My mid-life crisis manifested in a fear about my financial future. Realistically, I’m probably going to be fine. But at least part of that is due to my new-found understanding of (and fascination with) finances.

If you’re anything like me, you’ve never been comfortable talking about money. I grew up solidly middle class, surrounded by solidly low-income/abject poverty. No one had money in my childhood. And no one had their own business. Everyone was an employee, struggling to pay off credit cards, save something (anything!) for a rainy day, and if you were solidly middle class like my parents, you had “retirement” that they took out of your check every month.

We didn’t talk about money. We worried about it some. I knew saving was a good thing. I didn’t know what a stock was or how to get it. I didn’t know about compounding interest. I just figured you work until you’re old and then when you’re old you get a monthly check, the end.

But somehow I found myself starting a business after law school. And muddled through that for over a decade and figured out how to pay myself and my bills and sorta just wandered through the finances of it relatively blindly, but learning bits and pieces as I went.

Then I turned 40 and freaked out because I have no 401k and student loan debt is still maybe a thing and I’ve only put a tiny amount in a Roth IRA and I don’t even know what that really means and I can’t count on social security to actually pay me anything because there’s going to be a reckoning there at some point and with my luck it will totally be me and I’ll be old and poor and living in the worst possible nursing home because I have nothing and no one. Good thing I don’t have a flair for the dramatic…

So I started googling. And then started following people on instagram that teach you about money. And I did actually work with a financial planner to start the Roth IRA so I emailed her. And I talked to my business CPA a little bit.

Here’s what I’ve learned – take it all how you will. I’m passing on knowledge, not giving advice.

1. Emergency Fund – This is your savings account. Everyone should have one. There are stats all over about how most of America lives paycheck to paycheck and couldn’t survive an unexpected bill over $500. I get it. That was most of my life. Or that bill would go on a credit card (if I was lucky enough to have that much room on a credit card) and I’d pay an extra 15% interest on top of the $500 expense. An emergency fund is the buffer. The goal is to save 3-6 months of your expenses and just have that in a savings account so that if you lose your job or fall into a coma or whatever, there is readily-accessible money to help keep the lights on while you figure everything out.
2. High Yield Savings Account (HYSA) – This is where you store your emergency fund. As I write this, interest rates are high. Like 3% plus on an HYSA. My regular bank savings account is .3%. So I’m getting about $50 a month of free money just for keeping my emergency fund in an HYSA. Most are online banks, rather than brick and mortar which is why they can offer higher rates. But they are super easy to open, keep track of, move money to, and many are insured by the FDIC. Ally Bank is a good one. So is Capital One. Added bonus – because my HYSA isn’t part of my regular bank account, I don’t see it when I’m checking my balance so I’m not tempted to spend it because I think I have loads of money. So I just sit and enjoy that it’s earning me a tank of gas or so every month and sometimes choose to invest that extra $50.
3. Investing – This is the scariest part for me. I have lived my entire life knowing virtually nothing about the stock market. Whether it’s middle class upbringing, whether it’s my rural childhood, whether it’s me being a woman, whether it’s just me – the stock market has not entered my frame of reference. I don’t know what it all means and I don’t have time to figure it out. But there are some things that have simplified it for me. Personal Finance Club is a guy that had a bunch of businesses go well for him relatively early in life and he invested wisely and is now work-optional (what the cool kids call early retirement) at about the same age as me. He’s built a team to help people learn how to invest. There are courses available to help you prioritize and familiarize yourself with the stock market and what it all means. There are also lots of other readily-digestible, normal humans who talk all about finances and investing and budgeting and how to be financially responsible via things like podcasts and all the socials. This is one that has helped me and feels relatable. Here’s another one. Take from them what you will. They all have similar advice, but different vibes. Finding someone that you feel like you can digest is the most important.
4. More Investing – So I learned about index funds. This is the Warren Buffet approach (you know, the super chill billionaire associated with Berkshire Hathaway and not associated with trafficking scandals or under indictment anywhere?) Index funds are essentially a group of stocks. So you could buy X number of stock in Apple and let it ride. Or you could buy X number of shares of an index fund and you’ll get to benefit from Apple’s gains, but also buffer it with losses from other companies. But if Apple doesn’t do that great, you’re also getting the opportunity to benefit from other companies’ gains. Index Funds benefit when the whole stock market benefits. And, historically the stock market has gained at an average of close to 11% a year for 100+ years (this is counting the Great Depression in the 1920s AND the Great Recession in the 2008s). So, while it’s not a guarantee by any means, the odds are far likelier that if you put your money in index funds and let it grow, you’ll be better off than investing in any one particular company.
5. Retirement – For most people, you’re like my parents and have employee retirement plans that you can contribute to as part of your benefits package. This is foreign to me and I’m jealous. But, if you have to prioritize your retirement because you have other things you need to do with that money, prioritizing in a certain way makes sense. Priority number 1) if your employer matches your contributions – like you put in $100 and they’ll match that $100 so you get $200 added to your retirement account – do that. Don’t give up free money. Priority number 2) Open a Roth IRA – Fidelity and Vanguard both have super simple options for this and free or low-cost accounts you can open. Roth IRAs are great because you get taxed now. So you pay your payroll tax and you get your money and put $6500 a year into a Roth IRA ($6500 is the annual limit as of 2023). That money doesn’t get taxed again when you pull it out. Nor does any of the growth. So if you invest $6500 and invest it in index funds and gain 10% compounding each year, you get a bunch more money in 30 years that you get tax free – again, free money. We like that. Priority number 3) is then any non-matched 401k contribution for your employer or other similar retirement accounts. They’re not as great as the Roth IRA, but they are still hugely beneficial and will make retirement much more financially viable.
6. Compounding Interest – the reason that all these financial things are so beneficial is because of compounding interest. You put in $1000 and get 3% interest on it, you get $30. Then you have $1030. 3% of that is $30.90. So then you have $1060.90. Then you have $1092.73. As long as you leave your original money in the bank and let the interest it earns grow on itself (compound), your money grows all by itself. If you add to it, it grows that much faster. Compounding interest is the secret to wealth-building. Here’s a link if you want to see that experiment on steroids and play around with it.

This post is long. I hope it’s helpful. We should talk about money. We should know about money. The best opportunity we have to equalize the playing field is to open the access and share the knowledge. If you need some financial girl-power motivation, go get this book and connect with this financial queen.

More than anything though, start learning. On insta and tiktok and podcasts and library books, and pinterest. Find people that can share their knowledge with you. Level up and then share your knowledge with others. Money shouldn’t be scary, it should be a skill.