You know how you?re supposed to floss but you just don?t??
You?ll be on a weekend trip with some friends, see one of them floss, and that annoying guilty feeling creeps in…?Why? Because you know better.
Same with investing money.
Why is it that even though we know we need to invest to grow our money, we just don?t do it??Many of us freeze when it comes to complicated financial decisions because, well, they?re complicated.?And most of us don?t have extra money lying around to hand over to a broker or financial advisor and say ?Here, deal with this and make it grow.?
Wouldn?t it be awesome if we could just trick ourselves into stashing away money?
On top of that, what if the money we stashed was invested in an industry that we feel good about??And what if we could do it with as little as $5?? Without us having to do a thing?
Stash is an app that allows you to sneak as little as $5 out of your account into investments in sectors that you believe in.?
$5 impact investing.And you won?t even notice it.
They will even give you $5 to start investing.
Stash mainly offers a selection of Exchange Traded Funds (ETFs) via their platform that users can invest in. ETF?s are a bunch of investments, ?such as stocks and bonds, that are grouped together into a fund. This means that if you want to invest in a certain space like renewable energy, you can invest in a group of renewable energy stocks at the same time instead of just one company. So, you can begin to grow a diversified portfolio with a just few dollars.
You can invest in as many kinds of funds as you want, depending on your interests and passions. Stash offers a curated list of investments and includes sustainable investing options.
When you set up Auto-Stash, you can pick how much you think you won?t miss from your account, even if it?s $5.?You can sneak money – from yourself – and invest it!
Auto-Stash can be allocated to just one of your selected funds, or all of them. It?s up to you. You can stash money out once a month, or even once a week. And you can change the amount any time you want.
Before you know it, you?ll look at your little stash and see that it?s grown. And you won’t even miss the extra cash that you were going to spend on who-knows-what anyway.
This app tricks you into creating good money habits.
Learn While You Earn
You can track your investments while also learning about them on your Stash app.
Another great feature of the Stash app is its in-app educational content called Learn. Learn provides articles customized to your investment profile that help you understand the big picture, a little bit at a time, so your financial knowledge can grow alongside your money.
You won?t be overwhelmed by financial data. You can give yourself a little financial education while you?re waiting in line. If you want.?Or you can just ignore the whole thing and keep sneaking money from yourself and investing it …in yourself. Your choice!
Stash only charges a buck a month for investments under $5,000, and you get the first month free.?So, the next time you get that annoying cringy feeling when friends and family talk about money, maybe it?s a hint to start stashing some away for yourself.
The reality is that no one is going to look out for your financial future any more than they are going to offer to floss your teeth. You have to make that move. Stash is easy and can help you begin to build good investment habits.
Perhaps even easier than flossing. (Believe it or not, there?s an app for that, too)
I?m sure there are more people out there like me, people who woke up one day and realized that they were fucked. Over 50, broke and in debt, I’d been living month to month for years.?When I read about how to invest for retirement and see those little graphs that show how much you would have saved if you’d started socking money away years ago, I feel completely defeated.?
I?m going financially backward, and I?m getting older.
Trying to stretch each paycheck to cover childcare, your kid?s needs, the bills – you really don?t think about what you will be up against when you?re older.?I used to have a three-month whiteboard on my kitchen wall. I would faithfully update it with my son?s soccer, football and Taekwondo practices. Fees. Where he was going after school when I was at work. More fees.?I remember having to start saving in February to pay for his summer camps, aka ?childcare,? because adults don?t get summers off from work. (Why are we and our kids on different time schedules anyway?)
Then they go to college.?I tried to get him through without a student loan. I failed. That last year I cosigned a loan. It?s a huge burden for him now as he applies to law school. We chat online about how large of a loan he would need for the schools he’s interested in. We discuss how to come up with all of the application fees without him incurring more debt.?I wish I could help him, but I’m tapped out, broke and in debt.?
Save for retirement?
When you become vividly aware of your financial vulnerability, it?s like waking up to a bad dream. ?Wtf were you thinking? That you would never be old???We all truly have but two choices: get old or die.?I certainly didn?t imagine that I would be dead, so how did I fail to imagine that I would still be alive, only older … broke and in debt?
The fear. The overwhelm. You want to run away from it. To do the exact opposite of what you need to do. I froze for a long time. Deer in headlights. I had no idea where to begin. At first, it took me a while to fully accept where I was. Then it took me even longer to learn to let go of how I got there.?And when I finally started researching, I found out that I wasn?t alone.
