When I graduated college and started my first job, I was both comically broke and financially illiterate.
In the spirit of transparency, here are a few of the more embarrassing things I did in my early 20s because I was terrible with my money:
- One time I stole a toilet plunger from a Taco Bell because I didn’t have enough cash to buy one.
- The McDonald’s down the street had to put up a sign on its door expressly forbidding people from bringing in old cups to fill up at the soda fountain. I am positive this was a direct response to my daily habit of doing this. The sign might as well have said “Cups are for single-use only, ma’am.”
- For lack of a plate, I regularly ate food off a frisbee. Sometimes that food was beans, which are cheap and filling, and this lead to my invention of a meal staple, Frisbeans (patent pending).
- My problem was that I had never learned the basic tenets of personal finance, and was rather adrift without them.
My job paid $1,200 a month, $875 of which went to rent and another $100 or so went to clearing out my checking account’s overdrafts. Because I had no credit card (not for lack of trying), I treated my bank’s highly punitive overdraft system like a line of credit. (One with a 17,000% APR.) I had no emergency savings, no retirement accounts — no budget, even. The idea of building credit seemed very far off in the future.
I’m not alone in my ineptitude; if you want exposure to personal finance from an early age, growing up in the U.S. is not your best chance at success. Only 17 states require students to take at least one personal finance course in high school, according to a 2016 survey by the Council for Economic Education. The effects are long-reaching: A 2013 study found that only a third of adults over 50 could get a passing grade in basic financial literacy.
10 Personal Finance Tips For Broke Millennials
The good news is you can actually learn the staples of personal finance fairly easily. I picked up on them by reporting about and editing articles on finance for several years, but there are more painless routes.
I asked a number of experts on graduate and post-grad money management the same question: What are some easy ways to stay on top of your money as a broke 20-something, especially if personal finance has never been your strong suit? Read on for their suggestions.
1. Check In On Your Finances Regularly, Even If It Makes You Queasy
This above all else: Don’t treat your bank account like a spider you trap under a jar and leave marooned in the middle of the kitchen floor for three days until your roommate disposes of it. Ignoring your finances will only compound any money problems you have (and it won’t do your anxiety any favors either).
“The first step in getting things back on track is actually looking at your income and expenses, even if you might not like what you see,” said Casey Bond, managing editor of Student Loan Hero. “With so many budgeting apps out there today, it’s incredibly easy to get a snapshot of where your money is going. Once you’ve tracked your spending for a few weeks, you can begin identifying patterns and finding ways to make improvements.That could be cutting expenses, earning more income, or a combination of the two. How to fix the problem is up to you — the hardest part is admitting there is one.”
2. Get a Fee-Free Checking Account
Here’s something I wish I could tell my younger self: You don’t have to spend hundreds of dollars a year on bank fees.
The average checking account comes with 22 of them, according to WalletHub. There are your standards: overdraft charges (the U.S. median is $34 a pop), monthly service charges and ATM fees. And then there are the more devious expenses that tend to hit account holders with less money, like minimum balance fees, where the bank assesses a charge if your account drops below a certain threshold (say $1,000).
It doesn’t have to be like this. Bankrate estimates that nearly four in 10 banks offer free checking accounts (meaning no service charge and no balance requirements). Even better, more and more online-only banks offer checking accounts with no overdraft charges or ATM fees. If you overdraw your account frequently, as I used to, this adds up to hundreds a year — $260, on average, according to the Consumer Financial Protection Bureau.
You don’t owe your checking account any sentimentality, especially if you keep getting dinged for not keeping much money in it. Find a bank that won’t penalize you constantly, switch now and don’t look back.