”I have to make some budget cuts in the household,” he jokingly told me.
“Okay! I love budgeting. How much money do you spend a month?” I asked him.
“I have no clue,” he said.
This is a real conversation I had with my friend, who went to a top rated undergraduate school and then worked in financial services for four years before getting into an Ivy League Business School. He’s now a second year student with a six-figure offer to work at an NYC investment bank once he graduates. And yet, he felt confused about his spending; business school is expensive and he vaguely knew he was spending too much money. To reconcile this, he would somewhat inconsistently do things to save money like bring a paper bagged lunch instead of buying lunch or shop for regular broccoli instead of organic (I’m sorta joking here, but you get the point — see my post on why this is not a viable wealth building strategy).
I signed him up for a spending staredown (LINK!) and told him he would have to disclose all of his spending from the last two months to me. He agreed. After I was done tracking his August expenses, we played a guessing game.
Me: “Guess how much you spent on drinks and ‘going out’ in August?”
Him: “Hmmm…a few hundred dollars?”
Me: “$1,186.29. What about on Uber?”
Him: “Hmmm…maybe $100?”
Let me back up a little. A few years ago, I had no clue where my money went. I mean, I vaguely knew. This much went to rent, about this much went to utilities, I usually spent a lot on groceries because I love cooking, sometimes I’d go on trips, and sometimes I’d buy things I didn’t really need. I was in my early twenties, had very few financial responsibilities (see my privilege statement here) and generally felt like thinking about money was too confusing, too taboo, too masculine, and overall something I just didn’t (and moreover wasn’t supposed to) know how to do (again, seriously, see my privilege statement). As long as I could get by, pay my rent and credit card bills, I’d be fine. And I was fine. But I was living in a bit of denial and a bit of avoidance. I thought looking at my spending would make me cringe. I’d pay my credit card bill every other day because I never wanted to see the total I’d spent a month. It’s not like I was buying beyond my means or doing anything crazy or outlandish. I literally just didn’t want to know about any of it and suspected I wouldn’t like what my actual, final credit card bill amounted to. I tricked my brain into thinking it straight up could not handle dealing with my financial reality.
Fast forward to now and I’m living quite differently. I track my spending somewhat maniacally and love doing it. I use my own spreadsheets and have my own systems. I know exactly what I spend per month, in each of six categories that I’ve created for myself, based on averages from my spending over the past two years. I know which months I’ve spent beyond my means (very few since I started tracking) and I know which months I had extra money to invest (beyond what I invest automatically on the 1st of each month). I do not feel limited or tied down by these spreadsheets; I know where my money goes and I intentionally spend it (and sometimes don’t spend it). Over the past few years, what I’ve learned is that looking at your spending is the opposite of restrictive; it is freeing.
I share the story of my friend, the Ivy League B-School student, because I want to illuminate how even men with top degrees in finance are confused about money. If you’re similarly “confused about how this stuff works,” you’re NOT alone.
A few weeks ago, my mentor and part-time boss, Khe Hy at RadReads, published a post called “How a spending staredown can set you free”. As I read it it, I thought, what a perfect way to describe what I’ve been doing for myself and for friends. Every month — and really for me, once a week — I STARE DOWN my expenses. I text myself every time I spend money and then I look at my spending right in the eye on a consistent basis.
I’m a Special Education Teacher at a Charter School in Crown Heights, Brooklyn. My major was English. I wanted to become a professional poet. I have a graduate degree in Elementary Education. Yes, some of this high-level economic and financial stuff can be intense and confusing. But on the individual-level — YOU and your spending — it has far more to do with simple math equations and psychology. A few years ago, I had no idea what some of this stuff was. I have no degree in finance. There’s certainly merit to that work, and it’s important, but it’s totally separate from personal finance. It’s not the same as you being clear about your spending.
At Ladies Talking About Money, the numbers are the simple part. We’re working towards finding the reconciliation to say “this IS for me!” for women who want to take control of their financial lives. Wall Street and the finance world is often called a “Boy’s Club”. Look no further than our President to see an example of a man flourishing inside of patriarchal capitalism who is, let’s be honest, no smarter than you or me. Our society teaches women that this isn’t for us — we shouldn’t take finance jobs and we shouldn’t understand our shared financial lives with our partners or even our own as individuals. Patriarchy taught me, and all the things I’ve wanted to be as a woman, that money is not for me to understand. But here’s the truth: personal finance has basically nothing to do with my ability to understand math or finance or complicated equations or numbers. If you graduated fourth grade, you’re capable of doing this math (PS even if basic arithmetic isn’t your thing, there are simple algorithms in excel that can do that for you).
I’m not saying it doesn’t take work, but I am saying that the work is mostly getting past psychological barriers. Getting in front of your credit card statement is hard, but the logistics of tracking your spending? That’s easy. Even empowering. Until recently, I always told myself that I wasn’t supposed to know this. But I AM supposed to — and so are you. It’s been my experience that women don’t enter these spaces because they’re scared they don’t know enough or that they’ll be shamed. I am not in the business of shaming women. I do this work with no judgment. And I really do want to support you in getting your financial shit together.
These psychological barriers are a direct manifestation of gender inequity. While seemingly tiny, taking the step to start to break down these barriers is revolutionary for women. It’s not too hard and we’re more than capable.
While there are many ways to “understand” your money, I know from experience that the first, most important step is literally knowing where and how you spend it. I similarly know the shame and doubt that can creep in when we start to think about looking our spending in the eye. But trust me, it’s so so worth it.
If you’ve been vaguely feeling like you want to do something about your finances, want to know more about how your money works and where it goes but are scared to look, and generally just want to take the first tiny step towards getting on top of your money, I’m here to help.
If you sign up before next #moneymonday (10/28/19), I’m offering a 1:1 “intro to staredown” session together for $25 (a value of $150). My goal is for you to leave feeling more aware, more in charge, and more free. Click the link below to sign up. Let’s get started.