When I graduated law school in 2009, I never thought about money.
Within a year, I had racked up $20,000 in credit card debt ($30,000 in today’s dollars).
And, that was on top of my student loan debt.
My salary at the time was $62,000. This was a problem.
After all these years, I still ask myself, “How did I let that happen?”
The answer, I now realize, is actually pretty simple.
I never learned about personal finance.
I wasn’t thinking about money. And, I certainly wasn’t talking about money.
It wasn’t until later that I learned that I had made every common money mistake in the book.
- Rented a fancy apartment with a garage parking spot that I didn’t need?
- Paid for Cubs season tickets I couldn’t afford?
- Traveled coast-to-coast? Traveled overseas? Put it all on credit cards?
Check… check.. and check.
It’s not that I intentionally decided to get into debt. Frankly, there was nothing unusual about me at all.
I generally wanted to make good choices. I am a relatively smart human. You are, too. You’re reading a personal finance blog with the entire internet at your fingertips.
Maybe you’re like me, and it hadn’t occurred to you that money was a thing you needed to learn about.
I didn’t know the first thing about money when I began my career.
When I graduate law school, I blindly assumed that I would earn a high enough income that I didn’t have to worry about money.
As I fell deeper and deeper into debt, I realized what a huge mistake that was.
Maybe that’s why I still remember the day so clearly when I realized I was financially heading in the wrong direction.
It was an ordinary Monday. I had grabbed my mail on the way out the door as I headed to my job at the courthouse. When I got to my desk, I opened my credit card statement and was stunned by what I saw.
$20,000 owed ($30,000 in today’s dollars) one year into my career.
I was ashamed. I was supposed to be smart. Responsible. Trustworthy.
Looking back, I shouldn’t have been so hard on myself. I had never learned about personal finances.
It would be like getting upset today that I’m bad at playing the piano when I never learned how to play in the first place.
I’m certain that if I taken a personal finance course, or read a personal finance blog, I wouldn’t have made the same mistakes.
I would have saved myself a lot of worry, frustration, and time if I had a basic personal finance education.
I also would have learned that so many others were struggling with consumer debt like I was. There was no reason to make it harder on myself by keeping my debt a secret and struggling alone.
I unnecessarily did it the hard way, but I figured out personal finance.
At that moment when the full weight of my debt hit me, I made it a priority to turn things around.
At the time, I didn’t know the solution.
But, I had been trained to do research in law school so I could find answers to hard questions. So, that’s what I did.
Along the way, I realized that the fundamental and basic personal finance principles are, well, basic.
George S. Clason wrote “The Richest Man in Babylon” nearly a century ago. His collection of parables set in ancient Babylon is legendary.
Everyone should read it. His advice is simple and excellent: spend less than you earn. Save. Invest.
The same fundamentals are as true today as they were then.
Easy, right?
Not exactly.
Personal finance education should be a constant in your life.
Money is about continuous mindset and choices.
The basic concepts are easy enough to understand. Consistently making good choices is hard.
Even as I was racking up credit card debt, I could have aced a quiz that asked, “Is it a good idea to spend more money than you earn every month and plummet deeper and deeper into debt?”
I knew that I was supposed to spend less than I earned. That didn’t stop me from overspending.
Knowing the right answer is not the same as actually doing the right thing.
The law students and lawyers I teach are smart people. Like me back in 2010, they generally know the right answers. They don’t need me to tell them to spend less than they earn.
I help them get to the next level by building a strong money mindset. Then, we work on the habits and skills that will allow them to consistently use money as a tool to control their circumstances.
It’s not enough to learn the basics of personal finance and then stop. As your life changes, you need to regularly evaluate your personal finances so your money stays in line with your values.
That’s why it’s important to make personal finance education a constant in your life, whether it’s through a blog, a course or coaching.
Too many of us choose to struggle with money alone.
For some reason, though, most of us choose to deal with money on our own. Alone, we struggle with anxiety about credit card debt and guilt about splurging on things we love.
This has never made sense to me.
Making good choices with our money is essential to a healthy and meaningful life.
Why don’t we talk more about these things with our friends and family?
That’s what I’m trying to change.
I’m done with this stigma that we shouldn’t talk about money.
I want us to get comfortable with the idea of going to our friends and loved ones to talk about money, just as we would talk about anything else.
There should be no embarrassment or shame in it. We’re all dealing with the same challenges.
By talking about money, we can help each other turn those challenges into opportunities.
If we can alleviate our money stress, perhaps we can reverse the trend of lower happiness levels among young people today.
Talking about money is not about numbers.
We’ll have plenty more to say about how to talk money. For now, let’s agree that talking about money is not about prying into how many dollars we each have in the bank.
We can benefit by talking about our money mindset, habits, and strategies, while still keeping certain information private.
Let’s also agree that talking money is a “no judgment” endeavor.
We have all had different experiences that have shaped our relationship with money.
It’s important not to pass judgment, especially when talking to our significant others. Your conversation won’t last very long if you ignore this advice.
Each session I’m with my students, I learn from their experiences and money mindset, same as they learn from mine. I encourage them to continue the conversation outside the classroom with their loves ones.
When my students report back, they tell me how empowered they felt after starting these conversations. The more we can talk money, the less we’ll feel alone. We’ll all make better choices because of it.
Talk about money mindset with your significant other, family, and friends.
If you want to know where to begin the conversation with your loved ones, start with money mindset.
Money mindset touches every aspect of personal finance, so it’s the natural place to start.
I didn’t realize the power of money mindset until I wrote down my Tiara Goals for financial independence on a beach in 2017.
People tend to skip this step. They want to jump straight to investing and real estate before learning about money mindset.
But, why focus on investing if you and your significant other are not aligned on what those investments are for?
The same logic applies to budgeting. While very few people enjoy the budgeting process, it’s a crucial step to generate fuel for our savings and investments, which ultimately fund our major life goals.
The progression matters. Only after we’ve learned about budgeting, saving, and how to responsibly use debt and credit cards should we focus on investing and real estate investing.
Talking about money is not taboo.
There’s no reason to embark on your journey to financial freedom alone.
Read a personal finance blog. Take a personal finance course.
Talk about money.
Share your accomplishments and struggles with your friends and loved ones. You’ll only be better off for it.
If I can be of any help on your journey, please don’t hesitate to reach out.
Don’t forget to subscribe to my email list for all the latest money topics I’m thinking about.
Leave a Reply