Guest Author, Kevin: Takeaways from A Total Beginner’s Guide to Getting Good with Money
Saving Money

Guest Author, Kevin: Takeaways from A Total Beginner’s Guide to Getting Good with Money

January 13, 2019

The Financial Diet: A Total Beginner’s Guide to Getting Good with Money – Chelsea Fagan

Hi friends,

Kevin “KevDog” Mendez here, and I am so excited to be a part of the OneMoreSunset journey! I am friends with Kayla and Juan, and have been an avid follower of all the GOLD posted on their blog. This inspired me to want to contribute with my own twist, to provide some of the KNOWLEDGE I have picked up from books I have read and share the love with everyone. I’m truly honored and blessed to help in my own way! My vision is to share some of the biggest Bits of great books I’ve been reading so that we can all be better, grow a little more, and hopefully inspire some of you to pick up a copy and DIVE IN.

*DISCLAIMER: Long post ahead, but this is only a Bit of all the amazing things I have learned. Take a few minutes out of your day to read through the end, you can thank me later :)*

This BookBit goes over The Financial Diet by Chelsea Fagan which covers some hard and solid tips, advice, and GOLD that everyone can follow to become even a little bit better with one of the most intimidating parts of life— Money. As a soon-to-be college graduate, the Real World honestly scares the shit out of me… But after reading this book, I feel a little bit more secure on topics like budgeting, investing, career tips, feeding myself on a budget, my home, money and relationships, and building (and paying for) one’s happiness.

———————————————————————————————————————

Budgeting is one of the most effective tools you can have to set yourself up for financial stability and secure yourself a happy future. Life is one long marathon, not a sprint. The choices we make today (i.e. spending and saving habits) can have a drastic effect on our lives in the future— either for better or for worse. As Fagan puts it, “saving money isn’t about depriving yourself. It’s about deciding you love Future You as much as you love Today You.” Wow! So how do we do it? Here’s a good strategy to follow that will create a healthy and realistic budget that Future You will thank Today You for: 

“A popular system for breaking down and healthy budget is to follow the 50/30/20 system: with 50% of your income going to fixed costs (i.e. rent, phone and utilities), 30% of your income going to variable/life-style costs (i.e. groceries, going out, and travel), and 20% of your income going to savings (both short-term and long-term).” Saving a fifth of your income might seem daunting at first, but should be a goal that we should all strive for. Especially when it comes to securing an EMERGENCY FUND (covering 3 months of living expenses). That is NON-NEGOTIABLE— “Living without an emergency fund is like driving without a seat belt!”

Fagan also provides other budget breakdowns from three money experts with their own specific tips and advice, and I urge you to read them if you get the chance, but we’re here for the basics.

Here are some more of Fagan’s tips to get your finances under control:

  1. DON’T exceed your ability to pay things off every month. Not only will this hurt your credit (HUGE when you want to buy a house or a car—we’ll discuss credit in a bit) but also put yourself in a black hole you don’t want to get in. Credit cards can be a HUGE asset to propel your financial growth. However, the day you bite off more than you can chew, is the day Future You starts hurting.
  2. DON’T fall into the “CEO Lifestyle”. Even when things are going great you don’t need to stop at Starbucks every morning for that Pumpkin Spice Latte. Don’t impulsively buy something you might want but don’t NEED, sleep on any big purchase and think through it… if the little voice in your head is holding you back from swiping your credit card, LISTEN to it!
  3. DO make sure to check your account balance at least TWICE a week. This will keep you aware of what you have and don’t have. Yes, sometimes it will hurt to face the music, but if it hurts then that’s when you know you need to budget better and if it doesn’t then KEEP IT UP!
  4. DO save actively. Your savings aren’t going to build themselves. No matter what you can afford, whether it’s $200 or $2,000 a month, EVERY LITTLE BIT COUNTS.

———————————————————————————————————————

Investing always seemed to be something that super rich business executives did with their suit and ties, while drinking their morning coffee looking out of their penthouse balcony. But I’m here to tell you that we are ALL the CEOs of our money, and we can all start taking steps to make our money WORK for us! Fagan boils down her whole chapter on investing in her “Total Idiot’s Guide to Investing”:

  1. Save an emergency fund of at least 3-months’ worth of living costs.
  2. Pay down your debt by creating a debt repayment schedule that minimizes interest and maximizes benefit.
  3. Open a retirement account (She dives into the many different types, but ROTH IRA is the most recommended), ideally with an employer match— like a 401(k). Make sure to maximize your annual contributions per year, or the max your employer will match.
  4. Explore other low-risk investment options like mutual funds and index funds.
  5. NOW you can invest in individual stocks if you feel confident in your investing abilities and are confident in the companies your are investing in (this is what people normally think of when hearing “investing” and is NOT absolutely necessary if you do not feel comfortable, like me)

I would also like to recommend to speak to a financial advisor to help you manage your investments! They have your best interest in mind since they win when you win, and it takes off the stress of investing from your shoulders and hands it to a trained professional!