The hardest part isn?t starting, it?s getting out of your own way so that you can.
Money is loaded with emotional baggage. Fear, regret, greed, angst, sensuality, illusion. Behavioral economists have been studying this for years. Apparently, when you are experiencing scarcity of any form – time, money, love – it can affect you cognitively to the extent that you can make poor decisions, decisions that increase scarcity. Scarcity mindset. It decreases your ability to plan while increasing your impulsiveness.
I have friends whose debt is greater than half their home?s value. When they get a windfall, they buy season passes to something. Or a new toy. In that same breath, they might mention how they wished they hadn?t taken that 2nd or 3rd mortgage. ?The things we could have done with that money!? These are good people, smart people! It became apparent to me that when you are used to living month-to-month, you are used to spending all of your money every month.?And this got me asking some deep questions about my relationship with money.
What is money anyway?
Digits in a ledger, with the power to dictate how we spend our waking hours. So, really important digits in a ledger. But the financial world can be intimidating. Take compound interest, for example. That thing that will definitely bleed us out if we?re broke and in debt, or could possibly multiply our money if we?re invested. While the theory itself may be simple to understand, the actual calculation is a far cry from balancing a checkbook.
The more you learn about money, the more you wake up to how crazy debt is.?Yet it’s up to me, and only me, to rid myself of any ignorance of something that has such immense control over my life, how I spend my time, where I can go, and what I can do.?I know I have baggage around money. But at this stage in the game, I also know that I don?t have time to uber-analyze why.?Because the other thing that goes with saving money is time. You need them both.?And I?m running out of time.
So, I decided it was time to learn how to crawl out of this mess. And to do this, I had to first stop freaking out about it. My odds of facing this challenge with a self-deprecating mindset were low. I tried to treat myself with compassion and forgive myself.?I had to start, somewhere.?And when you’ve been using your credit cards as a source of income, looking at your?credit card statements isn’t fun. It brings up?a flood of negative feelings. I tried my best to do it with the cold eye of a surgeon?s scalpel. Void of emotion.
I approached it like a puzzle. Like a game. Something separate from me.
First I looked for any recurring payments that I might have set up and forgotten about. Book club websites, Skype, Amazon Prime, Netflix, memberships… I canceled them all. It felt cleansing. Did I notice? At first, a little bit. Then?I stopped using credit cards completely. This took a huge change in mindset. I?d always looked at credit cards as that go-to?when something came up.
No longer could I visit my family on holidays. You search for hours to get a good price on a ticket and end up paying in interest what it would have cost you to fly first class. No longer could I buy that new thing because it was on sale.??I had to charge it but it was 20% off!? Five years later, you?ve paid double for the thing that you’d already gotten rid of two years prior. Crazy!
How I Hacked Peace Of Mind
The first rift between my emotions and money occurred when I began to see that money had nothing to do with spending. Spending was something I did. Money is just a tool. And I had some problems that only that tool could fix. If I truly wanted to get out of debt forever, I had to create a platform where going back into debt at the slightest mishap or desire was off the table.?I had zero savings. Everything always went somewhere. Why couldn?t I just leave it alone? Just let it sit there and ignore it?
I started to ignore the money in my account in the same way I had been ignoring my debt. I pretended that it just wasn?t there, and continued living as if I just didn?t have any to spend.?So far I?ve saved a couple months’ worth of monthly expenses. Ten years ago that much money would be vacation fodder. Today, I want to be alright with myself more than I want a couple weeks of hotels and airplanes and souvenirs. A vacation would be lovely but it would also set me back in time.?And I?m terrified that I won?t have enough time.?Who is going to take care of me if I get sick? The government? Ha!
My biggest fear is that I will die broke and alone in some shit apartment, and no one will know until they smell the body.
Just recently, I?ve begun to learn a bit about how to make money grow. Not by reading expensive and complicated financial books or hiring a financial advisor, but by actually doing it on a tiny scale. Nothing I can?t afford to lose. Like 25-100 bucks a month. I?ve lost nothing yet. I?m diversified?(don?t put all your eggs in one basket).?Microbalances. (Tiny amounts.)?You can see what it?s doing and learn without hurting yourself.?I started picking up part-time gigs. I stopped buying coffee and other little crap throughout the day. I bought a cheap unlocked smartphone and a budget sim to get out from underneath my ridiculous cell phone contract.
