budgeting: Control vs. Restriction
00:02:54
Speaker
money. And so I listed a lot of things that I wish that I had understood or knew before I started making money, before I started spending money.
00:03:04
Speaker
And I'm going to talk about these things in this podcast. The first thing I wish that I had have known about money is how to budget. I believe that managing money and budgeting money is two totally different things. A lot of times we find ourselves managing our money. So we get paid on whatever day we get paid on.
00:03:26
Speaker
and we know what bills we need to pay, we know what minimums we need to meet with our money, and then we just spend, spend, spend before our bank account is in a negative. So we know how to manage that. But when you budget your money, it's you actually sitting down with either by yourself or with your spouse looking at how much money is coming in per week, per month, per year,
00:03:52
Speaker
and allocating where those dollars are going.
Importance of Savings and Emergency Funds
00:03:56
Speaker
So, budgeting is a tool that puts you in control of your money. And a lot of times we think budgeting is something that restricts us. It's something that keeps us closed in and we can't do anything because we're on our budget. But honestly, budgeting is really taking control of your money and saying, I'm telling you what to do. It's you creating your work plan for your financial prosperity and your financial peace.
00:04:22
Speaker
I wish that I knew how to save before I started making money. I wish that I understood what an emergency fund was. I did not hear the term emergency fund until I listened to those Dave Ramsey tapes.
00:04:40
Speaker
or CDs rather. I had no idea that you should have some money stacked up in your bank account. Now, I always knew that saving was a good idea, but I didn't know how much money I should save or I didn't have a rhyme or reason to save any cash. It's always suggested, but never like a mandatory thing because if you have a steady paying job, why do you need to save, right?
00:05:08
Speaker
And it wasn't until life really started to hit me hard and things started to catch up with me where I realized my life could have been so much easier if I had a save. And I wish that before I started spending any money,
00:05:25
Speaker
Even when I was working part time at a grocery store, I wish I had a stack at least $2,000 and had that saved up.
Investments and Financial Resources
00:05:34
Speaker
I wish that I had the vision for saving to be able to save three to six months of my income.
00:05:42
Speaker
and continue to go from there. So those are all things that I wish that I had known before I started spending money and got in over my head. I just wish that I knew those things so that when life threw a punch or a flat tire or an unexpected bill, I can always have an answer for it because I have money that will save. And honestly, saving is a really good habit because it gives you more cushion in your life.
00:06:10
Speaker
in your budgeting because let's say you have a hot water heater that breaks in your house or a pipe that breaks and you have the money saved up to be able to take care of the bill that happened, right? That money that you used to save, you'll be able to build back up your savings because saving is a constant habit.
00:06:35
Speaker
it's a part of your budgeting and that again is a part of a strategy like and that's something that I wish that I understood was that how to strategize with my money via budgeting because having the habit of saving having the habit of just squirreling away money would help me in the long run so that I can
00:06:55
Speaker
meet financial goals that I wanted to set for myself so save your money. Another thing that I wish that I understood more was my 401k plan. My uncle told me when I first when I got when I first started my career fresh out of college my uncle pulled me to a sign he told me I'm going to tell you
00:07:14
Speaker
You want to max out your 401k. You want to make sure that you max it out to the full amount because you want to be able to have a healthy retirement fund when the time comes. And so I listened to his advice. I saved up my money. I maxed out my 401k.
00:07:34
Speaker
But one thing that I wish that I understood was what I was investing in and how to actually invest and manage my 401k. A lot of times we don't have the financial background to understand what a 401k does and what its purpose is. So we just kind of find ourselves just doing it by habit or just by suggestion. But when you take time to like dive into the numbers and dive into what you're investing in, it gives you
00:08:04
Speaker
a sense of control and it helps you paint a better picture for yourself so that you can comfortably retire. So I know that a lot of 401ks, I know that everybody doesn't have a 401k, it's different kinds of retirement accounts depending on what kind of career you're in.
00:08:21
Speaker
So I'm saying 401k because that's what I have. I know that some people have pensions, some people have just different kind of accounts out there. So whatever you have, I would say, reach out to your HR department and call the people that's over your retirement account and ask them questions.
00:08:42
Speaker
A part of what these companies do that we don't know about as people that invest in these companies is that they offer free financial counseling, they offer free advisement. So if you have questions or if you just are interested in learning more, they have tons of tools with these financial institutes and they're more than willing to sit down and have conversations with you because they're being paid to do that.
00:09:11
Speaker
you're paying them a fee, whether you know it or not, you're paying them a fee and they're always there and they're so underutilized. So if you have questions about your 401k or your retirement plan, reach out to your HR department, ask them how you can ask questions or they can refer you to the company's website and they have hotlines and all of that stuff that's prepared and available for you. So I would suggest you utilize those.
00:09:37
Speaker
And while we're on the topic of 401k, I wish I understood what investment meant and what it looked like. So a lot of times we don't even really consider investing money because so many of us don't have money to invest. And that's, you know, for a number of reasons, we probably don't have money to invest and maybe we do have money to invest, but we don't know where to start.