———————————————————————————————————————

Career. Having a healthy and fruitful professional life in our careers is something we should all strive for. We will all have to work at a job we don’t necessarily LOVE, but that should only be temporary. Find a career that you LOVE. Yes, LOVE. Our careers will be a defining part of who we are, and if you are not happy with the current company or industry you are in, having a solid financial foundation to stand on will give you the freedom you DESERVE to spread your wings, while still being able to pay your rent for a few months. If you like your company and industry, but want MORE out of your job or reach a higher level, here are some of Joanne Cleaver’s (one of Fagan’s biggest mentors) tips to catapult you further in your career:

  1. Volunteer. That’s right, do more work. Take on extra tasks that no one wants to do. This does not only get noticed by your leadership, but will give you special experiences above that of your colleagues!
  2. Find ways to work alongside company and industry influencers. Volunteering at events which you feel passionate about in your industry will get you great experience, and also help connect you with other notable people also working in your industry—outside of your own company. You never know if one of these connections might be your way in to a new door for the future you’ve always wanted!
  3. Bring in customers and clients, no matter what your official job is. Every staffer is in a position to refer potential clients to those officially tasked to translate contacts into customers.
  4. Professional Empathy. Possess the ability to LISTEN and truly understand what the other person thinks they need and what they actually need. This can be a POWERFUL networking tool to use!
  5. A mastery of (good) networking. People like to work with people they know, trust, and like. Finding a new career opportunity is about you. And it’s about others. Networking is helping others help you!
  6. Think outside your role. Don’t be afraid to reach out beyond you official roles and responsibilities. Climbing the career [framework] is all about laying the groundwork now for something much better down the road. ———————————————————————————————————————

Food. Growing up in a Colombian household, there have been countless times where I was responsible for cooking for the whole family since I would usually be the first one home from school or work. Though it seemed like a chore then, I’m sooo grateful to have comfort in cooking for myself and others, something Fagan harps on BIG in her book. But, I’m not a Gordon Ramsay in any way, shape, or form. And I am still worried about having to start my own kitchen from scratch since that just means money out of my pocket. But Fagan shares some insight for cooking at home (MUCH cheaper and healthier than eating out) like advice from her Italian grandmother, tips for basic kitchen essentials, and simple recipes to follow!

How to be your own Italian Grandmother:

  1. NEVER waste your groceries. You buy it, you find a way to eat it.
  2. Think in ingredients, not in individual meals (or meals you find on Pinterest or Instagram)—What can you get the most out of?
  3. Always big batch and freeze your S-foods: sauces, soups, stews.
  4. Think in two portions: One for tonight, one for lunch tomorrow.
  5. Keep your spice rack full and garlic basket fuller.
  6. Have at least 10 recipes in your back pocket that you can make by heart in under 30 minutes.
  7. Make the meat the guest star of your plate, not the main character.
  8. When you buy or make good bread, get extra and freeze the rest.
  9. Know what to make from scratch and when to save yourself the trouble.
  10. For big cooking days, ALWAYS have a good glass of wine to sip.

Fuller Hunt’s (Fagan’s mom) Essential Kitchen Tools:

  • Butcher Knife
  • Bread Knife
  • Wood cutting board. One side for meats, one side for vegetables
  • Large mixing bowl
  • One each of high quality pot and pan.
  • Whisk
  • Rolling pan
  • Grater
  • Wooden/rubber/metal spatula
  • Tongs
  • Peeler
  • Small food processor
  • Measuring cups and spoons. One for dry ingredients and one for liquids.
  • Baking sheet and loaf
  • Quality kitchen towels
  • Thermometer

Fuller’s Rules for Buying Kitchen Supplies

  1. Get some basics that you KNOW you’ll need, and wait to see your cooking habit before buying more elaborate stuff
  2. It’s better to start with only a few high-quality items (skillets, pots, trays etc.) than a big set of something of crappy materials
  3. Thrift stores and garage/moving sales can be your best friend when it comes to high-high-quality kitchen tools and tableware—not everything needs to be new!

Fagan also dives into specifics on the essentials to stock your kitchen with like herbs, seasonings, and pastes; oil and sauces; and basics for baking. She also shares simple, step-by-step recipes for: a cocktail, recipe that uses whatever you have in your fridge, the meal you can make big and freeze later, the Sunday dinner that doesn’t take all day, the impressive-but-easy dessert, and the take-out alternative. I would share all these with you, but this post is already getting long… Phew!