The internet can open doors for you if you use it.
The internet gives us access to free financial information. I started reading Investopedia, watching Youtube videos, investment for beginners blogs, anything. I discovered that I didn?t need some professional financial person to introduce me to the world of finance and investing, and I also learned that you don’t have to be rich to invest.
Today there are services for people just like me to learn about investing by doing it on a small scale. I started learning about?roboadvisors, fintech sites, cryptocurrency.?And then another weird thing happened. I actually became interested. The financial world was no longer a necessary evil, it was fun. Bit by bit the little pieces of financial jargon were no longer as mysterious as Chinese characters. They began to have some context.
It’s easier to play the game when you are interested in it.
As I became aware of my feelings around money, angst, excitement, stress, fear, greed, desire, depression, sensuality, I tried to be mindful of them and acknowledge them without getting involved. I also began to challenge my thoughts, to get used to the discomfort of these emotions, and just sort of check them out rather than let them dictate my behavior.
I’ll be honest, it isn?t very pleasant at first. Perhaps this is why so many people pay high fees for brokers to make decisions for them so that they don?t have to get involved. But it?s getting easier. I?m learning. And the more I learn, the more I realize that I’m not alone in the struggle to extricate emotions from money issues.
I found out that even Wall Street and emotions are not mutually exclusive. I laughed out loud when I discovered that you can check the emotions of today?s market on CCN?s Fear and Greed index.? Nobel?Prize Winner Robert Shiller, professor of economics at Yale, talks about the relationships of the stock market and human emotions. He says that bubbles and crashes involve the human psyche on a mass scale. And it all makes sense. We can separate nothing from our humanness.
Money is a human creation.
Flipping The Script
We needn’t be?ashamed to discover that our emotions around money may have been causing us to make long-term financial mistakes. Many of us inherited weird stuff from our parents and culture around money.
We shouldn’t be afraid of not knowing enough about the financial world to start learning. Many of us have zero financial education. I remember having a one-off class on balancing a checkbook in Middle School. That?s about it.
Couple this lack of financial education with the aggressive marketing and consumerism we have been subject to from impressionable ages thereon, and you have an interesting mix of bullshit running malware through your head when it comes to managing money. My senior year in college I received countless pre-approved credit card offers after starving to death to work my way through school for years as a single mom. It was like a feast. My new consumer debt slipped right in next to my student loan. I was a good little American.
We are programmed to comply on a daily basis. A new phone. A new car. New, new, new. We need the latest iteration of everything. We have a twisted and erroneous idea of a success. It is empty. Short-lived.
We are leveraging our future for the appearance of success.
We get into debt, get out of debt, get into debt, get out of debt.The cycle is insane. And a lot of us have been doing it for a long time.
I?m intent on shattering this financial pathology.?A few more months of saving and I will be able to attack those credit card balances so I can stop the bleeding once and for all. I imagine the joy I will feel when they are gone. I know it won?t be easy. And I now know it’s going to take some time. But I can use that time to learn about how to grow the money I will get to keep after I?ve finished. And I can use that time to heal from the twisted mentality that has kept me swimming in this financial toilet bowl for years.?
I?m over 50. I’m broke and in debt. I?m at Ground Zero.
So fucking what.?It?s a mathematical puzzle game. And I?m going to learn how to play it.
The stories in Life are real. Sometimes the names are changed at the author’s request.
Send us your story if you’ve been duped, on the road to financial recovery, conquered your finances, or want to give feedback. firstname.lastname@example.org
Buying that great pair of jeans after a hard day can make us feel good. We work so hard, why not enjoy life? But like anything else, moderation is the key.?Too often these ?comfort buys? can improve our mood but the feeling is short lived. Many people feel remorse after the purchase is made.
Left unchecked, retail therapy can have a devastating impact on our financial health. As we spiral deeper into debt, our anxiety increases. We then look to reduce that anxiety by shopping. It?s a vicious cycle.
Taken to the extreme, retail therapy can sometimes evolve into compulsive spending. When this happens, people are driven to buy things in order to fill a need. But the purchase does not quench the need. The person may not even know what need they are trying to fill. They cannot help themselves and will continue to shop, even after facing negative consequences. If this feels familiar, these resources could help.
