As a young adult in my early 20s, financial planning and retirement do not frequently cross my mind. Money overall doesn’t cross my mind much, until it’s time to pay a bill! However, during the past few months, while working at Sophia Wealth Academy, I’ve been exposed to an abundance of financial knowledge and tools that have helped me take control of my finances and feel financially empowered. I have started to think more about how to realistically achieve my goals. This excites me, but at the same time, I feel incredibly nervous. Thinking about saving thousands of dollars is overwhelming. How does one plan a future without feeling financially secure and empowered today?
Since starting my first job at age 13 in an ice cream shop, I haven’t been unemployed for longer than a month. You would think that starting to work so young would mean that I have saved a significant amount, yet that couldn’t be further from the truth. Until recently, I had saved very little money. I carelessly threw my money at clothes, food, or whatever I wanted at the time. I don’t think this is a bad thing, but it has taken me some time to realize this works best in moderation (and with a little more planning).
“How does one plan a future without feeling financially secure today?”
Within the last year, I have moved out on my own and bought my first car. The reality check of actually needing to plan where my money was going was very shocking. I realized how much money I have nonchalantly thrown at stuff that I rarely use or enjoy. I have a large collection of jackets, yet I only ever wear the same one. It opened my eyes to my habit of going shopping and not leaving without purchasing at least one thing, to make it feel like a successful shopping trip. Realizing the emotional power shopping had over me was kind of scary.
The influx of new bills also left me feeling overwhelmed. I’ve never planned ahead with my money; I’ve never really needed to before. Being so young, I felt I still had so much time to figure out how to manage my money further down the road. But with these new responsibilities, I knew I needed to adjust my spending choices. For the first few months of living alone, I was living paycheque to paycheque. Groceries, utilities, and the fluctuating cost of gas always seemed to sneak up on me.
“Just thinking of money was stressful and I felt a weight on my shoulders that I couldn’t shake.”
My first step to more confidently managing my money involved tracking my spending and being aware of where my money was going. I quickly started to become more comfortable with my finances and actively taking steps to becoming financially empowered. Using these spreadsheets made a huge difference as they helped me keep track and become more conscious of my spending. As has thinking about my long-term goals, not just instant gratification.
Being so young and figuring out the simple “secrets” to becoming financially empowered has given me more confidence with my money. It wasn’t necessarily the easiest thing, or even something I wanted to do at first. “Start planning for your future” or “save for retirement” weren’t really what I wanted to hear. But by starting small, like with a monthly spreadsheet, the importance of these tedious tasks became clear.
The beauty of tracking my cash flow is being able to set goals, and know that I have the tools and confidence to reach them. For example, I have always been passionate about traveling. I feel most alive when visiting places that I’ve never been and meeting people from all over the world. My current goal is to buy a van, renovate it, and explore our beautiful planet. Of course, this will require thousands of dollars and years of work, but I am now confident that I can make it happen. This is an extreme example. A goal can be much simpler, like putting a thousand dollars into a savings account. I get to decide what I want to do with my money. As big as this goal is, if I start planning now and setting aside even the smallest amount every month, I will be in a much better position than if I were to make a last-minute spontaneous decision, most likely having to go into massive debt to do so!
“The beauty of tracking my cash flow is being able to set goals, and know that I have the tools and confidence to reach them.”
One thing that surprised me throughout this process is how easy it actually is to be comfortable with my decisions around money. Money does not control me, it’s the other way around. Once I learned this, everything that followed was less complicated. Think of it this way: You get invited to a party that’s far away from your home. There are a few options: take a bus and spend a couple of dollars, take an Uber and spend a little more, or don’t go to the party. Sounds simple enough, yet when you don’t feel comfortable with your money and really want to go to the party, this can be a hard decision. So, what do you do? If you plan ahead, you will know right away whether or not you can afford the additional cost of an Uber. Then it simply becomes a decision of how badly you want to go to the party and is it worth eating into your monthly plan. When tracking your cash flow, you will also know where you have room to reduce other expenses if the party is worth it! This is why it can be so helpful. Thinking ahead and planning where my money is roughly going to be spent each month creates a sense of ease when it comes to day-to-day financial decisions. Before I started using these techniques, I wouldn’t think twice about booking an Uber, and would find myself in an uncomfortable cycle of weeks with very little money.
Once comfortable with monthly plans and setting goals, I started to expand my financial planning and thinking further into the future. I have even started to think about retirement. Even though it is years away, I always saw it as a chapter of my life filled with traveling and spending time with those I love. But I don’t often think of the reality behind those dreams. Only a few weeks ago I realized how much money is needed to comfortably retire. With no constant flow of income, needing to plan for my future is essential.n Kamal Basra’s webinar, “Empowered Retirement”, it was eye-opening to learn that I should start planning for this stage of my life now. Realistically, I currently don’t have enough cash flow to start saving significantly, but just being aware of what will be needed in the future is something I now keep in mind.
Sophia Wealth Academy’s season full of engaging Wise Money Talks webinars, helpful tips on social media, and informative blog posts have opened my eyes to the reality of financial planning and becoming financially empowered. Personally, I found this season of Wise Money Talks webinars especially helpful. My favourites, “Fear and Finances” with Mihael Mamychshvili and “Talking About Money” with Sandy Gerber impacted me the most, as they explained different perspectives about money that I had not previously considered. Also, the spreadsheets as previously mentioned, were helpful stepping stones to getting used to financial planning.
I have felt more confident in myself and my financial decisions in the past few months than I ever have. I can truly say I have learned so much about financial planning and all it took was a hard reality check combined with the desire to become financially empowered.