———————————————————————————————————————

Home owning, or renting, is still a mysterious world that I’ll soon have to learn how to navigate in a few years time. Overall, the space that we own, or even rent, is OUR OWN. It is an extension of who we are, so we should all be PROUD of our space… even if it’s a one bedroom apartment! Our homes should be our sanctuary after a long, stressful day at work. It shouldn’t give us more stress than what we already have to deal with in life. 

Fagan shares how the art of being a homeowner has been lost in the younger generations. Yes, not everyone might be ready to take the leap or have the financial backing to drop the down payment on a house, but home-owning is an INVESTMENT for your future! Though you might not be looking to buy right away, like I am, Fagan stresses how we can rent smartly and take steps to getting YOUR OWN place in the future. 

First, it comes to credit. Having a credit score over 740 will give you the best opportunity for the BEST mortgage rates from most lenders and make your life a lot easier when looking for a loan for your first house. 740 is not impossible to reach, if you’re below this DON’T FREAK OUT! Here are some of Fagan’s tips on building your credit:

  • Automate your bill payments to go through a credit card, and them your credit card to be paid in full at the end of each month. You will automatically get good credit usage and rack up free points on the bills you were paying anyway!
  • Go through your credit report with a fine-tooth comb and pay any outstanding debts or collections— even $20 owed on an old card store counts!
  • Make the difference between the credit you can use and the credit you do use even wider: this might mean opening a new card or raising your limits on your current one while keeping spending down.

Overall, when it comes to saving up for your first house, it is an ACTIVE goal you have to strive for. This means living below your means, and sometimes sacrificing some things you would like on the place you rent while you save.

Erica Sinchak, VP of the Federal Savings Bank, shares some general financial principles that all home buyers should consider:

  • Income stability. It’s generally advisable to have been in the same job, or industry, for at least 2 years. Would it hypothetically by easy for you to find another job?
  • Savings. The minimum required on a down payment is 3.5%, but the more you can give up front, the more favorable your mortgage terms.You should also have savings that will cover unforeseeable expenses (i.e. home maintenance). Prove your ability and discipline to save money.
  • Credit. Strive for a credit score in the “good” range (700+) and you will gain access to the best mortgage rates. If you’re stretched so thin that you are forced to make purchases on your credit card (and can’t pay it off at the end of the month), you might reconsider buying a home until expenses are controlled.

BONUS: in many areas across the country, your mortgage will cost less than rent!

Now that you have your own place, it’s time to build and maintain it and doing decor work! Becoming your own handyman— or woman— can be one of the best tools to cut costs while also giving you the confidence you need to be independent in taking care of your home. Fagan discusses basic projects that you should be able to do one your own, and Fuller also shares the basic tools to have in your tool kit.

Fagan reached out to Carrie Waller (creator of Dream Green DIY, designer, and blogger) on tips for being a budget decor master:

  • Take your time. Don’t make an impulsive decision now you’ll regret in a year or two.
  • Shop secondhand. Finding a piece that works at a thrift store, and being willing to buff it up can be a HUGE money saver!
  • Stick to a strict color palette. Choosing a scheme of two or three colors will help streamline your home decor so that your whole place can come together, the first time.
  • Become a coupon pro.
  • Enlist the help of a friend. 
  • Search for budget versions of designer inspiration. 
  • Trade within your circle. Host a trade party with your friends with some of the stuff they no longer need, and you can easily trade or call dibs on items that catch your eye while spending quality time together.
  • Shop within your own house. 
  • Make your own wall art. 
  • Buy only what you love. 

———————————————————————————————————————

Money and Relationships. What I love most about this chapter is that money can not only affect your romantic relationships, but also your friendships. Fagan explains how there exists a social barrier today where “people are more comfortable talking about sex than money!”. Obviously having talks about money can be uncomfortable… but why should they be? She explains how friendships can be affected by discrepancies in income. Even if you have had a friend for years, at some point one of you might start making a notable amount more than the other. Having the money talk can clear the air in understanding each other’s financial ability to pay for ‘fun’ or wanting to do something more cost-effective. When it comes to your professional relationships, we must always take this into consideration if we are thinking about going out with everyone in the office, some people simply might not be able to afford it. Having the money talk can alleviate, or maybe eliminate, many inevitable situations where those with less disposable income might feel isolated because of their individual financial situation. 

Founder of Money Harmony, a therapist and writer, Olivia Mellan discusses many questions when it comes to money and relationships: What are the biggest problems in relationships when it comes to money? Why do so many couples break up or divorce over money? Aside from constant and empathetic communication, what would you say is the most important strategy for navigating money in relationships? And for friendships, what are the biggest money conflicts? Is lending money between friends always a bad idea? 

