Turning New Year Resolutions into New Year Practices
How One Grad Student is Using a Money Tracking App to Improve Her Financial Wellness and Create Better Financial Habits
by Jasmine Powell
One of the first things that I do when I wake up, like most 20-somethings, is pick up my phone. Instead of scrolling through my various social media apps or scrolling through school emails, I find myself *reluctantly* checking my credit score. To this day, I don’t really know what the importance of a credit score is aside from it almost being the golden ticket to getting a better home, a better car, and a better lifestyle in general. All I know is that I need my score to be high to live the life I’ve always wanted – a life free of financial anxiety and self-indulgence. Today, I can silently cheer as I see that my score has increased by just *1* point over the course of three months. By next week, I may be in despair to see it decrease. Yay.
Financial Stress is Normal
Unfortunately, this is the case for many young adults today. We don’t know much about our finances or how to build a better financial future. There’s a lot of insecurity and embarrassment when we talk about where we are with our money, or how much we have in the bank.
Though there isn’t a timestamp for success, a lot of us feel left behind in time to get our life together, especially when it comes to our money. Some of us just don’t know what’s going on – and though it’s okay not to know everything right away, shouldn’t we still know something? We’re adults now, so aren’t we responsible for our financial future?
My Relationship with Money
Like many of my peers, especially those within BIPOC (black, indigenous, and people of color) communities, I have always had a complex relationship with money. What I understood about money growing up was that my family needed it and that a lack thereof can cause not only financial problems but also mental and emotional problems within my family. Everything we did was for money.
I tried to get great grades in school to get money from my uncles and aunts. My family pawned things for money. Took out loans. Maxed out credit cards. It became a normal thing to see familial relationships fall apart because of money. A prerequisite for being with someone is making sure they have money. One of the biggest holidays within my family aside from Christmas became Tax Season.
Not only was there a lack of money within my family, but there was also a financial education, as is the case for families within low-income communities. Of course, we pay the bills and provide food for our family, but what are we really supposed to do with it?
Investing seems like a faraway idea when you have bills due the next month, or when you have children who will undoubtedly need food, clothing, and healthcare amongst a host of other things. They didn’t teach us about financial health in school or how we were more likely to be poor when we became adults.
Familial Obligation and Finances
Credit scores, loans, and debt are things that I wrote off as unimportant until I was in university amongst thousands of college students waiting for our financial disbursement so we could pay for our textbooks and school material. Until I was sending hundreds of dollars back home to support my family. Running up close to a thousand dollars on a credit card and having a collections agency called me almost every day to the point of tears until I paid the amount off. All of these things, down to the countless arguments I’d have with my mother about how she should be spending her money.
To say that I have a complex relationship with money is an understatement. As a 24-year-old, I have a lot of hesitation and anxiety when it comes to managing money and maintaining a sufficient credit score. Though I have developed some responsibility toward my finances and there are many things that I need to learn before I can feel financially confident.
Instead of going into the new year with resolutions, I have decided that I will make some new year practices for myself to become financially confident and resilient in 2021. Here are a few things that we can practice within the new year:
Before attempting to make 2021 a better financial year, it’s important that we educate ourselves on our finances and on money in general. Now is the time to start asking questions like what is a 401K? and When exactly should I start paying off those student loans? One of the steps in becoming a responsible adult is making sure that we are proactive and enthusiastic about our goals and intentions in the future. These things can be overwhelming at times, which is why it is a great idea to meet with a financial counselor so that you can take a step in building a better financial future for yourself.
The first step to becoming financially confident in confronting the fears and myths that I have about money. To confront those myths, we must acknowledge how a mindset of scarcity can negatively impact us not only emotionally, but financially.
Having a mindset of scarcity puts us at a disadvantage as it projects the myth that your life cannot be abundant without a certain amount of money (which is totally not true!). You may end up putting your worth into how much money you have at the moment, which can make you feel like you’re not accomplishing anything in your life.
Changing from a mindset of scarcity to one of growth can improve your relationship with money exponentially!
With a mindset of abundance, there is always enough money for you. Instead of basing value on how much money something or someone makes, we can look at the true value that people and things bring to us – happiness, joy, family, etc. It can also make us feel better about the progress that we are making – we don’t have to be millionaires to enjoy the abundance of life!
With the new year ahead, it is a great time to start developing a savings plan! The thought of saving instead of spending may sound ridiculous, but think of it this way – where are we going anyway? During a pandemic? This is the perfect time to start saving!
Throughout my years in undergrad, I made several attempts to keep a savings account but they weren’t so successful. This year, I am determined to change that narrative. There are a lot of benefits to saving and having some sort of savings account. Having a savings plan can give you a cushion to fall back on during hard and uncertain times (like a pandemic).
Not only can a savings account help during those tough times, but it can increase confidence. Knowing that you have money saved up somewhere can make you feel as though you have somewhat of a grasp on your financial future. And, it is said to make you happier.
Let’s be honest – it’s hard saving our money, especially as young adults, but the great thing about changing our new year resolutions into new year practices is that it gives us a chance to start again if we mess up. No fear of failure when you’re just practicing!
In 2020, I was able to raise my score by 156 points by using a secured credit card. I managed to stay on top of my payments, and even brought my credit utilization down to 0%. My credit is the highest it’s ever been, and I want that progress to continue to go upward. The problem now is that I have hit a point where my credit has hit a plateau in its progress. And, unfortunately, I’m still not sure how to increase my credit score.
If you’re in a somewhat similar predicament to me, chatting with a money coach can help you take that first step to get and maintain better credit. What is also needed when taking on the journey of getting better credit is patience (lots of patience). There isn’t any magical money fairy that can get your credit score up overnight, and there may be months where your credit fluctuates based on your credit history and payments.
With your new year practices though, you can see a jumpstart in your credit journey with continued consistency. Simple things like paying your credit card balances on or before the due date (or before your credit card statement date) can not only manage your credit but make you financially responsible. Having a good credit score not only grants you bragging rights, but it increases your chances of being approved for new credit like credit cards and loans. Not only that, having good credit may also help you get lower interest rates, which can ultimately save you more money over time.
Moving forward with confidence
There are a lot of things that we can work on financially within the new year, but the most important thing that we must work on is finding our value in things besides money. With these tips in mind, I hope to build a better relationship with money and become more confident with my finances. With consistency and determination (and good credit usage) and a little help from the nav.it money app, you certainly can too.
Jasmine Powell is currently a graduate student at the University of Memphis and an intern at Nav.it. Her goal is to make writing her living and create material that will help people of color in their daily lives.