This week, I want to bring it back to the individual. I know there is a lot of stuff going on in the news that scares people, and it is important stuff, but this past week has reminded me of what I want F4Y to be most of the time. I want to teach young people about finance, and to teach them to see and recognize what is going on in the world. But that is a secondary goal. Primarily, I want to help young people avoid making mistakes that are avoidable, or at the very least, to help them out of the hole they have dug for themselves. Both of the stories below are about friends that I have written about before.
My first friend is starting to realize the difficulty of trying to care for a family on one income. He and I have been talking for some time now about how he can afford to move out with his girlfriend and child, based on his part-time salary alone. I gave him a few pointers on things he should do before considering moving out. I think these ideas are good for everybody, but essential for him:
- Make a log of every penny spent for a period of a few months. Write down everything, no matter how small or how insignificant.
- Write down all of your expenses for the month. Many of these are static amounts, but write down high estimates for those that might change, like cell phones or utilities.
- Write down a budget.
- The first item on the budget should be 10% off the top to go towards building an emergency fund.
- As much as possible, automate your budget by using direct deposit and payroll allocations.
- Learn how to cook. My friend doesn’t know how to cook, so they wind up eating unhealthy fast food most of the time. Not only does this food cost more than real food, but it doesn’t taste as good, and it will make you slow and sluggish at work. When your productivity is compromised, you stand a greater chance of being let go in favor of someone who is more “on the ball”.
I talked to him today, and asked how he was doing. He still had the list of expenses, and he was working on a budget. He didn’t write down any of his spending. I take that as a small win. Hopefully, as time goes by and he realizes that my methods work 100% of the time, he will do more.
Friend two got herself into a situation where she was digging herself deeper in debt where she was. She recently moved in with some family in another state. The family is doing what it can to help her, but she is living with elderly grandparents who are living on a fixed income. This friend is also a princess. She believes that life should be handed to her. I recently hooked her up with a job connection, but it doesn’t pay as much as she would like to make (Who makes as much as they would like????). She is having a hard time adjusting, and feels like she should go back home, even though she can’t afford to. She’s a work in progress. One day she’ll give every indication that she is getting it, and the next she is talking about screwing up all over again. I guess I wouldn’t be as good at this as I think I am if I couldn’t take the highs with the lows.
I’ll keep you updated on the progress of both of these projects, but what do you think? Is there a piece of advice I left out that I should have covered? Let me know.