Today we continue the conversation that we began earlier this week. Beryl Jantzi further reflects on the importance of budgets, particularly related to living the life you want to live while on a budget and also addressing debt.
COMPASS: Young adults often must deal with limited financial resources. Do you have any advice on how to live the life you want on the budget you have?
Beryl: One of my favorite phrases is to, live well, below your means and to live well below, your means. Note where the comma is placed and the difference that can make in the meaning between these two phrases. Too many Americans live paycheck to paycheck. That’s not fiscally or emotionally wise. We need to live below what we can actually afford so we are setting money aside for the inevitable emergencies that come along. Cars break down and clothes wear out and fuel costs go higher than expected with extra cold winters. Being prepared means planning for the unexpected.
In addition, young adults, be they in college or getting into a career should be “poor”. It’s the way most of us start out and learning to get by on the basics is a kind of refreshing way to establish our values and priorities. There are some people who have this misconception that if they go to college and graduate they can then get a job and immediately, live large and have it all right now. That simply doesn’t happen and isn’t realistic for most of us.
COMPASS: Young adults are often told how important it is to set aside money for retirement, to save enough money to fall back on, AND pay off debt. When your budget is already tight, how do you put money away for each of those things? Is one more important than the others?
Beryl: Establishing good money habits early is really important – going back to the 10-10-80 idea. Giving for me is a given. Even if it means just $1 a week, we need to establish a habit which is where most spiritual disciplines start. So to answer your question, yes they are all important, but we each have to determine which is most important or most pressing and which is least important or least pressing at any given stage of life.
Debt is almost always bad – especially credit card debt or what is also called consumer debt. So pay off debt as fast as possible. Saving for retirement or another car or an anticipated vacation is also important and saving little by little adds up over time. By starting with our giving and saving goals we are then able to decide how to limit the spending which in turn determines our answers to questions like these: How much rent can I afford? Do I need to look for a roommate to help with expenses, etc? What kind of recreation and socializing is really necessary? How can I live more simply early on to open up more opportunities for the future?
Unfortunately, money is considered by many people to be a taboo subject. We simply don’t talk about it. What we really need is to find 1-2 people to talk with to help us think through these issues. I have been fortunate to have had people along the way to talk to that have helped keep me from making poor money decisions as well as helping me make wise choices that have given me more options now that I am in midlife.
Friday we will continue the conversation and conclude this three part series, as Beryl offers some thoughts about how faith can inform finances and some honesty about what he wishes he knew about money when he was a young adult.
About the author: Beryl Jantzi currently serves as Stewardship Education Director for Everence, a Christian-based, member-owned financial services organization which is a ministry of Mennonite Church USA and other churches.