The following blog post is part of The Road to Financial Wellness blog tour. The Road to Financial Wellness is a three-month, grassroots campaign promoting financial empowerment on a national level and encourages people to pursue their dream lifestyle. Find out more about local events near you.
You’ve heard the term F&ck Off Fund? Having one (and a mighty big one), right now, is the definition of financial empowerment for me. To me, financial empowerment is knowing that you’re financially beholden to no one – that everything you own is yours, and that any work you’re choosing to do, you’re doing only because it fits your criteria.
It’s amazing to me that when I was in college, the idea of financial independence never really crossed my mind. It just wasn’t a thing I thought about. In fact, at the time, I think I would have defined financial empowerment as the time when you can buy whatever you want.
I suppose that’s actually not a different definition, but “buy whatever you want” means years of my life, rather than handbags or cars.
I get that financial empowerment is supposed to be a journey. The whole process of being empowered in any area of life usually starts with education. It’s not like you’re magically empowered in your career just because you hit a certain position – it was a process that got you there.
Similarly, I don’t think achieving the FOF is going to be the magical denominator that makes me feel financially empowered. It’s the journey of getting there, starting with the process of paying down our debt. It is empowering to understand my situation, and know that I’m moving in the right direction. However, I don’t just walk around feeling empowered all the time, because I haven’t completed the journey, and reaped (or earned) the rewards yet.
Here’s how I perceive the journey to financial empowerment:
Stage 1: You are clueless.
Some people may skip this step simply because they learned about money early on, but everybody else can step in line behind Younger Me. Sign up for a credit card! It’s basically not real money. Spend everything you earn! That’s what money’s for, isn’t it?
This stage basically describes basically my entire college experience. Sure, I ‘knew’ that saving was supposed to be important, yet I went out to fancy meals, drove a ton, and spent all my savings. Even though I worked throughout college, I graduated with zero dollars saved, and a pretty much empty bank account.
Stage 2: You have a realization.
Something happens, and you realize that your dealings with money need to change.
You need to figure out how to save some money (at least enough for emergencies, and maybe a little towards retirement) and start paying off debt. I suspect that a lot of people live their whole lives in that pocket where they have the realization, and start taking steps, but never fully break out of the spend-debt-scrimp-worry cycle.
I got really tired of running out of money before the end of the month. I got really tired of calculating how many gallons of gas I could afford to put in my car. Yet every attempt at this stage to improve generally led back into the nasty spending-fear cycle. I spent a small fortune on an attempt to start a home business – twice. On a credit card.
Not all of the expenditures I made during this time were stupid – once I got an office job, I needed office clothes. I was pregnant at the time, and I bought most of my maternity clothes at an awesome thrift shop. My salary wasn’t enough to cover gas, daycare, and car expenses, and my car broke down frequently. And expensively.
I decided to go back to school, and the boss that had been ‘so supportive’ of me going back to school, wasn’t anymore.
I got a better job, with an incredible boss, negotiated my salary like a baller, and was finally making enough to cover daycare and working expenses. This job required a nicer wardrobe (my boss had to have a conversation with me about it, which was embarrassing, but necessary). My car blew up (nearly literally) at a training I was attending for work, and I had to have it towed from the parking lot. I bought my car used, with only 2,000 miles on it, at half the price of a brand-new model. To be honest, I don’t regret it at all. It’s been 2 years, I love my car, and I’ve had zero issues with it.
I graduated, my company was acquired, and it was time to job hunt again. More negotiating, landed a salary perfectly aligned with my market value, and yet another awesome boss. (I have really good luck in the boss department. Even the first guy was pretty great, up until he decided he didn’t like me going to school.)
Stage 3: You change.
There may be an epic event, or it may just be a snap decision. You get serious about your mission, whether it’s paying off debt, saving, or investing. You hunker down, cut unnecessary expenses, and start to look into side-hustling for extra income.
Shortly after I started my new job, I realized that even though my paychecks were getting bigger and bigger, our net worth wasn’t reflecting the progress I thought we were making. We still ran out of money before payday. This made no sense to me – in less than 3 years, I’d doubled my salary, so why weren’t we rolling in the dough? This is what motivated me to take over our finances, and start plotting our way out of debt – for real this time.
Stage 4: You understand your relationship to the market, your money, and your role in regards to both.
This is where you start to reach financial empowerment land. You understand that your skillset has a market value, and you’re willing to negotiate for it. Your money has a purpose. If there isn’t enough of it, you know how to make more, and you’re not afraid to ask for it. You understand that your economic power isn’t just purchasing power. You feel confident that you’re managing your money wisely, and the results are starting to show.
I think right now, I’m solidly at step 3. While I feel pretty confident about my market value, I’m not as confident about my relationship with my money yet. I think that as our debt load starts to decrease, I’ll start to get a better sense of how I can make my money work harder for me, and what I want to accomplish with it.
Stage 5: You’re a straight-up weirdo.
… And you’ve got big money in the bank to prove it. Either you’re frugal enough that your friends worry your homemade toothpaste and deodorant are made from the same ingredients, or you’re making such baller money that even though your spending looks like someone else’s salary, you’re still socking away 60% of your income. It may be both. Either way, if the average person looked at your money habits, they would take issue with them, despite the fact that your net worth has skyrocketed.
Get Weird to Get Ahead
Here’s what I’ve figured out: I want to be a weirdo. I tend to be in the baller dollars camp, rather than the homemade deodorant camp, but there’s room for everyone at this party. It’s no secret that half of Americans would struggle to cover a $400 emergency. With stats like that, I don’t want to be normal anymore, especially if normal comes with a suffocating load of debt and worry.