Y’all, my baby-boomer Daddy raised me right. He helped me write my first resume, get my first job at 16, do my own taxes, and open all my checking and savings accounts. He taught me about direct deposits and all things insurance and how putting money into my 401k was something I absolutely needed to do as soon as possible. Coming out of college, I thought I was super prepared for the financial future with a few thousand dollars in my savings account and three hourly wage jobs. And then I got married.
Before meeting Jake, I was working several part-time jobs, paying cheap rent living with a family I, to this day, adore. I was very content knowing the general amounts in my checking and savings accounts and knowing roughly what I was spending each month but not necessarily budgeting. I knew where my money was and had a general idea of where it was going and that’s all I really needed to know.
Around the time my husband Jake and I got engaged (actually, within the same week), I started my first salaried position with a company I was (and am) totally stoked about. With all the excitement about the position and wonderful benefits, coupled with all the excitement from the engagement and bringing our lives together, money came to the forefront of my conversations with Jake a lot sooner than I was expecting.
We dove straight into 401ks, wedding budgeting, buying a condo, and combining our finances really early on and quickly learned that we have very different approaches to money. Where I thought keeping my money safe in a savings account earning interest was the smart, conservative thing to do, Jake was all about investments and Roth IRAs and the stock market and other grownup-sounding things I really knew nothing about. And all of the things he was talking about sounded scary and risky and like nothing I wanted to do at all.
On top of that, I was now looking at sharing the money I had earned over my 8 years of independent hard work in the good old American workforce. Granted, I was looking at sharing with a kind, intelligent man whom I love and respect but still. It was a lot all at once.
So what happened? Jake explained that my money was doing nothing for me by sitting in my savings account. If we think of our money as employees working for us, each dollar in the bank is like an employee watching cat videos all day. They’re there, they’re capable, they’re able to be put to work at a moment’s notice, but they’re not actually getting anything done.
When you invest your money into mutual funds or index funds, you’re putting your employees to work for you to make more money! Yay money! Investments like these are a long-term bet that our economy will do better in the future than it’s currently doing. This bet is safe because even the longest economic downturns have only been a few years at a time and we’ve been able to come out of those recessions into times of stability or prosperity.*
And it doesn’t stop there. 401ks and Roth IRAs are retirement accounts that are tax-advantaged investments. Instead of your money hangin’ out on snapchat, when you put it in these accounts, it’s an employee of the month, every month, that won’t quit on you till you’re 60. (Jake would like me to clarify that these investments won’t stop earning you money when you’re 60, you just can’t easily touch the money that’s in these accounts until then).
I still struggle understanding what each kind of investment is and how it’s different from the others but now I understand that investing money isn’t quite as scary and complicated as I once thought it was. I get Jake’s frustration at me wanting to keep my money “safely” in my savings account and hope that anyone else who has the same understanding as I did not too long ago, maybe understands better how they can get more bang for their buck by investing. And being able to have a say into where our money goes each month has put to rest any qualms I had about sharing my hard-earned salary. Actually, budgeting and investing aren’t that bad.
So maybe my Daddy didn’t give me the whole story on money as a young adult. But you know what he did give me? A guide to picking a husband who cares just as much about all those adulty things as he does. So now they can bond about trading stocks and all the 401k things and I’ll just sit quietly in a corner and laugh at them. Buncha nerds.
*Obviously we don’t know what the future holds but if the market continues as it has since 1792, then you can expect a return on your investment.