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#BrokeMillennial has officially moved to www.brokemillennial.com. Please check out the newest post and subscribe on the new website!
Thanks for reading!
Tax day has come and gone. Congrats to those of you with hefty returns you’re already excited to spend, or better yet, save. My shove into the world of taxation didn’t come during my sophomore year of college when I worked my first legit job. The first memory I have of taxation (pretty sure it was without representation) occurred Halloween night 1993.
Dressed in my finest green felt with an orange feather stuck in my cap, I made the rounds of Heritage Woods as the cutest Peter Pan you ever did see. My one year old sister held court in her stroller dressed as Tinker Bell. Between her huge blue eyes and my endearing wit, we were really bringing home a substantial candy haul.
When we got home I ran to the living room and dumped the contents of my cloth pumpkin bag onto the floor. Oh the candy. So much yummy candy. Unfortunately, our two big dogs came running and I had to defend my stash. My Dad called off the hounds and I eased up my defensive stance realizing, a moment too late, a bigger threat had entered my candy territory.
Leaning down to pluck a fun size bag of Skittles from my pile, my Dad said the two worst words I had ever heard, “candy tax.” My mouth dropped open and I yelled, “put it back!” Those Skittles were my hard earned income. I shoved my body into a green-felt Peter Pan costume for those Skittles. I told jokes to the cranky lady down the street for those Skittles. THOSE WERE MY SKITTLES! My Dad looked at me and said, “We took you trick-or-treating, so we get some of your candy.”
Granted, I was four and much too young to truly understand taxation, but in my mind it stood for someone coming in and unjustly taking something I had worked hard to earn. Almost 20 years later when I received my first “real job” pay check and saw Federal, State and New York City taxes taken out I’m pretty sure I opened up to my mouth to yell, “put it back!”
Apart from my financial origin story, I learned about net profit by selling Krispy Kreme donuts at a yard sale*, candy tax is my earliest memory about finance and perhaps my biggest childhood grudge. My other grudges include the dogs getting to eat a whole cake on their birthday when I couldn’t. My sister finding the golden egg at Easter five years running. My eyebrows inexplicably turning from blond to black. And ruining my awesome Pocahontas sneakers because I dragged my feet trying to slow my bike down during a family outing.
Childhood grudges aside, I’m blessed to have two parents who were committed to making sure I had an understanding of finances early on in life. An understanding and respect of money is empowering and, in my opinion, one of the greatest gifts parents can give their child.
Even when we were little, my sister and I weren’t handed much. Sure, birthdays and Christmas were elaborate affairs filled with glorious toys, but in between we learned how to earn what we wanted or helped pay for it ourselves.
If I pointed out a toy at the store and asked for it, my Mom or Dad would ask if I was willing to pay for half. If I met them at 50 percent, then I could have the stuffed animal (it was always a stuffed animal). Nine times out of ten I wasn’t interested in paying the $4.50 it usually cost for a cuddly creature. However, this tactic taught me to evaluate purchases and prevent impulse buys at an incredibly early age. It’s a tough skill to learn later in life, especially when you have bills to pay.
Now, that I have reached “later in life” I’m pleased to be a millennial with a basic grasp on finances. According to mainstream media, the millennial generation is in big financial trouble. We can’t land jobs, with or without college degrees. We’re collectively drowning in student loans. As of October 2012, the average student is graduating with $26,600 of debt. And to top it all off we’re apparently all self-indulgent whiners who want to rely on parental welfare, well, forever.
Stereotypes aside, I have come across a fair amount of my fellow millennials who have a crippling fear of money, largely because they don’t understand how finance works. Those friends of mine were my motivation for creating #BrokeMillennial. Hopefully, this blog not only continues to develop my own financial literacy, but helps other fledgling adults learn some basics about budgets, saving and investing. Plus, I think some real-life grownups find my stories pretty entertaining too.
P.S. If you ever think you see me out shopping, yes, I am the woman wandering aimlessly around the store clutching a
stuffed animal cute blazer, trying to decided whether or not it’s worth my money. Unless it’s 50 percent off, then it seems like an obvious yes.
