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Navigating adulthood is a lot more complicated when you don’t understand the basics of your own money. So we’re making it easy for you to take control! Alex Sadler, Managing Editor of Clark.com, brings you Common Cents, a multi-platform series that takes the mystery out of your finances.
It’s not about being an expert, it’s just about paying attention – with the right information and a little motivation, you can make smarter decisions that will change your life. Money may not be able to buy you happiness, but it CAN buy you freedom.
You don’t have to know everything, you just need a little Common Cents!
We all make mistakes – especially when it comes to money – and believe me, I know, because I’ve made plenty of them myself along the way.
Mistakes are how we learn and grow – they’re simply part of our journey through life – making us smarter, savvier and wiser along the way.
But while it’s important to learn from your mistakes, what can often be even more powerful is learning from the mistakes of others.
Experience is one of the greatest teachers in life, even if it’s not your own – because when you’re navigating the unfamiliar, it’s what you learn from others that can help you not only avoid big mistakes, but also make better, smarter choices that keep you on the right path.
This is exactly why I decided to share my story.
“Be brave. Growing, and most everything else in life worth having, is painful and scary.”
The journey that’s gotten me to where I am today has not been an easy one – but it’s full of moments, lessons and mistakes that I hope will inspire and empower others to be brave – and to take control of their own life.
In a nutshell, I’ve been Clark’d (yes, Clark Howard has become a verb).
But it definitely didn’t happen overnight…
I wasn’t one of those kids who turned my lemonade stand into a small business at age 10 or started investing at age 15.
Frankly, for a while there, I did exactly what millennials get a bad rap for – I didn’t take adulthood seriously (at least not financially), and I didn’t take the time to understand what really mattered when I finally started making money.
Whenever I hit a roadblock, I would just find a way around it, rather than face the situation and find a way to get myself through it.
I had maxed out my credit cards, put off paying my student loans and never really took the time to pay attention to where my money was going. I checked my bank account to make sure I could cover rent or going out that night, but I never evaluated any of it.
I understood the basic concepts of money, and even studied them in-depth while earning my master’s degree in business journalism from Northwestern University. But I didn’t start applying everything I knew until I reached the point when I realized it was holding me back – and would continue to do so until I did something about it.
Eventually, I decided to learn from my own mistakes and experiences – and pay attention to all of the lessons that others had put right in front of my face. I made the decision to finally wrap my head around – and apply – all the knowledge I had gained throughout my life.
I finally took control of my own money, my own life and my own future.
I didn’t necessarily have one single ah-ha moment, but there was a short period of time when I did realize that at some point, I wasn’t going to be able to do the things I wanted to do if I didn’t start paying attention and actually giving a $#*!.
I had to, because no one was going to do it for me. And that realization changed my life.
This is something I am so passionate about helping others understand sooner rather than later – that eventually, you’re on your own. And this isn’t meant to scare you, but rather motivate you to take control so you can have a confident relationship with your money and your own choices.
This idea – that no one is going to do it for you – can be difficult to really grasp until you reach the point when your past mistakes catch up with you – when they prevent you from doing something that really matters to you.
How you handle money early on in life, most importantly beginning in your 20s, is a lot more important than people realize at the time – but the reality is, the choices you make now will impact your life for the next 10 to 15 years, if not longer.
To give you some context, I owed a few hundred bucks on an Ann Taylor card in my early 20s (I don’t even know where an Ann Taylor is…). I ignored it because I just simply couldn’t pay it off. No one was there to bail me out, so I avoided it altogether.
It wasn’t until a few years (and several missed payments) later that I realized it was never paid off – and that it definitely had not gone away.
When I figured it out, I paid the bill in full – but unfortunately, the damage was done – and those missed payments destroyed my credit score for years.
Payment history (whether you pay your bills on time) makes up 35% of your credit score – so while a 97% on-time history may sound good, it’s not.
It took me years to repair the damage caused by that one mistake – ignoring an ANN TAYLOR CARD!
If I had just taken the time to understand the implications of my own decisions, rather than ignore it and assume it’d turn out fine, I could have gotten on the right track sooner than I did. And that’s my responsibility. I couldn’t be a bigger believer in the idea that you are 99.9% responsible for your own life – because for 99.9% of people, that’s a fact.
It doesn’t mean you’re alone, it just means it’s up to you to decide to change.
So I started paying attention. I didn’t eat on $1 a month or never buy a fancy coffee, but I stopped wasting my money on things I didn’t need – I reevaluated where my money was going based on my priorities. I stopped buying clothes I didn’t need, I reduced my grocery bills and other monthly costs – and began paying down my debt.
After a couple of years, I paid off my credit cards and was stashing away a good amount of savings – and just last year, I paid off my student loan.
It was a combination of my own life experiences and various influences in my life that allowed me to reach the point where I am today.
And Clark Howard has been a big part of my journey.
I was working for Bloomberg News after graduate school when I decided to make a change to get into personal finance. When I started working with Clark, not only did I quickly realize that I needed to get my stuff together, but also that I needed to learn as much as I possibly could from him.
That’s when I really started to turn things around – when I changed my mindset about money and realized how financial freedom could change my life. If I didn’t start caring, I’d never really be in control of my own decisions and I’d never be able to do things I wanted to do, when I wanted to do them.
There’s a lot of talk about why you should save money and why you should budget etc., but if you don’t really know your own why – or how to change and how to do what everyone says you should be doing – then how do ever actually make tomorrow better?
It may seem impossible, but it’s not, regardless of where you came from or where you are now. You just need the right information and tools to help you get there.
This journey has empowered me to not only continue improving my own life, but also empower others to do the same. Once you have the right information and tools to make it happen, it’s up to you to change your own life – and I promise, you’ll thank yourself later.