How often do you discuss money topics with your friends? Probably less often than you should!
“What?” you might be thinking. After all, money is not something that should be discussed in polite society, right? Wrong!
Think about it. You discuss everything from makeup to sex with your friends, yet talking money makes you all awkward. It’s silly, isn’t it?
But this is a common thing among women. Money FIT Women study shows that while 75% women want to learn more about money, only 47% of them feel confident enough to bring up these topics on their own.
It’s time to break that taboo. Summon the courage to bring it up when out with your girlfriends. You can all benefit from learning more about money, so why not do it together? Your girlfriends will probably gladly go along with it!
I suggest you to decide on a topic each month and then meet up each week to discuss it.
Here’s a three-month plan that will change your life if you are bold enough to follow through:
Month One: Budget
We all know that we should keep a budget, but how many of us do? The reality is that most of us only have a vague idea of where our money is going. This is a big problem because it slows us down when it comes to achieving our financial goals.
There are three steps to creating and keeping a budget:
- Figure out where your money is going. Print out your bank statements for the last year and go through them. Take notes as you do this, especially how much is coming in and out each month. You might be surprised by what you find.
- Figure out where your money should go. According to Eric Ravenscraft, who wrote a guide called “How to Start Managing Your Money, For Those Who Never Learned Growing Up”, 50%-60% of your budget should go to fixed costs (paying the bills), 20%-35% should go to guilt-free spending, 5%-10% should go to savings, and 10% should go to investments. These are good numbers to aim at, though I’d recommend to lower guilt-free spending and increase savings and investments.
- Make it automatic. Set up an automatic bank transfer from your checking account to your savings account and investments account the day you get paid. That way the only money you’ll ever see will be the money you can spend. This will make keeping a budget infinitely easier.
Discuss each of these steps with your girlfriends and go through each of them together. It might feel awkward at first to share such personal information, but really, think about how much personal information you have already shared with your friends. This will only bring you closer together while improving your finances.
Month Two: Savings
Do you know that according to the Office of National Statistics, 36.6% of Britons said they would be unable to meet unexpected expenses?
This is why savings are so important. Having savings is what makes all the difference in emergency situations. Want some peace of mind? Better start squirreling away!
Here’s what you should discuss with your girlfriends when it comes to savings:
- What is your current savings situation? Again, more than a third of Britons don’t have any savings, so there’s no shame in that. But you have to admit that it’s a problem in order to be able to solve it.
- What are your savings goals? A good savings goal to have is a 12-month emergency fund that would cover your living expenses for a year. Better safe than sorry.
- How do you intend to achieve your savings goals? There are always things you can cut from your budget and there are always opportunities to make a little bit of extra cash here and there. Bounce ideas off each other and you’ll be sure to come up with workable solutions.
Openly talking about savings will help you all to reassure each other that you are not alone in your struggle to put something away and will also help you to come up with new ideas on how to boost those savings accounts!
Month Three: Investments
You don’t want your money to just sit there in your savings account, though - you want it to work for you even while you sleep. This is where investing comes in.
I recommend you to discuss these five topics:
- Investment accounts. Your bank probably offers an account that is just like a savings account but your money is invested in a portfolio of assets. This is probably the safest investment vehicle, but the return on investment is pretty small, usually 3%-5%. It won’t make you rich, but it’s a great substitute for an ordinary savings account if you can afford to put money away and not touch it for a while.
- Real estate. Real estate investment requires a lot of starting capital (down payment for the property), but it can be really lucrative if you manage to acquire several properties while keeping your head above the water.
- Startups. Up until recently, investing in startups was only available to venture capitalist, but with AngelList ordinary people can now invest too. It does require a significant amount of money (usually $10k-$20k), though, and is somewhat reminiscent of a lottery: you put the money in and hope that the startup hits it big and becomes a unicorn. If that happens, the return on investment is huge!
- P2P lending. P2P lending is exactly what we do here at FastInvest. The main idea is that you loan money to a borrower, and then as borrower makes repayments, you get payments every month, including both payments on the principal and the interest. This is a great way to earn passive income. You can also take the money out any time!
- Cryptocurrency. Some say cryptocurrencies like Bitcoin and Ethereum are a bubble, others say that it’s the future. It’s certainly a risky investment due to high volatility. However, the potential is huge (cryptocurrency transactions could surpass $1 trillion this year), and this is a topic that you should definitely learn more about if you are interested in high risk, high reward investing.
Investing is an exciting topic so look forward to many interesting (and sometimes heated) discussions!
Okay, so you have discussed the three main money topics with your girlfriends, and you’re thinking ‘Now what?’.
Here’s how you can keep the momentum going and move forward with your financial education:
- Start a book club. One of the best ways to educate yourself about financial topics is reading books. Pick a book each month, read it, and then discuss it together.
- Attend meetups. There’s probably a business or investing related meetup in your town or city (you can check on Meetup). Organize your girlfriends and attend it… Then head to a bar to discuss it over cocktails!
- Attend seminars. There also must be some business or investing seminars happening in your town or city. Why not go together with your girlfriends? Just don’t forget to discuss it afterwards!
Learning about money with your girlfriends is a great way to bond while doing something valuable with your time, so don’t stop after the initial 3 months, keep moving forward and improving your life!
Work towards your goals together!
It’s very hard to achieve your goals if your group of friends isn’t supportive of those goals.
Imagine that you are trying to save more money. It would be kind of awkward to start declining all the invitations to go shopping all of the sudden, right? That’s why so many people are spending more than they can afford just to keep up with their friends.
Meanwhile, if you have already discussed money and your financial goals with your friends, it’s much easier. Maybe some of them will even want to join you?
You can achieve much more together by all agreeing to dinner parties at home instead of eating out at fancy restaurants or movie nights instead of going out to expensive clubs.
Common goals will also make your bond stronger and make you better friends. So don’t be a loner. Talk to your girlfriends about money and agree to work on your goals together!