Just as the term “one size fits all” has no place on clothing labels, it also shouldn’t be apply to financial plans. From the things we learned about money as kids to the varying levels of income and job security we experience as adults, we all have different reasons for the choices we make with our money—even when those choices feel more blind than strategic. The “right” financial approach for you should depend on your lifestyle, your values, and your goals. However, that doesn’t mean you’re on your own to figure it all out.
The HelloGiggles team (who range from age 22 to 30) sought out judgement-free financial guidance to help cut through all the insiders-only language and unrealistic advice. We offered up the different ways we splurge and save and provided the financial goals we have in mind—then, we asked financial experts to analyze our individual approaches.
Joy Liu, a financial trainer from The Financial Gym, said our approaches reflect “standard millennial problems when it comes to our money.” Across the HG team and Liu’s clients, our big pictures vary, but our daily expenses have the most in common.
“The things we’re spending most of our money are, [especially] millennials who live in urban environments, are on things that help us survive our day-to-day grind. We all work very busy jobs…so [it looks like] a lot of [our] money is going to lunch, coffee, and takeout.”
While these expenses do add up, and none of us like to see all our money going toward food or material things, these daily purchases don’t have to take all the blame. Our team had another main commonality with our expenses: The cost of living. Paying rent is, of course, a big factor in this, but so is the cost of having a social life.
But creating a financial plan is about more than just cutting back or saying “no.” There’s a way to have our coffee and drink it, too. Both Liu and Palmer suggest a more holistic approach to finances, which includes considering where we are now, where we want to be in the future, and how to be more intentional with our money overall. These can be intimidating (read: terrifying) concepts to address, and financial anxiety is very real, but coming face-to-face with our finances can really pay off.
So as we head into the new year prioritizing intentional living, we’re applying this approach to our finances, too. Read what the experts had to say about our financial habits and see how their tips can potentially aid your financial goals, as well.
Hayley Mason, Editorial Director
- Eats out or orders in often. “I often justify this—let’s be honest, a total waste of money—by telling myself I am super-busy and this is a justified cost for the sake of my time. But I know that is not completely true.”
- A “pro-bargain hunter” when it comes to clothes.
- Lives in Jersey City instead of Manhattan. “My friends rib me endlessly for it. But, it has allowed me to save so much money over the last several years—money I make certain to stash away.”
- Good at saving for the things that matter, like vacations with her husband and trips to visit her family.
- Money goals: to buy a house, save for retirement, and help out her family as they age.
Palmer zeroed in on Hayley’s goal to buy a house. Even if it’s not a near-future goal, Palmer says it’s never too early to start some of the initial steps for planning. She emphasized the importance of checking your credit score before applying for a mortgage. “If you start working on that a few years ahead of time, you can make sure that your credit score is higher, and then you’ll pay less for a mortgage,” Palmer says. Once you have access to your credit reports, which are available through many free tools online, Palmer says there are three main things you can do to improve your credit score.
Making on-time payments (basically, paying all your bills on time) is the first and most important step toward improving your credit score, Palmer says. The next would be keeping your credit utilization score under 30 percent. “All that means is that whatever your available credit is…make sure you’re never spending above 30% of that because lenders want to see that you have some wiggle room there. They don’t want to see that you’re spending up to your credit limit every month,” Palmer says. And the third factor involves the length of history on your accounts.
Caitlin White, News Editor
- Works as a freelancer and puts away money for quarterly tax payments.
- “My student loans are on an income-based repayment plan, but I way overpay every month because, man, am I tired of having those as an anchor.”
- Other big expenses include traveling to see her family that lives far away, caring for a pet with pre-existing health issues, and paying for her own health services.
- “I consider therapy appointments non-negotiable, so those can add up.”
- Money goals: to replace the car she’s had since college with a safe, snow-friendly used car, buy a house at some point, save up for retirement, and ultimately, “have the resources to better set me up for the future.”
For freelancers, and anyone working with a variable income, Liu suggests that a percentage approach to savings can be especially helpful. Liu recommends automatically saving a percentage of your income each month that works for you and your family, rather than leaving savings for the end. “Far too often when we sit down to put together a budget, we budget out all of the expenses with the hope of being able to save whatever’s leftover and [often] there’s nothing left over,” Liu says. At The Financial Gym, they encourage having and naming separate savings accounts for each goal to help visualize those priorities more. In Caitlin’s case, she might have one savings account named “Car,” one named “House,” and one named “Retirement” that she could allocate money to each month.
