Money Habits of This 20-something

I’m the interviewee this week for Nina Smith‘s weekly column at BlogHer, where she finds people of various backgrounds and asks 10 money-related questions. While writing the answers, I realized this is a good example of how I don’t normally bring up certain subjects unless I’m specifically asked. It’s not that I mind talking about it, but some of the answers are things I wouldn’t randomly volunteer.

So here are some of my feelings and attitudes about money (including my spending habits).

1. It has been reported that the current twentysomethings could be the most indebted generation in modern history. What’s the cause of all this debt? (Spending, sense of entitlement, school loans, etc.)

It’s a combination of all those things. Everybody is different, so reasons a person is in debt have to do with their particular life situation. My attitude toward money is influenced by the fact that I grew up in a rural area, with a working father and stay-at-home mother, and was home-schooled for eight years.

On the flip side, I enjoy reading Heather’s posts, and I think her financial experiences are typical of many 20-somethings, but it’s hard for me to relate to her experiences. Instead of pulling out my credit card when I see an expensive purse or pair of shoes, the price tag makes me want to faint and I walk away.

2. What is your most significant memory about money?

That there wasn’t an overabundance of it when I was growing up. We never wanted for any of our basic needs, but my dad is very thrifty and doesn’t like to spend money unnecessarily if he can help it. He’s never owned a brand new car and he still lives in the house where he lived as a child. I think his thriftiness rubbed off on me: in general, I’m more a saver, less of a shopper.

3. What is your worst habit around finances?

In general, I think I have pretty good habits. I save money. I’ve never been in credit card debt because I pay off my balance in full every month. I don’t care about keeping up with the latest trends.

But my worst habit, one that I know I should address, is not understanding what is happening with my money. I’ve read all those articles about how women don’t pay attention to what’s going on with their finances, and I know I’m guilty of that but I haven’t taken the steps to change it. My savings are in a high-interest ING account, but other than that it just sits there. I don’t have a separate IRA account, and I don’t know anything about stocks or investments or whatever.

4. I read that you bought your current car when you were 19, but have since paid it off and plan to keep it for a long time. What are your thoughts about having a car payment and other monthly expenses like cable service?

Yes, I was 19 when I bought my 2000 Honda Civic brand new. I paid it off three years later. I always took very good care of it and kept up with the maintenance schedule, and I would have kept it for a long time if it hadn’t been for a crazy drunk man slamming into me and totaling it. (And then he abandoned his car in the middle of the road and ran away on foot. It was quite exciting. Especially when he was apprehended a few weeks later.)

I think having a car payment is fine if you can afford it and that’s what you really want, but I told myself if I ever replaced my first Civic I was going to get something used. I replaced the 2000 Civic with a 2002 model. I haven’t had a car payment for four years so I was looking for something I wouldn’t have to finance but that would still be reliable (and also look good — that’s important, too). So I paid for it using my insurance settlement and a little extra from my savings.

As for other bills: I don’t have cable at home because it’s not worth it to me to pay the high price when I live by myself. I work at night, Mon-Fri, so I’m not home when any of the interesting nighttime shows are on anyway. Six months ago I switched from a monthly cellular plan that I was hardly ever using to a prepaid plan, and that has already saved me hundreds of dollars. That option might not work for some people because they talk on the phone more than I do, but it’s far less expensive for me to pay by the minute than have tons of time left over that I never use. I do pay for a telephone line and DSL at home, though. I have to have my internet access.

5. You once commented on a post about Money & Matrimony that you think marriage can be economically advantageous for some people, but not so much for others. Can you elaborate on this comment?

I just meant that it depends on the kind of person you are, and the kind of person your husband is. If you’re both upfront about your finances and you’re sharing expenses then, sure, it could work out to your advantage. But what if your partner is a spending maniac and you’re pooling all your money in a joint checking account? What if you haven’t talked about your financial expectations, and retirement, and savings? What if one person has bad credit and it ends up affecting both of you?

6. In your family, you are one of five children. What did this experience teach you about money?

I guess the biggest thing was experiencing how a seven-member family can survive on one income. (I’m the second of five kids: one older sister, one younger sister, two younger brothers.) Sure, we shared things. Families with multiple children are well acquainted with hand-me-downs. We drove station wagons, and later a minivan, to fit everyone in. There might have been less money for certain things since it was spread out between so many people.

But there were advantages to having so many siblings, too. There was always someone to talk to and play with (which was important, since we were being home schooled). And there are pictures of me and my sisters dressing up the older of our two brothers in dresses and makeup. I really consider myself lucky to be part of a large family, especially now that I’m older. I’ve never had a serious altercation with any of them and I know they’d be there for me in an instant if I asked.

7. Have you started saving for retirement? Why or why not?

I think saving for retirement is very important. I worked for Wachovia for seven years, from the time I was in my late teens to my mid-twenties, and I started putting money into a 401k during that time. There was a period of about a year and a half after I resigned that I didn’t contribute to the account — I had moved to California, was job hunting for a while, and worked at a company for six months before moving back to the east coast — but when I started at my current job I started contributing again. I get paid every two weeks, and I have $100 from every paycheck going to my retirement account.

