Crypto. ETFs. The Great Resignation. NFTs. Robo-advisers. Salary transparency. A pandemic that won’t quit. And inflation the likes of which we haven’t seen in 40 years. There are so many question marks out there right now, but at least one thing is pretty clear: This is not your mother’s economy.
That doesn’t mean you can’t handle it. Far from it—you just need a new set of rules. When it comes to money, having rules can be particularly helpful. Why? Because although there are some elements of the financial world that you can’t control (stock prices, rising interest rates, and a thousand others), you can reduce the amount of volatility in your financial life by controlling what you can—and when you do that successfully, it’s going to bring your financial stress level waaay down.
If you’re looking for financial empowerment, less worry, and a greater sense of control over your money, it’s time to breathe these new rules in and make them a part of your playbook from here on out. As we say at HerMoney.com: You got this.
More From Oprah Daily
Getting Paid Is Good. Getting Paid More Is Better.
The gender wage gap, where women earn just 82 cents for every dollar a white man earns—women of color earn even less—is closing. In fact, the Pew Research Center notes women under the age of 30 have made pretty big strides: They earn 93 cents on average, up from 88 cents in 2020. And young women in big cities earn comparatively even more.
The problem is, those gains don’t stick as we age and take breaks from work to do things like have kids and take care of our parents. But no matter how old you are or where you live, what you have to remember about the gap is that it’s an average. And “average” is one thing you are not.
First, acknowledge that you deserve more. As Sallie Krawcheck, founder of the female-led fintech firm Ellevest, likes to say: “Nothing bad happens when women have more money.” She’s right. Women are more willing to use our money to create the change we want to see in the world, from ensuring our children have resources for college to giving our money to the causes and candidates we believe in. But in order to get more, you have to make your case. That means doing the research to know what a job like yours should pay, or what a business like yours should charge. (Sites like Payscale.com and Glassdoor.com can help.) Then, unapologetically ask for more while pointing out the additional value you’re bringing to your employer or clients. Our favorite gender wage gap-eliminating phrase: “Can you do better?”
Know Your Money Type.
Have you ever wondered why you are the way you are with money? Why you have trouble spending it even if you’re sitting on a flush cash cushion, or why it flows through your fingers like water? Here’s the deal: Everyone has a Money Type, a money personality, that was largely formed during our childhood. It’s not what your parents taught you; rather, it’s what you absorbed and what you felt about money.
As inflation eats into every dollar you bring into your wallet and a volatile stock market leads investors down dangerous rabbit holes, it’s even more important to understand your Money Type in order to shield yourself from your lesser impulses. How do you do that? Start by asking yourself some probing questions: What was the atmosphere like in your childhood home? Was there stress every time a bill dropped? Was there tension rather than joy around the holidays? What money messages did you get from your mom or dad? Even better, take our Money Type personality assessment—it will give you a clearer picture and a set of directions to follow specifically for you. Particularly right now, understanding where we come from with our money is a must. Because while you can’t unsee your childhood, you can overcome your financial hang-ups to live a richer adult life.
Got Debt? You Can Still Have a Life.
The old thinking was that you had to abolish your debt first, then you could focus on the future. Now we know it’s better to both pay down your debt and save for the future simultaneously. Why? Because those early years of saving and investing are far too valuable to leave on the sidelines while you’re wailing on those student loans.
So here’s the playbook: Put every next dollar where it’s going to get you the greatest return. In general, that means you grab your 401(k) or other retirement account match first. A 50 percent match is a 50 percent guaranteed return on your money. Then, pay off any high-interest-rate credit card debt. Next, come back to work on maxing out that retirement plan contribution. And as for those student loans? Don’t stress about accelerating your payments. Refinance private ones so that the interest rate is as low as possible, then just pay them off over time. With federal ones, either stick to the 10-year clock or use an income-based repayment plan to lower your monthly payments to make the rest of your financial life manageable.