P.P.S. Don’t let the tough love with finances or candy stealing fool you. My Dad is an amazing father.
*For my financial origin story please read Donuts and Dollars.
Please join me and my fellow personal finance bloggers as we celebrate Financial Literacy Awareness Month. Hosted by Shannon Ryan from The Heavy Purse, you can read why financial literacy matters to all of us. Just visit The Heavy Purse and click on the participating bloggers’ links.
Follow the journey on Twitter @BrokeMillennial or subscribe for emails about new posts. Email feedback or topic requests to email@example.com.
Per special request a series of posts will deal with practical budgeting. I’m not claiming my way is the right way, or the best way, for you to deal with your money. I’m simply offering the #BrokeMillennial budgeting system.
Other children of the 90s might remember the glorious time when clogs were fashionable for everyone, not just Dutch milkmaids, and before crocs existed. In 1996 clogs were quite the trend at St. Michael’s Catholic school in Gastonia, North Carolina. Every time I would see all the trendy 8th graders (aka the oldest girls in school) wearing those comfortable clogs my saddle shoes would feel so restrictive. My second grade self became determined to own a pair of clogs.
My mother, an always practical woman, knew that I would outgrow those clogs or the fashion would end within minutes of buying them for me. Instead of giving into my incessant pleading she made a one-sided deal with me. I could have the clogs, if I bought them with my own money. Luckily, I was still sitting pretty on some money from my Krispy Kreme donut sales and had recently started to branch out into the cat-sitting business.
Armed with $15, I headed to the local Payless and made the first big purchase of my life. I loved my $13.85 navy clogs with cork bottoms and I wore them proudly, every day for two weeks. Then St. Michaels banned clogs because they somehow clashed with our school uniform. Regardless, it remains a pivotal financial and budgeting milestone for me.
Few things seem to bother people more than dealing with a budget. Who enjoys them you ask? Let’s call them accountants, accountants and me.
If it weren’t for my intense aversion to non-financial math and the horror stories about tax season, accounting probably would have been my calling. More than once my first roommate would walk into the apartment and find me gleeful pounding away on a TI-83 calculator and furiously writing numbers in my money notebook. The number crunching always proved, yes, I was still quite poor. Even so, I enjoyed knowing just how much money I did, or more realistically didn’t, have to spend.
A plethora of systems exist to help people deal with their money. Previously, I’ve discussed the envelope system of budgeting and explained where I made budget cuts when I first moved to New York (spoiler alert: it was food). Today, I don’t particularly endorse either but they fit at the time.
My goal of budgeting is simple: spend less than I make. For the sake of this post, I claim to earn $2,300 a month after taxes (this is a fictional number).
For those readers who remember my financial origin story it should come as no surprise that my budget focuses on saving. Future posts will discuss the importance of saving at least a little bit every paycheck, putting money aside for retirement and dealing with student loans and other forms of debt.
Before you can start saving, or paying off debt, you have to be able to survive your day-to-day expenses. As a 23-year-old living in New York City with no dependents, my expenses will vary drastically from people with children, joint-incomes, still living at home and various other factors. Please keep that in mind when reading my outline.
There are two types of budgets I focus on, weekly and monthly. I’m not neurotic enough to crunch numbers daily, but I have an idea each week how much I’ll need. If I’m traveling, going out for a friend’s birthday, entertaining visitors or a myriad of other situations, I mentally prepare to scale back expenses the week prior or after.
My weekly budget mostly deals with how much I can afford to spend on food and entertainment. Each month I budget $300 for food, because it only costs about $50 each week for my groceries and I add extra for dinners or drinks with friends.
My set monthly expenses are:
- Transportation (NYCpublic transit) – $112 monthly pass
- Laundry – $21
- Toiletries (shampoo, conditioner, soap, toilet paper, etc) – around $10
- Utilities (heat and electricity) – ranges from $30-$55 because my roommate and I don’t use AC in the summer and we only have lights on in rooms we’re using.