You are not alone.
So how big is this problem? Let’s use credit card debt as a proxy. Here are a few staggering statistics about the state of our credit card debt.
The average American household credit card debt is $5,700.
According to a recent press release by the New York Fed, America now has $784 billion in credit card debt.
Here?s what?s worrisome: credit cards delinquencies are increasing at a rate not seen since the 2009 recession.
Retail therapy, or the act of shopping in order to make ourselves feel happier, is a big contributor to credit card debt.
So what can we do to stop the madness?
5 questions to ask yourself before you buy anything.
Changing a habit is not done in one day. It?s a process. Here are 5 questions to ask yourself before making your next purchase.
Do I really need this or do I want this? Is this a necessity or a splurge? It?s OK either way, no judgement zone. Simply asking the question will help you reframe things in your mind.
What Impact will this purchase have on the planet? That new toy is wrapped in a bunch of plastic. Ask yourself if your kids really need another piece of plastic from China. Is there an alternative that would bring your family just as much joy?When feeling anxious, sometimes it helps to focus on something outside of our own immediate needs. ?Taking a moment to consider the broader impact that our purchases have on people and planet could have the added benefit of reducing unease.
What impact will this purchase have on my community? Is the purchase helping my community in some way? Are you buying from a local merchant who is sourcing their materials sustainably? Is your purchase creating jobs that people enjoy?
Can I text a friend? Set up a code word with your friends. Any time you text ?Itch?, they?ll know you have a shopping itch that you need to scratch. Ask your friends ahead of time to talk you away from the mall or online store. Great friends are good at helping you refocus.
Can I take a walk? We?ve heard it before: if you exercise, eat healthy and sleep for 8 hours a night, all shall be well. But sometimes those things are hard to do in the moment.If you?re shopping to ease anxiety, see if you can do something else to make yourself feel better. Keep it small and simple. Instead of walking into the store, walk around the block. See how you feel about making that purchase once you?ve taken a little walk.
They say it takes 27 days to form a new habit. Start small, lean on people, help others, and above all, be kind to yourself.
I don?t consider myself to be a ?cheap? consumer but I do consider myself to be a ?smart? consumer. Unlike a lot of kids my age–16–I am careful about how I spend.
Many Juniors and Seniors at my public high school in Boulder, Colorado go out to expensive lunches during the week.
There is a nearby shopping mall close to my high school that has quite a variety of dining options. The mall is about a fifteen minute walk away but most students tend to drive over. Whether students realize this or not, they are slowly using a lot of gas which adds up.
However, this isn’t even the main problem. In the shopping mall, there are two well-known and well-liked restaurants. There is Restaurant A, a traditional sit-down American restaurant where there is a wide variety of options. The prices vary. There are some expensive items on the menu but there are some low priced items as well. Most students choose to go to Restaurant A. I will admit, Restaurant A has really good food and I go to Restaurant A once every couple weeks.
When I go to Restaurant A, however, I make different choices. I usually order a chicken sandwich, which is $8 before tip and tax. Sometimes I’ll splurge and get a drink or some french fries. That comes to $11 after tip and tax. My peers on the other hand order 12 Chicken Wings, which are $15 pre-tip and tax. On top of that, they will order large french fries, which is $4, and a soda for a couple more dollars. This means most of my peers are spending around $20 per meal.
I prefer Restaurant B. Restaurant B is a bagel restaurant. You can get a filling bagel meat sandwich for $5. If you bring some snacks from your house for outside the restaurant, you have a perfectly filling and tasty lunch for $5! However, most students don?t go to Restaurant B for lunch.
This is just the beginning. A lot of students will drive out to farther places. There are more popular shopping malls with numerous good restaurants that are a 10-15 minute drive away. Teenagers will go out and get meals that are at least $20. What most teenagers don?t realize is that they are getting themselves into bad habits that could last for the rest of their lives. If they go out to lunch every day, and spend at least $20, that’s a minimum of $140 for lunch every single week!
Setting Bad Habits
Teenagers don?t only have a problem with spending lots of money on lunch, they have a spending problem in other areas. Teenagers spend a lot of money on clothes, for example.
I have heard of students specifically ordering a $25 baseball cap and paying for overnight shipping because they need a certain color hat for an event. That is just crazy!
Also, students pay a ridiculous amount of money for clothes by shopping at expensive stores. I think most of my peers believe that it is unacceptable or not cool to shop at places that offer discounted priced clothes.