8. I once wrote a post that cited an article where someone’s 94-year-old grandma said, “You’re going to end up single if you buy a house yourself.” Why do you think single women delay the purchase of a home?

A huge factor for delaying the purchase of a home is the cost of real estate. Since I turned 18, I’ve lived in Richmond, VA ; Los Angeles county, and the DC metro. Richmond is less expensive than the other two locations, but the real estate market there has gone up pretty dramatically in the past five years, too. If you’re single, you won’t have a dual income to offset the costs unless you bring in a roommate, and not everybody wants to do that (myself included).

The other reason I’ve delayed buying a home is because I want to make sure it’s in a location where I plan to stay a while. I’ve been going back and forth between various locations for the past few years, so it doesn’t really make sense to put down permanent roots yet.

As for what the 94-year-old grandma said, I don’t think the stigma about a single woman delaying the purchase of a home because she might up end up remaining single is really valid any longer. There has been a huge increase in the number of single women buying homes, and I love that. If I could afford it and knew I was going to remain in an area for a while, I would definitely want to get my own place.

9. What role has money played in your relationships to date? Do men still pay on the first date?

I haven’t had many relationships to date, so money hasn’t been a big factor. I’ve never paid my own way on the dates I have been on, though. I offer, but I’ve never had anyone take me up on it.

I think women have different expectations about what they expect men to pay for. One of my friends had a man regularly pay for her to get acrylic nails and bought her new clothes all the time. Another recently voiced the expectation that if something went wrong with her car and she couldn’t afford to fix it, she would expect her man to step up.

I don’t have a problem with men paying on dates, but as for the other stuff — unless he was rolling in money and genuinely wanted to share it — I would expect to continue taking care of my own expenses. So I don’t purposefully look for a certain income level or a person’s willingness (or lack thereof) to share what he has as a prerequisite for dating someone.

10. Which is more important: how much money you make, how you spend it or where you live?

I would have to say it’s a combination of “how you spend it” and “where you live.” I’m conscientious about how I spend my money, but I’m also not willing to live in a less expensive area just because it’s cheaper. I moved to DC because there were better job opportunities here than in Richmond, and I think employment is a big reason why 20-somethings end up in expensive, congested places like DC, Los Angeles, and New York, among others.

But even though I live in an expensive area, that doesn’t mean I have to live beyond my means — so then it goes back to “how you spend it.” I take my dinner with me to work every night, rather than going out and buying something already prepared. I don’t go shopping very often.

If I’m conscientious about how I spend and save, I won’t have to work at a job that I dislike just because it gives me a higher salary. And that’s very important to me. I’ve had to work at a job in the past that I didn’t like — I was going to college at the time and they were very accommodating with my schedule and generous with benefits. I’ve had several jobs since that one, and I still haven’t reached the same salary level that I was making at the soul-sucking job. But I don’t regret leaving and I would never go back. So even though there’s definitely a minimum amount of money I need to make in order to afford my rent, monthly bills, car upkeep, and daily living expenses, I don’t want striving for money to be the biggest factor that rules my life.

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  • Reply Tori April 14, 2007 at 7:15 pm

    Good for you for not being like the average 20 something when it comes to money. It seems that you are totally together financially. Money can play a huge role in marriage and I must say it takes an awful lot of time to negotiate finances with a spouse. My husband and I came from different ends of the spectrum (him-spender, me-saver) and it has taken us a few years and many compromises (and yes, arguments) to settle on a middle ground.
    Great answers to these questions.

  • Reply Amy April 15, 2007 at 7:02 pm

    Very interesting post! I often think about debt and wonder why the percentage of money Americans put into savings was NEGATIVE last year. I think that “luxury goods” were considered unattainable a generation ago, but now working-class people have expensive clothes, purses, TVs because they put them on credit. To me it spells economic doom for America. I come from thrifty stock and save a lot of money. I’ve created an Excel spreadsheet where I log all my expenses and keep track of my budget. Yes, it’s a little anal, but it has worked great for me. I wish I had as much self-control in other areas of my life!

  • Reply Amy April 15, 2007 at 7:03 pm

    Oh, and also, buying a condo as a single woman is the single best financial decision I have made! Sorry, grandma!

  • Reply ally bean April 15, 2007 at 7:57 pm

    You are so sane, it’s scary! Good for you.

  • Reply Alyndabear April 16, 2007 at 2:48 am

    Reading this, it sounds like you have things worked out very well for yourself as an independent. I think you’re one smart lady, Zandria. 🙂

    Interesting questions, too.

  • Reply Aunt Cathy April 16, 2007 at 4:46 pm

    Facinating!!!! Good Stuff Zan!!!! I’m so proud of you!!!!
    YOU GO GIRL!!!! :0)

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