Emergency Savings Are No Joke.
Pandemic lesson number one: Emergencies happen. Being prepared means having liquid savings—not money that’s tied up in investments, but money in a bank account or credit union that you can access quickly and easily. We were great at that while we were on lockdown and receiving stimulus checks. The personal savings rate (which is the percentage of after-tax income that is saved or invested rather than spent) kicked up each time we got a stimulus check, and it remained in double digits through most of the pandemic. Today, we’ve blown through those savings (thanks again, inflation) and are only putting away 5%. That’s nowhere near enough. Yes, having $1,000 or $2,000 set aside is great, but ideally you’ll bulk that up enough to have 3 to 6 months’ worth of living expenses on hand. So, add up what those costs would be for you and start automatically moving $100 or even $200 into a separate account every month until you’re there. (Note: We think tax refunds make a great emergency cushion starter, too.) And yes, it has to live in a bank despite the fact that you’re not going to get a great return on the money.
One thing you can do to improve your returns a smidge, particularly as interest rates rise, is to look for a high-yield savings account, or HYSA. These accounts, typically located at credit unions or internet banks, will more quickly pass each interest rate hike from the Federal Reserve on to you. Some good ones: Ally, Marcus, Citizens.
Grandma Actually Did Know Best.
Maybe you’d already begun to suspect this, but Nana did not steer you wrong. And when emergencies happen, the old-fashioned habits you might have picked up from family over the years may be the same ones that will help you through the storm.
For example, Grandma knew how to get the most out of every meal. She’d roast a chicken for dinner, then whip the leftovers into a chicken salad sandwich for lunch the next day, and then use the carcass to flavor a soup or stew. She also didn’t need a $35 bootcamp class to stay in shape, because she’d mow the lawn, walk everywhere, or put in a new garden. Oh, and you know the “cash stuffing” trend that’s all over TikTok? (If you haven’t seen it, this TikTok is a pretty good example.) Basically, you get your paycheck in cash, then divvy it up into envelopes allocated for all the spending categories in your life—groceries, beauty, your pooch. We love it, in part because research shows you’ll spend less with cash than you will with debit, credit, even Venmo. The actual green stuff feels more valuable, so you’re less likely to be willing to part with it. But it’s literally just your grandma’s old envelope system.
Used Is the New New.
If it’s good for the planet, it’s generally good for your wallet. When it comes to clothes, that means (a) shopping resale (The Real Real, Poshmark, your local consignment or thrift shop) instead of buying new, (b) consigning what you’re not wearing, and then (c) donating what you can’t consign.
This is particularly important where clothes are concerned. You can thank the fashion industry for 10 percent of global carbon emissions, according to a World Bank report. But clothing’s not the only thing to recycle. For furniture, look to Kaiyo for lightly used name-brand pieces, or to your local Freecycle or Buy Nothing groups on Facebook for other people’s castoffs. In fact, Facebook Marketplace can be a good source of pretty much anything you need from tools to pet supplies.
And when Fido outgrows the crate you got from someone else? Yep, you can recycle it all over again.
My Money Is More Valuable Than Our Money.
The State of Women 2022, a survey of 1,000+ women conducted by HerMoney.com and the Alliance For Lifetime Income, revealed that fewer than one-third of women in a relationship have merged all their money with a spouse or partner, and only 2 percent (just 2 percent!) of singles say they’d merge everything in the future.
We get it. And we love to see it. Every woman needs money she can use—to spend, save, invest, and give—at her discretion, without asking anyone’s permission. Even if you don’t earn income outside the home, this is true for you, too. Set up a separate account and funnel some of the household’s money into it automatically with every paycheck. Do the same for your spouse or partner for their autonomous needs. And note: You don’t have to keep all your money separate, but you should, without a doubt, keep some of your earnings reserved just for you.
The Side Hustle Is the New Safety Net.
