Getting your personal finances in order can be done at any time, but there’s something about January — the clean slate, forward momentum of a new year — that has many of us determined to figure our money out. But with a new set of goals comes a lot of internal pressure to be perfect. This is too hard and confusing, you may think. I’m overwhelmed, and I’m not making progress fast enough. I waited too long to start saving. From there, it’s easy to fall off the resolution wagon before you can even flip the page on the calendar.
Haley Sacks — a.k.a. the irreverent zillennial money expert known on social media as @MrsDowJones — wants you to know that none of that is true. “The best time to start was yesterday, but the second best time to start is right now,” she said during Thursday’s R29 Twitch stream. “Financial wellness is as important as physical wellness and emotional wellness. If you really want to have more moments of happiness than you did last year, start with your money.”
Sacks knows how you feel. She started @MrsDowJones because she wanted to learn how to navigate the finance world, but couldn’t find a teacher or materials she related to. So she took matters into her own hands, and now runs Finance Is Cool, an online educational platform where she offers courses, tools, and game-changing tips to help others do the same. Joining R29 Entertainment Director and Twitch host Melissah Yang and Entertainment Writer Katherine Singh live this week, Sacks revealed some of her advice about how you can keep your money-related New Year’s resolutions on track beyond February 1. Spoiler alert: It’s a lot easier than you think.
Start With Good Money Habits
If you approach your money goals thinking they’re going to be impossible to achieve or with unrealistic expectations, you’re basically setting yourself up for failure. “A lot of people are so hard on themselves, but nothing changes right away,” said Sacks. “The biggest thing is to put doable habits into place.” What “doable” money habits look like will vary for everyone — cutting back on monthly subscription fees that automatically get taken out of your account, tracking your credit card spending, or never skipping out on putting money into your savings, for example — but it’s crucial to think critically about what is feasible in your lifestyle. You won’t be able to, say, cut back on spending if you don’t sit down every month and keep track of your budget. Be patient, be kind to yourself, and don’t be afraid to change your attitude and certain behaviours.
Tell Yourself What You Want
Sacks often comes across people who know they should have financial goals, but don’t really know what they want their money to do for them. “It’s important to take a moment and figure out a clear ‘why,’” she said. “When you can see your future self, and you’re motivated by that, it’s a lot easier to make better decisions. But if you haven’t really thought your goals through, of course you’re going to end up spending mindlessly.”
Of course, everyone will have different aims — maybe you want to pay off your student loans or credit card debt, buy a home, or be able to retire comfortably — but, according to Sacks, there are generally three tiers of financial goals that can serve as a starting point. Level one is opening a high-yield savings account, which is a type of deposit account that offers higher-than-average interest rates. Your money will grow quicker, making it a perfect place for, say, an emergency fund or any other money you don’t have to access regularly but may still need to use at some point. Once you’re able to put away £1,000, you can move onto level two: building up to a three-to–six month emergency fund in that high-yield account and starting to pay off your high-interest debt. Step three comes after you reach debt £0. “Start investing and max out tax-advantaged retirement accounts,” Sacks explained. “There’s no ceiling to how much you can make, but you can’t save your way to wealth.”
Analyse Your Spending
Look, we get it. Calculating exactly how much money you spent on DoorDash last month does not sound like a fun time. But, according to Sacks, it’s a key step in your money journey. When you’re first starting to figure out what your goals are, carefully review the last month of your spending. How much of your money goes where? Only then will you be able to see where you’re overspending and decide what actually makes sense for you.
Try the Elizabeth Warren-Approved Budgeting Method
Before she was a senator, Elizabeth Warren worked as a law professor and money expert who published several books. During that time, she developed the 50-30-20 budget rule that Sacks swears by. Essentially, you should spend 50 percent of your after-tax income on the essentials — things like food, rent, health care, and whatever else you need to survive. Thirty percent can be treated like disposable income; this is money that can go to your wants: gym membership, Netflix subscription, monthly trips to the salon, and more. The remaining 20 percent “goes towards future you,” Sacks said. Put this money into your emergency funds, use it to pay off your high-interest debts, or set some aside for retirement.
Invest in Your Financial Literacy
You can have the best of intentions, but achieving your goals will be really difficult if you don’t have the tools to understand them inside and out. Sacks truly believes that the most valuable thing you can do to boost your financial wellness is find a teacher who speaks to you and makes understanding all the jargon and processes easy. Plus, to go all the way, you should embrace your newfound money knowledge as part of your identity. “Get a new personality that is obsessed with finance,” she said. “Finance is cool. It’s cool to be good with money. It’s cool to understand the stock market. Be cool.”