- Hulu Plus – $7.99 (We cut cable and went with a Roku box instead.)
- Phone bill – $70
- Food – $300
- Rent – $950
For a grand total of $1455.99, more than 50% of my monthly earnings.
Working under the assumption that I earn $2,300 a month I then have $844.01 each month to allocate towards other expenses and savings. Realistically, each month brings a new hidden expense that aren’t factored into the monthly budget. For example, needing items dry cleaned, buying birthday or holiday presents, taking trips to visit friends or entertaining guests.
For those of you interested in starting to budget your money I encourage you to take the first step by writing down all your monthly expenses and subtracting it from your monthly earned income (after taxes). Once you have an understanding just how much money you actually have after expenses it becomes easier to know where to allocate your funds be it savings, paying off debt or a shopping spree.
Stayed tuned for future posts about how this millennial deals with budgets. During the interim, follow the journey on Twitter @BrokeMillennial or subscribe for emails about new posts. Feel free to email feedback or topic requests to firstname.lastname@example.org.
In the summer of 1996 a glazed Krispy Kreme donut changed my life. My sister and I had two boxes of donuts set up on our Fisher Price yellow-and-blue picnic table right at the edge of our driveway. Our mother’s garage sale lured folks in while my sister’s big blue eyes and my charming sales pitch secured the purchase of our Krispy Kreme donuts. We charged a horrifically marked-up price of fifty-cents apiece.
In reality it probably only took an hour for us to sell all our donuts, but at the time it felt like eons. Handing over those donuts to die-hard garage sale enthusiasts was grueling work in the heat of a North Carolina summer morning. Looking in my teal fanny pack I counted out $12 and proudly told my father I’d made a lot of money that day.
He asked to see the earnings. After being subjected to seven years of “candy tax” at Halloween I clutched the pouch to my chest, refusing to show him. Feeling the weight of all those quarters I imagined what this money could buy at Toys-R-Us.
My dad scooped up the fanny pack and carefully counted out the money on our picnic table and proceeded to give me my first lesson in economics.
“You have twelve dollars here,” he said.
“Yes,” I said. “I am going to Toys-R-Us.” “Well, it cost me three dollars to buy the donuts you sold,” he said while he picked up three dollars worth of quarters.
“Then, you had your sister help you sell them so you need to pay her.” he rationalized while handing my four-year-old sister $2.00. “So, after expenses, your total profit was seven dollars.”
He smiled while pushing the remaining piles of quarters towards me.
At that moment I had never felt so cheated in my life.
Now, looking back, I see the beautiful gift my father bestowed upon me. I understand and respect money.
The parable from my childhood always elicits interesting responses. Many of my peers seem to view my father as a heartless Scrooge snatching away petty cash, while others nod their heads in approval.
If you fall into the first category, don’t fear. My sister and I received plenty of Christmas presents and never had to chip-in on the cost of my birthday parties. My father simply chose to teach me lessons about money from an early age, lessons that have greatly benefited me as a millennial.
The millennial generation is portrayed in popular media as whiny, over-indulgent brats who feel entitled to live off their parents well into adulthood. Hence the moniker “Generation Me.” I’d like to give my fellow “Generation Me” members a break.
Sure, some of my fellow millennials still live off of parental welfare. But often times I find that it’s because they simply have not been given the tools, or the shove out of the nest, to survive without it. How are we supposed to know how to survive, and thrive, financially if we were never taught the skills to do so?
I’m embarking on a quest to continue my education about finances. Shortly after graduating college I moved to New York City. It has proven a great struggle to financially survive living in the Big Apple on funds that, initially, placed me barely above the poverty line. My main goal at the time: keep my balance sheet out of the red.
The basics of finances I understand, the importance of savings, developing good credit and how to balance a checkbook. Other things like IRAs, stock market investments and consolidating debt are outside of my scope of knowledge. Hopefully, sharing my own stories and what I learn along the way will help some other broke millennials who aren’t enjoying the stark reality of living without the Bank of Mom and Dad.
You can also follow the journey on Twitter: @BrokeMillennial