When it comes to investing, diversification—making sure you have a mix of investments in case one goes south—is a way to reduce your risk. Increasingly, the same is true when it comes to your livelihood. Multiple income streams can put you in greater control of your destiny. Having a side hustle (or two) is a way to put extra money in your pocket, but it can also keep your skills sharp and grow your network.
For example?
If you’re crafty or a particularly eagle-eyed thrifter, set up an Etsy shop to sell your wares or finds. Develop an online course to teach others your superpower. Or make some money from whatever excess capacity you have—rent out a spare room, your parking spot, even your car on a car-sharing site like Turo. Plus, if that primary job starts to feel like it’s no longer a good fit, you’ll have a fallback that you might be able to ramp up quickly. (Think of it like having an F-You fund, only for your career.)
Spend Your Values.
Want to know the real secret to using your money to buy you happiness? Not everyone values experiences over things, or travel over trinkets. And, as new research from UCLA psychology professor Patricia Greenfield shows, the pandemic shifted our values a bit. We’re now more interested in conserving resources, growing our own food, and spending time with the older members of our families.
But again, these are averages. The key is figuring out what you value.
To do that, track your spending for a month (or go back over your last month’s spending using your credit and debit card bills, as well as your Venmo history). Look at each line item and ask yourself: Would I spend this money again? If you get a yes, those are the things you value. The ones that get a no or a maybe should be the first to go when it’s time to trim your budget.
Save 15 Percent. Of Everything.
The old rule of retirement saving used to be that if you socked away 10 percent of everything you made from the time you started working until retirement, you’d have enough—along with Social Security—to live comfortably pretty much forever. But we’re living so much longer now that 10 percent just isn’t going to be enough—it’s time we kicked things up to 15 percent. We know that’s a lot, but the good news is that any matching dollars you get from an employer, such as a 401(k), count toward that 15 percent.
If you’re not sure you’re on track, here are some benchmarks developed by Fidelity Investments that can help: By age 30, you should have 1x your current annual income put away for retirement. (So, if you earn $50,000 annually, you should have $50,000 saved.) By 40, you should try to have 3x saved, so with the $50,000 example, that’s $150,000. By age 50, 6x. By 60, you should have 8x, and by the time you retire, 10x. If you’re not there yet, please don’t panic. Just try to bump up your savings by about 2 percent a year until you’re regularly hitting that 15 percent mark. You got this.
Time Is More Valuable Than Money.
Time and money are both limited resources. But while there is an unending list of ways to earn more money, you can’t say the same about more time. So be very careful how you trade one for the other.
Before taking something new onto your plate—or even accepting a calendar invite for a meeting or event—ask yourself: What am I giving up? What will I be saying no to so that I can say yes to this? When we’re happier about the time and money tradeoffs we’re making, we’re more likely to feel empowered with our money, and have less stress. Which is not to say you should stop working (or not take on that side hustle that can lead you down a fascinating new path). Just be choosy—or choosier. You know that old Ben Franklin saying: If you want to get something done, ask a busy person. He didn’t know it then, but he was talking about you. Whether it’s an invite to an event you’d rather not attend, a Zoom that should have been an email, or a request to “pick your brain,” it’s okay to say no. “Thanks so much for asking. Unfortunately, my calendar is a little full right now” are the words that work for us.
Be Generous.
There are decades of research that show that as long as you have enough money to be comfortable, more money won’t buy more happiness. What will make you happier, however, is using your resources to help someone else. So give as often as you’re able, but make sure you’re doing so thoughtfully and with purpose. And understand this includes not just giving to charity—Americans give a little more than 2 percent of their income away each year—but also doing things that will make other people happy. Even little gestures of kindness can put a smile on your face. (A recent study from the University of California Berkeley registered a happiness pop just for feeding someone else’s parking meter.) The point? Not only will the recipient find joy and fulfillment, but you will, too.
Jean Chatzky is the CEO and Founder of Hermoney.com where Kathryn Tuggle is the Chief Content Officer.
