Like most millennials, becoming financially independent can be difficult. Luckily, Erin Lowry developed the blog, Broke Millennial, to help everyone who’s trying to survive without the help of their parents. From advice on budgeting to boosting your credit, this financial expert has valuable advice for people of any age bracket! Check out our interview with her for some great words of wisdom!
Hi Erin, great to have you with us here today. You mention on your blog Broke Millennial that what inspired your love for personal finance was a deliciously educational combination of Krispy Kreme donuts and a basic lesson in profit and loss. Can you walk us through this story, and how it affected your financial journey from then on?
Sure! It was the summer of 1996 and I, a precocious seven-year-old girl, decided I wanted to try to make some quick cash at my mother’s yard sale. I set up a Fisher-Price table and stacked it with boxes of Krispy Kreme doughnuts. I enlisted my little sister to help me charm the bargain hunters into taking our massive upsell of 50 cents for a doughnut.
After we sold out, I took in my teal fanny pack, I counted up my earnings, and proudly told my father I’d made a lot of money that day. He asked to see my money. After being subjected to seven years of "candy tax" at Halloween, I clutched the pouch to my chest, refusing to show him. Feeling the weight of all those quarters, I imagined what this money could buy at Toys-R-Us.
My dad scooped up the fanny pack and carefully counted out the money on our picnic table and proceeded to give me my first lesson in economics. He counted out the money I owed him for covering the cost of buying the doughnuts and then had me pay my little sister for her hours of labor. The remaining cash, he told me, was my net profit.
At that moment I had never felt so cheated in my life.
Honestly, that lesson was only the beginning. Both my parents were hands on when it came to not only teaching us about how money worked, but the value of a dollar. My sister and I would have to pay for 50% of toys we wanted (excluding birthdays and Christmas), which curbed impulse buying at an incredibly early age. We were taught how to balance checkbooks and the importance of saving.
Those early life lessons made dealing with money empowering and never intimidating.
What do you think it is about millennials that works against them as they enter into the workforce, attempt to become financially self-sufficient, and finally cut the cord that tethers them to their parents?
For those who grew up never needing to think about money, it can be really scary to handle your finances alone. I had a lot of friends who would talk about just hoping they had enough to cover expenses at the end of the month instead of checking their bank accounts or keeping tabs on how much money was coming in versus going out.
This fearful mentality about money is what inspired me to start Broke Millennial. I wanted to create a safe space for people to learn about basic financial concepts without feeling intimidated. I try to infuse a lot of humor into my writing in order to keep potentially dry topics more appealing.
You graduated college with a B.A. in Journalism and Theatre. How many jobs have you held down since leaving the alma mater, what were they, and how did you land them?
I moved to New York right after graduation and originally worked for a popular late night show. To subsidize that not exactly six-figure-salary, I also worked as a Starbucks barista and did a lot of babysitting. After I wrapped that gig, I worked in public relations for a little while and started BrokeMillennial and freelancing on the side. Now, I’m working for a startup here in New York City called MagnifyMoney. The site provides unbiased recommendations and helps people save hundreds to thousands of dollars by finding the financial products that are the best fit for their lifestyles.
In all your writing, there is a recurring theme of helping millennials become “financially literate.” How did you learn (or teach yourself) the major principles of financial aptitude?
My parents. I am fortunate that my parents never made money a taboo topic in our household. They also instilled in me the desire to be a saver -- which has served me incredibly well in my adult life. After my early financial lessons, I started to do a lot of reading, listening to podcasts, watching documentaries, and consuming any sort of media that would teach me about money.
One of the keys to financial success you mention is saving – for you, that comes in the form of a 401k at work. How do you decide what percentage of your income to save, spend on necessary expenses, and finally splurge on the not-so-necessary ones?
I’ve been a saver well before ever getting to take advantage of a 401(k). In college, I’d save 50% of every paycheck I got for being an RA in the hopes of having a nest egg to move to New York City.
In my early days here, I couldn’t come close to saving 50% but I did have a little envelope system to tuck money away for savings, utilities and rent. When I say envelope -- I literally mean I’d put cash in envelopes. Thanks to the Starbucks gig and babysitting, I had a lot of cash sitting around. In retrospect it was a completely idiotic move. Thank God I never got robbed!
Once I started a grown-up job and had access to a 401(k) I began to re-evaluate my strategy. My company matched at 4%, so I ended up deferring 10% into my 401(k) just so I knew I’d automatically be saving 10%. I also put 15% of each paycheck into a savings account to have an emergency fund.
Then I’d have money set aside for my bills (rent, utilities, phone) and a set amount for basic living (groceries, laundry, etc.); the rest was my “fun” money.
I’m a big believer in the “pay yourself first” mentality. When you look at your base-pay and subtract the cost of monthly expenses (rent/mortgage, groceries, insurance, student loans), you can then deduce how much you can put into savings. Even if seems like a trivial amount -- say 3% -- it still gets you in the habit of saving. Every time your paycheck comes in you should immediately put away that percentage into savings. As your income increases, so should the percentage you save.
After graduating college, you moved almost immediately to New York City – one of your lifelong dreams. New York also happens to be one of the most expensive cities in the world. What techniques do you use when searching for the best deals New York City has to offer?
Social media, local magazines, word of mouth, blogs, or just a basic Google search! There are tons of ways to find out about free, unique activities in New York.
You mentioned in an interview on Workable Wealth that you take advantage of free recreational events in New York City. How do you find these awesome and affordable activities?
Now that I’ve been here three years, I’ve managed to cultivate a list of great activities, and I learn new tricks and tips all the time. You get pretty resourceful when you have limited discretionary income.
I published a pretty extensive list of things to do for cheap or free in New York, and sometimes I like to share it on social media to ask for updates.
My sister also gave me a book called The Cheap Bastard’s Guide to New York City, which really helped me survive my first year. It has details on everything from happy hours with free food to cheap admission to museums to where to get your hair cut.
You’ve garnered a Twitter following of over 2,000 fans. Have any of your followers ever surprised you with a personal finance tip you didn’t know before?
Absolutely! I’d actually never heard about a “soft inquiry” on your credit score until a follower mentioned it in response to an article I’d written on credit history.
If you apply for a P2P loan through a Prosper or Lending Club then they’ll do what’s called a soft inquiry on your credit score to evaluate if you’re an eligible candidate for a loan. A soft inquiry doesn’t have an impact on your score. A hard inquiry is what happens when you apply for a new credit card or a mortgage and typically causes your credit score to take a small dip (usually 10-20 points).
He pointed out that if you get approved for a loan then you know the range your score is in based on what those companies require to receive a loan. There are also free sites out there that can show you your credit score, but they only pull from one of the three credit bureaus, so it isn’t a 100% accurate representation.
Many jobs available to millennials are freelance positions. These, when bundled together, can often pay a livable wage, but lack health and other benefits that come with full-time employment positions. How should a freelancer go about finding a health insurance package without spending a fortune?
Insurance is not my forte, but I would recommend looking into a freelancers union. At the very least, they can help point you to the right resources and hopefully help you find a plan that doesn’t bleed your bank account dry. There are also a lot of great bloggers out there who’ve written about health coverage as a freelancer and the impact of ACA on their wallets.
Thank you so much for speaking with us today, Erin. Do you have any last words of wisdom for our readers?
Never be afraid to ask questions about your financial situation! If you don’t understand how to invest or set up a 401(k) or contribute to an IRA or find the best credit card or savings account for you -- just start asking and researching. Always feel free to tweet or email me directly!
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