She dives into all of these topics but the biggest thing that I took from Mellan’s insight was that in any serious relationship, we must be able to take care of ourselves and secure our own financial well-being. That means to not solely rely on your significant other to give you financial stability. She also explains how—generally— it is easy for women to get lost in their relationships and giving in to their identity as a couple. This is not a bad thing, but everyone should have their own separate funds. It is an important, tangible sense of ‘self’ that does not disappear in the relationship.

Mellan also gives tips on working out a money issue in any relationship, romantic or otherwise:

  • Find a non-non-stressful time to  have the money talk
  • Start with sharing an appreciation or two about the other—not necessarily about money 
  • Each one should share something about how money was handled in their family of origin. The other should listen empathetically without interruption.
  • Share hopes and dreams—and fears and concerns. Play back what the other said, what makes sense about it from their perspective, what else they might be feeling.
  • Only after feelings are shared, go to the “facts and figures.”
  • Agree not to attack each other or blame each other for problems related to money.
  • End with an appreciation.

———————————————————————————————————————

Happiness. At the end of the day, we are the sole proprietors of our HAPPINESS. Yes, everyone is at different stages of this within their own lives—some still grinding away to make the life that they want. But, even through the difficult grind we must be able to stop and appreciate what we DO have. Fagan hits hard on living “medium” is the key to this. “We have to set our goals in little, manageable steps and embrace the idea that not all of our emotional eggs can be put in one basket. If we can love our jobs, relatively speaking, that’s awesome. But we also need to love our friends and families and significant others and hobbies and time alone just reading or watching TV. We should diversify our fulfillment as much as possible, and not expect any one thing—even our BIG Dreams—to make us suddenly feel whole.”

Here’s Fagan’s Starter Kit for Happiness I hope helps everyone reach a little more happiness in their lives:

  1. Decide what you want your life to look like on a day-to-day basis: What hours do you want to work? What hobbies do you want to have? What career path interests you? What are your financial goals? Relationship goals?
  2. Whatever your loftiest goals and dreams are, break them into several mini-dreams and tackle them one by one (celebrating each victory as it comes).
  3. Identify the places where you want to take risks or make changes, and will need a safety net.
  4. Create a detailed, thoughtful budget and yearly financial plan that takes into account both day-to-day costs and your longer-term financial goals.
  5. When it comes to risks and changes, start planning specifically for them at least a year in advance: anything from a move to a new city to a completely different career path needs to be thought through and well planned, financially and logistically.
  6. Once you have your year long plan, break it down into month-to-month steps full of actionable items and goals.
  7. Give yourself freedom to change your mind—if you decide that world travel or oil painting isn’t all you thought it would be, accept that it doesn’t define who you are. If a great unexpected opportunity comes along, you are allowed to take it. Adjust your plans as life dictates.
  8. Stick to your budget through as much volatility as you can—if your lifestyle is preventing you from saving money, it had better be very temporary.
  9. Remember you are good enough for the things you want, and do not let a less-advantaged background or inexperience dissuade you from at least attempting something
  10. A casual hobby could become an awesome career.
  11. Accept your class privileges or obstacles where you have them.
  12. Diversify your income and skill set by always maintaining at least one side gig—look at your path through the professional world as a lattice, and not a ladder.
  13. Learn to do things for yourself, and let your home become both a key part of your fulfillment and a key part of saving some serious money: everything from making your own food to building your own furniture can and should be on your list of “cool, affordable shit I enjoy doing.”
  14. Be honest and thoughtful about money in all your relationships—share your dreams and help each other figure out how to get there, in practical ways.
  15. Accept that you may not what want every time and that the thing you thought would make you happy might leave you feeling completely “meh.” Learn to have a diverse-enough portfolio of fulfillment and joy that no one disappointment, professional or otherwise, is enough to make you seriously thrown off your path.
  16. Live below your means, and remember to be impressed by your shit. Your life is probably pretty fucking awesome, but even the coolest life would seem dull if your expectations and seeding habits way exceed it.
  17. Be kind, most of all, to yourself.

I hope this post meets you well, and you were able to take something from it. We are all working towards the life we dream of and I hope reading this helped—even in the smallest of ways. I look forward to sharing more with you all! More KNOWLEDGE to come! Happy Holidays 🙂

Much Love,

KevDog 

If you would like to DIVE IN, here’s the link to grab a copy of The Financial Diet for yourself: https://amzn.to/2VKTWh7

Note: None of these posts are endorsed, or sponsored, by the teams who write these amazing books. All credit is given to the original authors and not intended on being my own original work.