00:10:02
Speaker
And so with the uptick of apps like Stash and Robinhood and so many others out there, and then you have Bitcoin and Forex training and DayX Day training, trading and the stock market and things like that, all of those things can be incredibly overwhelming.
Credit Cards and Debt Missteps
00:10:20
Speaker
And everybody is like out trying to make sure that they make
00:10:25
Speaker
make money and be able to have money saved and stashed and things like that. So it's important to understand investing and what you're investing in. So I wish that I had understood investing more. I had no clue what investing looked like and
00:10:42
Speaker
To be quite honest, it scared me, but after doing research, after reading, after taking my time to understand it, it started to become less scary to me and more important to me because now I knew what I was doing.
00:10:59
Speaker
I recommend if you're in a place where you can afford to invest any kind of money, make sure you do some research on it. If you can, talk to a financial advisor, hire an investment banker, you're going to pay fees and all of that stuff, and that's a part of investing. But understand your risk that you're taking with investing and understand the risk that you take when you don't invest.
00:11:27
Speaker
I wish that I understood investing more before I made money. I also wish that I understood how credit cards work. I remember when I was 18, I was on my way to college. Matter of fact, I was literally on my way to college, maybe about a week.
00:11:45
Speaker
before I got this phone call. And this is pre-recession, so back in the day they used to call credit card companies, I don't know if they still do it now, but back in the day they used to call you and offer you credit cards. And they would fill out the applications for you via the phone, and they would take all your information, fill out the credit card, get you approved, and send you on your way.
00:12:07
Speaker
And they would really target college students that was on their way to college because they knew that college students would need money. And even though these college students didn't understand money, even though they didn't have a job, even though they didn't have a way to pay back this credit card, they would offer them a credit card with a decent credit limit and send them on their way. And then next thing you know before,
00:12:32
Speaker
they're graduating out of college, they have a credit card bill. And they don't even know how it works. And they targeted my age group at a very young age. And so I did not accept the credit card because it scared me. But later on down the line, I ended up taking out credit cards and I didn't understand how credit cards work. I didn't know how credit cards gained interest.
00:12:55
Speaker
I didn't know about paying more than the minimum. So here I am paying the minimum thinking I'm doing something and all along my bill is not going down and I'm constantly being charged interest and you know, I didn't know how to strategize and how to actually use credit cards for my benefit. I just kind of
00:13:17
Speaker
vicariously went with it and ended up finding myself in credit card debt because I didn't know how credit cards work. And one thing about credit cards is that they're very enticing. It seems like it's the thing to do with the rewards points and the quote-unquote low interest and oh, you don't have to pay interest for six months.
00:13:39
Speaker
But what they don't tell you is if you don't pay the balance off, by the time the promotional offer ends, you have to back pay all that interest. And so then not only do you have to back pay the interest that you didn't pay, but then they charge you interest on top of that interest. So it's like it's a constant cycle that you'll find yourself in if you're not careful with credit cards.
00:14:05
Speaker
I also learned, I wish that I had understood more about how interest works period. I wish I understood that how interest works in bank accounts and how interest works with credit cards and how interest works with
00:14:22
Speaker
401k and things like that. Compound interest, those are all terms and things that I did not know before I started making money that I wish that I understood and had a better understanding.
Understanding Taxes and Civic Responsibilities
00:14:33
Speaker
So even when I was putting money up to save just for an emergency fund, I wish I knew about the kind of interest that different bank accounts offer so that I can put my savings in a good savings account.
00:14:48
Speaker
that would help my money grow as I saved it. So those are things that I wish that I understood. I wish that I understood credit scores better and how do we gain a credit score and what are the three different credit unions and why?
00:15:08
Speaker
Yeah, the credit unions, I wish I understood like, what did they mean and why and what is the FICO score and things like that and so again you know a lot of times we just kind of roll into life and life doesn't you know we just have to roll with the punches because we don't know.
00:15:24
Speaker
But I didn't understand, I knew that having a good credit score was important, but I didn't understand what a good credit score was. And I didn't know how to obtain to get a good credit score and what that looked like. And so having a good credit score means you might pay hundreds of dollars in interest versus thousands of dollars in interest. So all of those things matter when it comes down to making purchases like a car or a house or
00:15:54
Speaker
even taking out student loans and things like that, like your credit matters. And so I wish that I understood how important those things were. I wish that I understood taxes more. I live in the state of Illinois. Illinois taxes is off the chain. No shade, but they are really bad. They're really high. I think that Illinois pay, we pay the highest state taxes.
00:16:20
Speaker
In the country, I want to say, if I'm not mistaken, we pay the most taxes and our taxes are ridiculous. And so I know that with Illinois is going to be a big bill for us, but I wish that I had understood those things more. Recently we had on our ballot in Illinois, they had something called the fair tax.
00:16:43
Speaker
something, right? And it was a they was trying to pass a bill to create fair taxes within the state. And that that fair tax bill did not pass because a lot of people just didn't understand what they was voting for. And they didn't know what it meant and what it looked like, what it would look like for the average person.
