Financial Report Card: Kathleen H.

This post is one in a series from real actual life. Along the financial journey, we do some things well and others not so well. We learn as we go, and benefit from sharing our stories.

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Kathleen H., 32 (she/her)

Corporate innovation and marketing, Chicago

Looking back at your 20s, how would you grade yourself in the five key areas of personal finance?

Creating income: B+

I moved to Chicago after college, with no job, and was applying to anything in an effort to land something quickly—retail, coffee shops, stuff on craigslist, part time, contract work, everything. I joined a babysitting agency to have some income coming in. Then I got a temp job, full time but not permanent (no benefits) at a real estate company. I did filing, accounts payable, stuff like that. They knew they were going out of business but needed help keeping up with some of the daily office work since most of the former staff had been let go. So I was there for about 6 months. It worked well for me since they gave me the freedom to come and go for interviews any time I had one come up.

I graduated in 2011, a few years after the recession, which of course had a huge impact on the job market, especially for people like me who were liberal arts majors. I had some work experience, an internship, but there wasn’t anything about my resume that set me apart from a sea of other job applicants.

Eventually I did get a full-time job at a law firm, which had benefits. I knew that was important, but I had no idea what that meant. I knew I needed health insurance but I wasn't really aware of things like 401(k)s when I started there. Luckily a couple more senior co-workers took it upon themselves to explain to me things they wished they had known at the beginning of their careers.

Spending less than you made: A

I have to credit my parents, because they always told us, “You’re never allowed to spend more than you have.” That was something I always took to heart and was super strict in what I spent, knowing what I had in the bank. When I moved to Chicago, I had $800 and a credit card to buy groceries.

Starting in college, my parents had helped me out so I wouldn’t have bad credit. They paid my credit card on time and I ran up a tab with them for a while. When I got a full-time job, I could cover my rent, my credit card, and bills with my salary. I spent some of my extra time babysitting for supplemental income. Still, I wasn’t making anything extra to save, and I was living paycheck to paycheck for quite a number of years.

Paying down debt: B+

I focused on paying rent, credit cards, utilities, that stuff. I was able to avoid adding new debt, but I held off on paying student loans for 5 or 6 years after college. Instead, my parents were paying my loans because they were able to get a better interest rate than I would have, and I in turn would pay them back in full.

When I was 28, I started paying my parents back once I had a job making a bit more money than what was just covering my living expenses. I still have another 5 years to go, but at this point I know exactly what I owe and how I will pay off my student loans once and for all.

Investing in your future: B

This is the hardest thing to wrap your mind around, unless you’re a business major or are really driven by this mindset right out of school. When I look at my friends, I think a lot of the guys had more of that mindset early on and started out with better habits.

My mindset was that I had to focus on paying back my student loans before I could do anything else, since that was my debt and I had the mindset that any debt was a bad thing and must be paid off as soon as possible. But when I got the job at the law firm, I had some mentors there who explained to me, “That’s ridiculous. You can’t wait until you’re 40 to start thinking about your future and retirement. It's ok to have debt from student loans if you have a plan.”

Everyone who worked there was older and well into their careers. They really helped me work through insurance, benefits, all my options, and decide what to do. One thing they said was, “No matter what you do, start putting money into your 401(k).” I probably wouldn’t have done that without people mentoring me. I was too shortsighted on my own, but on their advice, I started that and have always put money into it since.

Still, I probably could have set aside more. I did the minimum and didn’t branch outside of that too much.

Knowing your money: B

I feel like understanding your money all depends on how you grew up. My parents didn’t go to college, and their setup was just different. I didn’t know anything about their retirement savings. My knowledge came more from people at work over the years, who were like my work parents.

I’m definitely better at this now than I was before, like a lot of people probably. I read my statements, I can do budgeting, and I have always paid my taxes myself, without any support. I feel like I have a better grasp on it, but I’m not always the most confident.

Today it’s pretty simple for me. I have a 401(k) but not a bunch of other investments. I don’t own any property, so it’s pretty straightforward—bills, savings, retirement—in that order. Then investments, which I think of separately, like getting into the stock market or real estate. I'll get there soon hopefully.

Overall, I think I did pretty well with the circumstances I had. The earlier you figure this out the better, but for me and probably most people, that wasn’t necessarily in my 20s. Some things yes, but if you have a better understanding of the full picture a lot earlier, the better off you'll be. That is also something my mentors have told me over the years.