Although this interview was originally meant to be a part of the Sumer School Series posts, life happened and I’m just publishing it now. However, getting your groove on about finances is absolutely timeless and something we should all get comfortable with. The lovely Alejandra from MyLettering is sharing some of her knowledge with us today. Follow through to pick up some great tips on managing your money and the amazing advice she has for people interested in embarking on a healthy finances journey.
1. Can you please tell us a little bit about yourself and what you do nowadays?
I'm Alejandra, I was born and raised in Colombia, I'm a wife, a mom, and the face behind all the art you see in MyLettering. I'm actually an Industrial Engineer and I have a Master of Business Administration, and I focused my career on finances and numbers (I was a teacher at my alma mater). That was until 2 years ago when I discovered lettering and watercolors, and a whole new world opened before my eyes. I realized that my true calling was art; specifically teaching art to those who like me, thought their lives were pretty much defined when they chose a major. Nowadays, I travel around Colombia with my husband and my son teaching lettering and watercolor in different cities, plus we are creating a platform for online learning for Spanish speakers.
2. How did you become interested in the topic of finances?
I used to teach finances, and though I'm mostly committed to art right now, finances are like my first big love. Initially, my interest for finances grew out of convenience, I wanted to teach (as this has always been my true calling), and there was a need for professors specialized in this area that also had an Industrial Engineering degree, as we’d be teaching to students in this field. Once I started researching and studying the topic, keeping up with news on the matter, and eventually teaching it, I realized it was a topic I was passionate about, both for the impact it has on society and in watching the way in which being uninformed makes us make major mistakes (particularly in our youth) that have an impact on the long run.
3. What are the top recommendations you have for young women interested in learning more about their personal finances and taking control of them?
a. Learn the basics. What you need to know is not rocket science; you only need to learn a few things to understand how it works. You don't need to know all the technical stuff, just learn about Time Value of Money (TMV) and you're halfway there. Also learn about the basics of compound interest, present value, and future value. These will get you through and will give you a grounded perspective about your hard earned money and how credit cards are NOT your friends. You can find many online articles and resources that teach you about this, you can even take a free online course in www.coursera.com.
It may seem overwhelming but it only gets easier once you start
b. Two words: DELAYED GRATIFICATION. Our culture is not a patient one, we want immediate rewards and we can have them. But when it comes to money, -and most of our rewards involve money-, "right now" has a price tag, usually one with many digits on it. I'm not saying we don't deserve that pair of shoes, or those drinks with friends because we got a promotion or finished a task that seemed impossible, but we have to be very wise and careful because, especially when we're young every penny is an investment in our future, so choose wisely when and where to spend them. Rewards are amazing, but saving is even a greater reward. Money that we save has the potential for growth, while the money we spend is gone right away. Add to that the possibility of accessing these self-rewards with a credit card: not only is your money going away, it’s multiplying but in the opposite direction you’d like it to. You spend a given amount but you’ll have to repay that and pluses when it comes to interest and management fees. And both things will bring you the same results (except for the debt you would or wouldn’t accumulate). Instead of booking a trip on an impulse and charging it on your credit card, you can start putting money away for it and pay it in full when you can. In both cases, you get to go on a wonderful trip, but only in one of them do you pay so much more than you should in fees and return with debt to worry about paying off.
c. If it is on sale, but you have to charge it to your credit card... RUN AWAY. One of the greatest traps with discounts is when they invite us to get that immediate reward, that huge discounts, it almost feels as if you’d be losing money by not getting it, but unless we have the money for it in cash, in your checking account, or you’re able to pay your credit card in full each month, using your credit card is not worth the trouble. Credit cards have the highest interest rates in the market (this is because in finances running a higher risk has a higher interest – it would be more likely for someone to miss a credit card payment than a mortgage, right? So that’s where the risk lies for them). So if you’re paying something off in several installments by the time you’ve paid it in full you will have spent more than it was originally worth, and then if you add interest and management fees it’s probably even more than the item was before it event went on sale.
d. Maybe you love the points program on your credit card and you just won't give it up, plus you have all these subscriptions online that require a credit card. Here is my piece of advice: buy only what you can pay immediately... so forget multiple payments: if you can't afford it with one payment YOU CAN'T AFFORD IT. If you have multiple credit cards (I hope you don't), maybe you can try using one only for subscriptions, that way you can really control how much money you're spending on those and see if once they are all added up you're comfortable with that monthly expenditure.
e. Budget, budget, and budget. There's a concept called "zero-based budgeting" and it means that you plan ahead where every single dollar will go and by the end, all your earnings minus your planned expenses equal zero. How can you achieve this? By planning ahead how much money you will save, how much money you will spend eating out, on clothes, shoes, and you even plan ahead for the unexpected. For example, try putting 10% (or more, if you can afford it) monthly towards “cushion money,” sometimes it's medicine, sometimes it's a gift for a party that you were invited to last minute, some months this will remain untouched and then it becomes adds onto the cushion for next month’s “just in cases.” We can plan and plan and plan, but life always throws us things we don't expect. You don't know the future, but you can be prepared for it. You can find tools for this method of budgeting all over the Internet.
**You can visit our post on budgeting right here and request a sample to set up your own budgeting file.
f. I could go on and on about this all day long, but I don’t want to overload you, so I'm just going to close with what’s probably the most important concept for me, and that is SAVE, save as much money as you can, without overdoing it, of course, the idea is not that you're the next star of the show "extreme cheapskates", but that you're in control of your money, for you to know where each of your dollars are going and not that at the end of the month you find yourself asking where did all my money go? Save for your big expenses and for treating yourself, save for a rainy day. Saving is investing in your future and your peace of mind. Nothing will take your peace of mind away as much as debt will, and once you see half your salary evaporating into bank payments you’ll see that instant reward yesterday is nothing more than a headache today.
4. Is there anything else you'd like to share with us?
When I started to learn about finances, the first person I had to apply all these lessons on was myself. I’m very impatient and I have a hard time waiting. Many times while I was studying I’d feel very silly with all the financial decisions I had made in the past and wished I could turn back time and be wise with the way in which I managed my money.
There’s a Dave Ramsey quote that really caught my attention: “if you live like no one else, later you can live like no one else.” This was made in reference particularly to young people, as we sometimes worry too much about having the same clothes, cars, or trips as others, meaning we want to live like everyone else, but when you don’t have the resources that will lead you to live like everyone else: with debt, depending on your credit card, taking on an endless mortgage, and assigning such a large part of your income to bank payments. Whereas if you delay that gratification today, live like no one else is living today, eventually you’ll be the one that will be able to live like no one else in the sense of being debt free and with healthy financial habits. He also says, "You can buy fun, but you can't buy happiness, don't get them confused.”
See ya in a few...
Ale thank you so, so much for taking the time to answer these questions for us!! Where can my readers find you and see more of the amazing lettering work you do?