My Why

I wanted to take this week’s post to really go deep into my purpose and explain my “why” behind starting On Top of Your Money. I just became passionate about personal finances in the last 3 years for a couple of reasons – first, I had just graduated college in May of 2017 and was managing my finances entirely on my own for the first time and was beyond afraid of how to do so and that I might fuck up, eager to learn as much as I could and was overly cautious in preparation for the worst. Second, I purchased my first car that August and suddenly had just under $15,000 in debt (not including my federal student loans because at the time I wasn’t concerned about them and took full advantage of my grace period *facepalm*). 

The additional $15K scared the shit out of me and all I could think about was what I would do with an extra $265/month when I was done making payments. It was a 5-year loan but I was determined to pay it off before then and with no plan as to how to do this I began aggressively saving and working side jobs to put every additional penny I earned toward the balance. It ended up taking me 26 months but I paid off the loan and was extremely proud of myself.

Unfortunately, it wasn’t until around that time that I discovered the debt-free and personal finance communities on Instagram and learned that I would never be *chill* about my money again. It was addicting to watch my VW Credit account balance drop with each passing week. I was so excited to take on extra babysitting jobs while my friends went out (or more realistically, going straight from babysitting gigs to the bar) knowing I would be putting an additional $85 to my loan in the morning. As a result of paying off my car, I am now the extremely proud OWNER of a 2014 Volkswagen Jetta complete with plastic hubcaps, a missing side-view mirror cover and slight damage from a minor accident last May but SHE’S ALL MINE. 

The drive I discovered while paying off my auto loan got me excited about all the possibilities when I one day paid off all my loans (I had in the meantime discovered I had another private student loan in my name, another story for another time) and would be able to save, invest and in theory live the life of my dreams although I really didn’t have any grasp of what that would look like at the time or just how possible my dream life was. 

In diving deeper into the debt-free movement and personal finance community I learned in hindsight what I would have done differently, how to set proper goals for my money and continued to soak up any and all resources I could find on the subject – Instagram accounts, blogs, books, YouTube videos etc. But in my search for knowledge I came across some statistics that really stopped me in my tracks. We’ve been taught about the wage gap between men, women and minority groups our whole lifetime but that really is just the tip of the iceberg. I’ve been a ~feminist~ arguably my whole life yet I had never thought about how this wage gap combined with the limitations and hidden scripts instilled by society about women and our roles from the day we are born sets us on a path for failure. 

I’m still searching for the exact article I first read on the subject that had my eyes bulging and stomach dropped (I believe it was a research piece put out by my firm and thus not google-able) but I will sum it up for you with a few of the stats I found while writing this post: 

• Women keep 71% of their assets in hard cash (Blackrock) – with inflation overtime your cash savings are literally losing money. Hence why I will never get off my soap box telling you to get yo’ damn high-yield savings accounts. Moreover this is just not necessary. You need your 3-12 months cash (this amount depends on your personal situation and stability in career) in a high-yield savings account and that’s it. Above that invest, save for specific short/medium term goals, upscale your lifestyle, be generous etc. 
• Millennial women have 34% less saved for retirement than our male counterparts (PNC Investments 2018 Millennials & Investing survey) – hopefully as I continue to post you all will understand the severity of this but the earlier you start saving/investing in your 401K or IRA the better. There are a million reasons to do this but to name a few – we live longer than men, you may not want to get married and thus can’t rely on a husband’s retirement savings, you fall madly in love one day with a man who was not one of the named male counterparts in this survey, your future self lives a boujee lifestyle which will require funds to upkeep and lastly, compound investing. 
• Less than half were socking away 6% or more in their 401Ks meaning over 50% of millennial females weren’t taking advantage of their employer matches whereas 6 out of 10 millennial men put 6% or more into tax-sheltered retirement accounts – a more frightening stat from the same survey. Again, hopefully this isn’t news to some and this blog will help literally just one woman start saving for retirement and/or investing but if your employer offers a match to your 401K that is FREE MONEY and you absolutely should be contributing that minimum 6% (or whatever your employer matches) at the very least. 

Sallie Krawcheck, CEO and founder of Ellevest, sees the gender investment gap as a catalyst for change and hope. While the gender pay gap absolutely needs to be addressed, making progress on that front will be a long fight for systemic changes that is out of hands for the average millennial woman. The way Krawcheck sees it, investing is an actionable step any individual woman can take into her own hands to fight the good fight towards equality. On top of that, the gender investing gap will cost women hundreds of thousands if not millions over the course of our lifetimes in missed earnings. Moreover, a lack of performance is not the reason many young women don’t invest. In reality, a Fidelity analysis of 8 million clients found in 2016 that their female clients outperformed men due to the fact that they don’t overtrade, pay less in fees and don’t panic in a down market. Similarly, Ellevest found that women aren’t risk-adverse but risk-aware.  We are rational investors who want the full picture before proceeding unlike our overconfident male counterparts and this will pay off in the long run so long as we just get started. 

Feminist undertones aside, our society IS changing and that’s great news. But the way young women plan for their financial futures has to change in correlation. More of us than ever are working successful careers, will be breadwinners for our future families, will be business owners/CEOs or learn that we just want to be the cool aunt who goes on lavish vacations and brings the best gifts home every Christmas. Whatever your reasoning is, I personally believe it is so important that we as millennial women step up the game and pave the path for the generations to follow us by planning for our financial futures now so that we can live our absolute best lives.