Turning New Year’s Resolutions into New Year’s Practices
How One Grad Student is Using a Money Tracking App to Improve Her Financial Wellness and Create Better Financial Habits
One of the first things 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 school emails, I find myself reluctantly checking my credit score. To this day, I don’t know the importance of a credit score 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 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. Insecurity and embarrassment exist 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, many of us feel left behind, especially regarding our money. Some of us 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 too little can cause financial, mental, and emotional problems within my family. Everything we did was for money.
I tried to get excellent grades in school to get money from my uncles and aunts. My family pawned things for cash, took out loans, and maxed out credit cards. It became normal to see familial relationships fall apart because of money. A prerequisite for being with someone is making sure they have money. Aside from Christmas, one of my family’s biggest holidays became Tax Season.
There was not only a lack of money within my family but also financial education. This is not uncommon for many families within low-income communities. Of course, we pay the bills and provide food for our family, but what should we do with extra funds?
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. 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
I wrote off credit scores, loans, and debt as unimportant until I was among thousands of college students in college. We were all waiting for our financial disbursement to pay for our textbooks and school material. Then I found myself sending hundreds of dollars back home to support my family. I accumulated close to a thousand dollars on a credit card and had a collections agency call me almost every day, to the point of tears, until I paid the amount off. Add in the countless arguments I’d have with my mother about how she should be spending her money, and you could say I have a complex relationship with money.
Though, that would be an understatement. As a 24-year-old, I have a lot of hesitation and anxiety regarding money management and maintaining a satisfactory credit score. Though I have developed some responsibility for my finances, I need to learn many things before I can feel financially confident.
Instead of going into the new year with resolutions, I have decided to make some new year practices 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, we must educate ourselves on our finances and money. Now is the time to ask questions about what a 401k is or when to start paying off student loans. One of the steps in becoming a responsible adult is ensuring that we are proactive and enthusiastic about our goals and intentions in the future. Sometimes, these things can be overwhelming, so it’s a great idea to meet with a financial counselor. Take a step toward building a better financial future for yourself.
The first step to becoming financially confident is confronting my fears and myths about money. To confront those myths, we must acknowledge how a mindset of scarcity can negatively impact us not only emotionally but financially.
A scarcity mindset puts us at a disadvantage as it projects the myth that your life cannot be abundant without a certain amount of money. Which, by the way, totally isn’t true! You may put your worth into how much money you have now, making 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 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 great 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? It’s the perfect time to start saving!
I made several attempts to keep a savings account during my years in undergrad; they weren’t so successful. This year, I am determined to change that narrative. There are many benefits to saving and having some type of savings account. 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 like you have somewhat of a grasp on your financial future. And, it is said to make you happier.
It’s hard saving our money, especially as young adults. 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. There’s no fear of failure when you’re just practicing!
In 2020, I raised my score by 156 points using a secured credit card. I managed to stay on top of my payments and even reduced my credit utilization to 0%. My credit is the highest it’s ever been, and I want that progress to continue upward. My credit has now hit a plateau in its progress. And unfortunately, I’m still not sure how to increase my credit score.
If you’re in a similar predicament to mine, chatting with a money coach can help you take that first step to getting and maintaining better credit. When taking on the journey of getting better credit, you’ll also need patience (lots of it). 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.
Your new year practices can jumpstart 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. A good credit score grants you bragging rights and increases your chances of being approved for new credit, like credit cards and loans. Having good credit may also help you get lower interest rates, which can save you more money over time.
Moving forward with confidence
We can work on many things financially within the new year, but the most important 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. You can too, with consistency, determination, good credit usage, and a little help from the Nav.it money app.
Jasmine Powell is currently a graduate student at the University of Memphis and a freelance writer at Nav.it. Her goal is to make writing her living and create material that will help people of color in their daily lives.