Palmer especially approved of Caitlin’s plans to buy a used versus a new car. A survey conducted at NerdWallet found that used cars can pay off. “We calculated that buying a used car, because of the savings that you get from buying used versus new, can increase your retirement savings by over $79,000 if you invest those savings over 20 years,” Palmer says. With Caitlin also wanting to save for retirement, this is a big perk for her—and Palmer adds there are plenty of options for people who are self-employed.
For Caitlin, who hails from Canada, a tax-free savings account would be the most similar option to an individual retirement account.
Pia Velasco, Senior Fashion & Beauty Editor
- “I eat out all the time, whether it’s because I’m constantly on-the-go and don’t want to carry a lunchbox, I’m seeing friends, or simply because I don’t enjoy cooking.”
- Travels often—her whole family lives in Mexico, many of her close friends live across the Atlantic, and she loves to explore—but she tries to do so as affordably as possible.
- Set up a 10-year payment plan for student loans. “[Student loans are] a topic I had been too scared to look at for months, but now that I have a plan I feel more secure and empowered in my finances.”
- Uses Nuuly, the clothing rental service, to enjoy six new pieces a month without dropping a bunch of money on new clothing trends.
- Money goals: to start investing some of the money in her savings account, buy some real estate, save for children. “Yes, these are things that aren’t in my immediate future or even in the next five years, but I want to make sure I’m planning as smartly as I can for the future.”
For Pia, traveling, eating out, and having an allowance for clothing are all important to her—and that’s not something that’s likely to change anytime soon. So instead of simply cutting back on the things that bring Pia joy, Palmer suggests a more holistic approach to her budgeting, specifically the 50, 30, 20 approach.
The 50, 30, 20 approach is meant to help people rebalance, not simply restrict their budget. “We’re not trying to say you can’t enjoy yourself,” Palmer says.
Palmer also addressed Pia’s goal of investing her money and said that opening up an investment account is one of the smartest moves she could make for herself. For Pia and others looking to start investing, Palmer recommends starting small and looking for a company with a low or zero account minimum, like E-Trade or TD Ameritrade. NerdWallet also offers a “How to Start Investing” beginner’s guide.
Raven Ishak, Senior Lifestyle Editor
- Mostly spends her money on caffeine and lunch during the workweek, but she sticks to a monthly food budget for dinner and weekends. “This is something I strive to keep consistent in my life, so I don’t throw my whole paycheck away on going out, except for maybe special (and lazy) occasions.”
- If she could spend her whole paycheck on traveling, she would. “Yes, I find deals when it comes to air travel and hotels, but ultimately, I have no ‘real’ control once I’m at the destination.”
- Saves money on rent by living in Astoria in the same apartment where she’s been for five years.
- Money goals: to build up a significant savings, to be able to rely on that savings to help friends or family when needed, begin to save for retirement, and get rid of credit card and student loan debt.
When looking through quarterly spend reports with clients, Liu says sometimes the amount of money her clients spent on coffee will stand out to them. “People get really mad at themselves for that $300 being spent on Starbucks,” Liu says. “But I tell them, if we cut out Starbucks altogether, we would just have $300 more to work with this quarter. Like, it’s [usually] not going to make [up] the difference for being able to take the trip to or go to all of your friend’s weddings next year.”
So if you’re someone, like Raven, whose morning routine involves a trip to the coffee shop, you don’t have to give that up. Liu recommends a goals-based budget approach that considers your goals (like building up savings, paying off credit, or student loan debt) and everyday expenses in tandem.
With this approach, you start with the goal in mind, subtract what needs to go into savings and toward fixed expenses like rent and utilities for the month, then build a weekly budget for variable expenses, like coffee, lunch, and going out. “What we hope that does is that it unlocks some creativity and some foresight into planning out what the week is going to look like to prioritize spending accordingly,” Liu says.
Danielle Fox, Social Media Manager
- Buys lunch every day at work, but tries to make dinner at home most nights.
- “Every Monday, I say I’m not going out next weekend and then every weekend, I go out and spend money on concerts/experiences/drinks with friends. I’ve also recently begun dating for the first time in years, and finding love is pricey!”
- Pays less for rent than anyone she knows and plans to live in her apartment “maybe forever.”
- Money goals: “I have a money goal I want to hit early in 2020 and then reevaluate what I need to do from there. This is the first year I can actually think about saving and not just staying above the water. I need to sit down and crunch the numbers on what’s reasonable for my goals, but that terrifies me because it’ll force me to confront what I want for my life.”
When it comes to the fear of confronting finances, Danielle is in no way alone. “Basically, 100% of people experience financial anxiety at some point in their life and on a spectrum of [intensity],” Liu says. Avoidance, which Liu likens to “the ostrich effect of burying your head in the sand” is a common way of dealing with that anxiety.
