Pay Attention to Your Grass: Money Mistakes New Grads Make
Helen Ngo was a stock broker and financial planner for 10 years before starting her own independent financial planning firm, Capital Benchmark Partners in 2013. She is also the
founder of Made Modern Money, Inc, an organization "made to promote the economic empowerment of boss women through education, community and sheer audacity". On April 4th, Helen and the CDSAA hosted the first Financial Empowerment webinar, Money Mistakes New Grads Make.
Helen covered four of the most common mistakes: 1) Not Accounting for All Lifestyle Costs, 2) Signing Up for Too Many Benefits at Work, 3) Saving and Spending without Intention, and 4) Avoidance.
1) Not Accounting for All Lifestyle Costs
One of biggest faults in financial planning and salary negotiation is not accounting for your entire lifestyle costs. Helen suggests keeping track of categorical spending and figuring out how much it actually costs you to live. After calculating your expenses (rent, utilities, accessories for your puppy, ubers back and forth from Capitol Hill bars, artisan coffees, healing crystals, textbooks, etc.) you should also consider your tax liability. Understanding your financial status holistically (to the dime or the penny) will help you in salary negotiations and evaluating what parts of your lifestyle you can modify. Always think about your actual cash flow (what you take home), instead of just the baseline salary. Cash flow is king.
2) Signing Up for Too Many Benefits @ Work
All company benefits may seem like necessities, (why would they offer it if you didn't need it right?), but that is not always the case. Helen suggests you review your pay stubs and evaluate how much of your salary you are actually taking home. Determine if you're benefiting from your benefits or if you're just paying for benefits to pay for benefits.
As a remedy for mistakes 1 & 2, Helen suggests reviewing your lifestyle vs. your cash flow. Then at the beginning of the year, set a budget and do a 6 month check up to stay on track.
3) Saving & Spending without Intention
You should always have a goal for how you save or spend your money. This is the best practice to build a good relationship and understanding of your personal finances. Intention is what turns goals into reality. Don't save just to save. Be intentional with your savings. Are you saving for retirement? Are you saving for your Emergency/"Oh Sh*t!" fund? Are you saving to finally get floor seats at a Beyonce concert? Putting intention behind your savings will make you conscious of your spending. You'll be more self-aware if you buy your Beyonce #Blessed tickets with money from your Emergency/Oh Sh*t! fund more than if it was just a "rainy day" fund. There's nothing like being frivolous with an ambiguous "rainy day fund" in Western Washington.
Finally, 4) Avoidance.
Don't avoid understanding your finances. Knowledge is power and avoidance is jail time. Helen jokes that "the last person you want to be in debt with is the IRS". If you don't have a handle on your debt, the debt can be turned over to collections and they can withhold your paycheck or tax returns and may be able to put you in jail depending on severity. But in a less severe lens, if you avoid your finances, you may be losing out on potential savings. It's best to know where you stand.
After Helen went over the four common mistakes new grads make, she hosted a 30 minutes Q&A session. Kathleen "Queen B" Huynh (Alpha Chapter, Epsilon Class, Grad. 2012) and Erin "Iridescent" Todoki (Alpha Chapter, Iota Class, Undergrad) were in attendance and were able to ask Helen about student loan consolidation, retirement plans, aggressiveness of retirement plans, and optimizing tax benefits through the W4.
One of the biggest takeaways is that basic financial empowerment starts with self-actualization. You may never know someone else's financial status holistically, so why compare? Evaluate your spending, your historic behavior and pay attention to your own grass instead of your neighbors.
Helen Ngo is a CERTIFIED FINANCIAL PLANNER™ and Founder of Made Modern Money, Inc. and Capital Benchmark Partners, LLC, an independent financial planning firm based in Atlanta, GA. Helen tailors her practice to serve women entrepreneurs and Millennial professionals, equipping them with the proper tools and strategic planning techniques to make financially mindful decisions and be independent thinkers. Her unique style and approach to business has allowed her to expand her businesses to accommodate clients nationally and overseas. Helen is often featured in major financial news outlets including CNBC, Forbes, NerdWallet, CBS Money, and Investor’s Business Daily.