A lot of students are using their parents? money to pay for these sorts of things. They may think of this as ?free money?, but they are unlikely to change their high-spending habits when they have to earn and spend their own money. Some of the students, like myself, have part-time jobs. Having a job is a good reality check. If I know it?ll take me an hour?s work to earn $10, I won?t go around wasting money when I can avoid it. Whether the students realize it or not, they are setting themselves up for future financial troubles.
Teenagers seem to be spending more and more money and I believe one of the main reasons is they feel like they have an endless supply of money from the Bank of Mom and Dad. Once they head off to college and are saddled with massive student debt, they will have to learn how to control their spending.
Impact Down The Road
I am genuinely concerned for most of my peers because they could wind up in a terrible financial situation say ten years down the road. They will have to come to the realization that there is not an endless supply of money for them to spend. Otherwise, they will be in debt for possibly the rest of their lives.
Think about it. If they are already spending $140 per week on lunch as a teenager, I can only imagine what their other expenses will be. I believe that most of my peers will choose to take out huge loans to buy an expensive house that is way out of their price range instead of settling for a more modest house where they are taking out less money or not borrowing any money at all.
Based on my observations, my generation seems to be developing some potentially dangerous spending habits. If kids continue to spend like they are now, a whole lot of them are going to be in serious financial trouble for the rest of their lives.
Sounds like a crazy question, right? But the fact that over 50% of Americans have less than $1,000 in their bank account gives it a bit more weight. If you are a part of the majority that has no emergency savings, it might make you feel better that you aren’t alone here, but please don?t let it make you complacent.
What happens when we don?t have emergency savings?
Every time we hit a bump in the road, we have to reach for credit cards to bail us out. And when you’re already in a position where you have to reach for a credit card to put out a fire, the last thing you need is an additional monthly credit card payment, especially one that grows with compound interest. Clearly, you can see the spiral here.
Admittedly, saving hard earned cash to disappear problems isn’t as sexy as getting that new shiny thing, but the alternatives are worse. When you have cash backing you up, you have more options available to you when you’re in trouble, so you won?t have to sell a piece of your future to solve a problem. Think of cash as the hammer in your financial toolbox. You need it. We all do.
Savings accounts aren’t subject to the risk that investments are.
Savings accounts generally earn a lower return than investments.
Monthly fees at some banks can eat up interest earned.
Saving money could mean a change in lifestyle.
Budgeting to save forces you to take a deep look at how you handle money.
How much should I save?
Ask yourself how much you would need each month to survive if your income stopped abruptly. Ask yourself uncomfortable questions such as ?how long would it take me to replace my job?? The more difficult you think it might be for you to replace your income, the more you should save. Financial advisors suggest ranges anywhere from 3 month’s to 2 year’s worth of monthly expenses. But you are the best judge of your risk tolerance.?
Where should I keep my emergency savings?
The most important features of an emergency savings account are accessibility and growth. You want to be able to use the money immediately should you have to, but you also want to keep it in an account with the highest interest rate possible, and no monthly fees. It’s a good idea to keep an emergency savings?account in a different bank than where you do your everyday banking to avoid the temptation of dipping into it.?Online savings accounts can come into play well here as their interest rates are generally higher, and some have zero fees.
How do I start?
You may not be in a position to put very much aside at first, but don?t let this dissuade you from saving at all. The truth is, if you simply start by setting reachable goals, you will gain the confidence you need to continue. For example, set an initial savings goal of $1,000. Reach it. Then repeat it. Decide on a fixed?amount that you can spare each month. Can you afford $50 bucks? $250? Pay yourself first via direct deposit or scheduled transfer. Treat your emergency savings like a monthly bill, and pay it first.?Here are a few of the highest interest rate, no monthly fee savings accounts that allow you to automate your savings.
So, let’s put this in play here. Say you can save $100 per month. (That’s like $3.50 a day, you can do that, right?) With an interest rate of 1.30%, you’d have $1,000 in around 9 months. While that might not seem like much, if you put this in place today and forget about it, 3 years down the road you?ll have close to a $4,000 cushion to fall back on should something happen. $4,000 can at least buy you some time, or car repairs, and keep you from sinking into debt. So, just socking away $3.50 a day for 9 months can put you in a better financial position than most Americans. Think about that for a minute.