Personal Wealth and Financial Values
00:17:06
Speaker
And so
00:17:08
Speaker
A lot of people, they didn't promote it well, they downplayed it. Opposing Ian really did their job in making sure that people stayed less educated about it as possible. So I wish that, so even in that, wishing that, and I knew more about that tax bill going into it when I went to go vote, but so many people around me did not know. They didn't even know it was gonna be on the ballot.
00:17:33
Speaker
So I wish that I had it took the time to understand taxes more and what am I voting for when I vote for taxes or different tax bills and things like that. And so I just want to encourage you all to make sure that you look
00:17:49
Speaker
into your taxes for your state, look into federal taxes, understand how those things work. Even when you're filing your taxes, ask your tax preparer questions, find out your different deductions that you can make off your taxes to maximize your tax returns and things like that.
00:18:08
Speaker
So it's vitally important that you look into those things and know these things. And I know that I talked about a lot of different things that I wish that I knew in this podcast. And some of them seem like you need a financial degree in order to learn these things. But really all you need to be is a person that's making money to learn these things.
00:18:28
Speaker
You don't have to learn everything all at once. I know it's overwhelming, but start with the basics. Start with savings, start with budgeting and making sure, and also if you're working, please make sure you invest into your retirement fund. But start with those basics and make sure that you're investing in yourself. Read a financial book, like read one financial book a year that can help you shift your mindset as it pertains to your dollar. Listen to podcasts.
00:18:57
Speaker
tons of free resources out there in the world that talk about how to maximize your dollar, how to manage your dollar, how to get out of debt if you're in it. It is tons of free resources out there that can help you manage your money better and help you get out of debt. What I had done personally was set down and wrote out a definition of what wealth means to me.
00:19:26
Speaker
I believe that wealth is not only shown in money, but I believe wealth is shown in family. I believe it's shown in relationships, your career and your health and in every area of your life. But I wish that as it pertains to money, I would have sat down and wrote out a definition for me of what wealth meant to me. Because so many times we find ourselves just wanting to make a lot of money, right?
00:19:52
Speaker
and just have a bunch of money. But what do you want to do with that money? For some people making $65,000 a year is wealthy. And for some people making $65 million a year is wealthy.
00:20:07
Speaker
But what does wealth mean to you? What does it mean to you personally? Do you want to leave money behind to your children? Do you want to have a bunch of cars or a really big house? What would be a sign of wealth for you? Based off of that definition of wealth,
00:20:33
Speaker
you will start to spend your money accordingly. One thing that I did for myself was I wrote down things that I value, what are values of mine, and based off what I value, I make purchases according to what I value.
00:20:50
Speaker
I don't value wearing a bunch of name brand stuff because to me it doesn't really mean much. It's just a name with an expensive price tag. But for me, investing in my 401k is taking the money that I would spend on something expensive and investing in my 401k, that's the value of mine.
00:21:08
Speaker
saving to buy a house or saving up to buy a car in cash instead of having to take out a car loan like those things are something are those are things that I value personally so what are your values and based off your values and your definition of wealth
00:21:24
Speaker
That will help guide you as you spend your money and as you budget your money because you'll always have that definition and those values in the back of your mind as you make your budget and choices and as you allocate where your money is going.
00:21:42
Speaker
I just want to encourage you all to take some time if you if you so decide to do this I just want to encourage you and even give you some homework to write down your definition of wealth really define what financial wealth looks like to you not what it looks like on TV not what it looks like to the next person but what does financial wealth look like to you and write down maybe
00:22:04
Speaker
five to 10 values of yours as it pertains to money and how you spend money so that you can have a roadmap and a guide to help guide you as you make your financial decisions. And keep those definitions handy. When you write out your budget, write out your definition of wealth every single time you do your budget so that when it comes down to budgeting your money and spending it where you need to spend it or placing it where you need to place it,
00:22:31
Speaker
you'll always have that definition and those values in the back of your mind as you allocate your dollars. I just wanted to encourage you guys to do some research, do the work.
Empowering Financial Education
00:22:42
Speaker
I know that finances are hard. It's a very complicated and it's a very sensitive subject to talk about. A lot of us grew up in homes where we did not know what to do with money when we got it. Money was almost like a survival tool.
00:22:57
Speaker
But you can take that tool and not only survive with it, but you can take that tool and build with it if you use it correctly. So I hope that this podcast helps you and kind of like maybe even got you to thinking about your money and got you to thinking about what you want to teach your kids if you have them. I don't have children, but
00:23:19
Speaker
One day when I do have them, I wanna teach my kids money and money tips and tools and tricks and things like that so that they can be able to maximize their dollar and not only survive with it, but thrive with it as well. So if you guys enjoyed this podcast, please share with your friends and family. Also rate this podcast, please give me a good rating, five-star rating.
Listener Engagement and Feedback
00:23:42
Speaker
Leave me a comment, something, y'all say something to me.
00:23:47
Speaker
or let the people know that this is a good podcast. And if you have any questions, you can email me at alienanitashow at gmail.com. And if you want to follow me on social media, I am alienanita on all of the things. So hit me up if you want to chitchat with me. And yeah, as always, guys, be blessed and stay relevant.