However, Liu explains that simply having a plan can help ease a lot of that financial anxiety. As mentioned before, that weekly budget for variable expenses could also be an approachable way for people like Danielle to feel more in control of personal spending. “If [someone knows] they have $200 a week to spend on food and fun, then they can manage that a lot better and look at the calendar and be like, ‘Oh, I have someone’s birthday party, or ‘I know I’m going to go out these nights.’ That means I’ve got to allocate money for that and I’m going to bring lunch to work these days to make sure that I have enough for the weekend,'” Liu says.
Mackenzie Dunn, SEO Content Writer
- “I’m honestly one of those people who is frugal almost to a fault.”
- Years of job insecurity left her in a “constant state of survival mode” so she struggles to say yes to the things she can now afford with a salary.
- Tries to cut back on unnecessary spending and save money whenever possible. “If I ever have to make a big purchase (like say, a plane ticket to visit my boyfriend’s family for the holidays), I try and use the points from my travel credit card and book the cheapest flight that’s not entirely inconvenient.”
- Gets her hair colored once every four to six months, which costs around $200 and gets her eyebrows threaded about every four weeks which only costs $10.
- Money goals: pay off student loans, save for a future wedding, hit my 401K contribution limits every year
Because of Mackenzie’s history of job insecurity, her financial approach is more risk-averse, which Palmer says can be a positive thing. However, Palmer also explained that some intentional financial risks can lead to more benefits.
Mackenzie has been smart with her money—but Palmer wants to encourage her not to play it too safe. Since she’s now in a secure place, taking calculated financial risks could help her get out more than what she puts in.
Claire Harmeyer, Assistant Editor
- “Since my very first job, [my parents] taught me to put half of every paycheck into savings, and then act like I never had it, so I can’t touch it…but now that I’ve graduated college and am on my own for finances, it’s harder to do this”
- Moving to NYC has thrown off her spending and saving habits (and the cost of living makes the “half paycheck rule” impossible to follow).
- Spends an average of $60-$70 a week on groceries at Trader Joe’s, brings her lunch to work every day, and makes dinner every night.
- Enjoys spending money on experiences most, like going to see shows and traveling. “I think the area where I should cut back the most is going out on the weekends, but it’s hard when you’ve just moved to a new city and want to meet new people!”
- Money goals: to get back on her “half-paycheck rule” in a few years, cut back on some personal expenses, start putting money towards retirement.
Claire saves money by bringing her lunch to work every day instead of purchasing it, but the cost of being social and going out in New York has shaken up her financial approach. Palmer recommends that Claire and her friends take turns hosting at their homes for drinks before going out or instead of going out in order to avoid spending so much on expensive drinks at bars. As it turns out, pregaming isn’t just a college pastime, it’s also a more financially sound approach to socializing.
Bringing up the money conversation for friends can be uncomfortable, but Palmer says it can open up the floodgates. “I think a lot of people do want to spend less, but no one necessarily wants the person to bring it up or say it,” Palmer says.
Palmer also says the 50, 30, 20 budget approach could also help Claire make sure she’s staying on track with her spending.
Morgan Noll, Editorial Assistant
- “I’m in a bit of a transitional phase financially since I just started a new job. Before then, I was working as a freelancer plus a few barista shifts a week, so my income varied month to month. Since my income was irregular, I didn’t really plan a budget for myself, I just made sure I had enough money to pay rent and buy groceries each month.”
- Saves some money on rent by living in Brooklyn versus Manhattan, but that’s still where a good amount of her money goes.
- Brings lunch to work and cooks as much as possible during the week. “I justify splurging a bit more on weekend meals and drinks, because it’s my time to de-stress, but I do worry that the spending ends up stressing me out more.”
- Money goals: to get better at managing that “leftover” money once rent and utilities are paid for, use money more intentionally, put more money toward loans, and be able to help her family out more.
“When we go through these kinds of transitional phases where we suddenly do have more stability in our income than before, it’s a great time to make progress,” Palmer says. “So even though at first it can seem like, ‘Oh great, I have all this extra spending income,’ instead of thinking of it like that, it can be a good time to significantly ramp up your savings.”
Palmer says that when you’re settling into a more predictable income, it’s a great time to set up automated savings accounts based on goals—similar to the goals-based budgeting that Liu recommended for Raven. Before getting into specific goals, however, Palmer says that the “number one [priority] is always that emergency fund.” Palmer recommends building up an emergency savings that equals around three to six months of expenses in order to ease some financial anxiety to provide a safety net.
Many of us hope to secure our finances so that we can also help out [our] loved ones. The idea of the emergency fund, however, is similar to the reasoning behind the “put your mask on first” instructions on airplanes. You have to ensure your safety and stability first, so that you can be in a better position to help others. And this, we can get behind.