There’s so much noise in the personal finance space—especially on social media. In many ways, a lot has changed in 10 years since Lindsey was working at Refinery29 on the Money Diaries franchise. More people speak openly about their finances. Personal finance advice is much more democratic—you can find it everywhere. And we’ve weathered all kinds of crazy economic ups and downs over the last decade—the pandemic, the meme stock craze, and the AI boom, just to name a few.
If all of it makes your head hurt, well, we feel the same! Which is part of why we were inspired to create The Purse. We wanted to build a platform where people feel comfortable learning about their money from experts who aren’t going to judge, yell, or ridicule.
It’s not all sunshine and roses, though. Sometimes we might offer some hard truths (we use the word “sacrifice” a lot in this list) or admit our own mistakes and shortcomings. (We both still have old 401(k)s that need to be rolled over, and Lindsey didn’t know until last night how much she spent on home owner’s insurance last year.) We’re learning alongside you.
We also see this as a living, breathing document. We reserve the right to amend our principles over time. But we felt it was important to share these ideals, so that you can understand the money philosophies that inform so much of what we do at The Purse.
1. Your finances should be (mostly) boring
When people learn we write about personal finance for a living, they often ask us for our stock tips or money hacks. Surely, there must be some secret to how the rich get rich, some life-changing strategy normal people aren’t privy to.
But the truth is that for most people, the boring money tips you’ve likely heard—and will hear again—are what work best. Particularly when you’re just starting out on your financial journey.
That includes: spending less than you earn; not racking up unnecessary debt; investing consistently for retirement in low-cost, diversified index funds; avoiding lifestyle creep; setting up automatic savings and investments; and so on.
Finance bros may swear by their day trades and options, but those strategies are usually a recipe for disaster. You realistically don’t need more than one or two credit cards, unless you trust yourself to keep track of your perks and maximize your points responsibly. If someone is trying to sell you something that seems too good to be true, it probably is.
You need a financial foundation, and foundations are not a good spot for experimentation. That doesn’t mean you can’t try out a few things later—dip your toe into alternative investments, test out new tax-saving strategies—but if you don’t even have a sufficient emergency fund yet, you need to slow down and start there. Which brings us to our next principle.
2. You need to have the basics down before you add the bells and whistles
When you’re first getting your finances in order—whatever your age—you need the following:
- An emergency fund, ideally with three to six months’ worth of expenses in a high-yield savings account
- A retirement account, whether that’s an employer-sponsored 401(k) or your own personal IRA, or some combination
- A plan for paying off your debt
If you have high-interest credit card debt, pause the retirement contributions and decrease your emergency fund goal to focus on paying off those balances ASAP. Credit cards have the highest interest rates of any debt product, plus the interest compounds daily, which means your balance grows a lot and fast. The more quickly you get it under control, the easier it will be to pay it off.
As part of the saving/investing/debt-payoff journey, you also need to take some time to understand your expenses and your goals. How much are you spending each month? How do you feel about those expenses? If you don’t feel like you can save, are there areas of your spending where you can cut back? Or how can you earn more money to afford the lifestyle you want?
Personal finance personality Ramit Sethi is popular for good reason. His formula for determining your “rich life” is so simple, which also makes it so doable. When you’re figuring out the basics, make sure you’re also taking time to understand your priorities. And remember, priorities change! So you’ll want to re-evaluate from time to time.
3. There’s no one right answer for everyone—and that’s frustrating
If there’s one thing we’ve learned from talking to people about their finances, it’s that there’s no one right way to earn, save, spend, or invest your money. You may aim to follow the general guidelines put forth by personal finance experts, but inevitably you will run up against something that doesn’t make sense in the context of your life.
How much should you have saved by X age? What’s a good goal for retirement? At what age should you get a credit card, buy a home, or set up a life insurance plan? The answer to all of those questions: It depends!
And that can be really frustrating! It’s natural to want to be told exactly how much to save and exactly what to invest in now to be set for the future, but the problem is that no one knows the answers. And there’s definitely not one answer that applies to every single person out there. You will have to make peace with gray areas.
Personal finance is personal. And you have to put in the work to be successful, which includes deciding which goals you want to achieve and how much money you’ll need to fund them.
4. Good things take time, but don’t focus on timing
Anyone who has ever engaged with personal finance content has probably heard this saying: “The best time to start saving was yesterday. The second best is today.” It’s repeated ad nauseam because, well, it’s good advice.
It can be hard to get started saving and investing when you’re young and money is tight (or when you’re older and money is tight). And you’ll likely need to make some sacrifices in order to put aside cash for an emergency fund and/or retirement. But a small sacrifice in your 20s can pay off big time in your 40s, 50s, and beyond, as you don’t have to worry as much about investing bigger sums to achieve your goals.
Compound interest truly is one of the world’s wonders. The Federal Reserve Bank of St. Louis does a good job of explaining how it works in the most basic terms. Long story short: You really begin to build wealth when you start earning returns on your investments, and then the returns start earning returns, too. With a reasonable 6% return, you can double your money in 12 years.
This is where we add the disclaimer that past returns are not a guarantee of future results. The stock market has been on a meteoric rise in recent history, but at some point it will probably drop (and maybe even crash). The key in those dramatic situations is to stay the course and not panic. What goes up comes down but also goes up again. While you need time for your investments to grow, don’t get too caught up in timing.
Very few people get rich overnight—or by trying to time the markets. But if you’re patient and disciplined (and have a healthy dose of luck on your side), you can accomplish a myriad of financial goals like saving up an emergency fund, investing for retirement, and buying a home.
But that brings us to our next point.
5. You can do anything with your money but not everything
Was it Sex and the City or Lindsey’s wise friend Cristina who said it feels impossible to have a boyfriend, a good apartment, and a job you love all at the same time. You can have two of the three, but, inevitably, you’ll always be searching/striving for something.
The same can be said about financial goals. Unless you’re very wealthy, you’re going to have to make some compromises. Most people don’t get to spend their 20s traveling the world and buying a house. Usually there’s some sacrifice involved in order to achieve your big dreams. It’s up to you to decide how much you’re willing to give up and for what. Because Lindsey’s goals are different from Alicia’s, and Alicia’s goals are different from yours, dear reader.
Take the time to decide what you really want to achieve—and try to block out the noise of people telling you what they think you should do. Sure, homeownership is a great goal, but if you hate yard work and want to live in a different city every few years, it might not be the right goal for you.
6. Take the easy wins
We can acknowledge that there are plenty of nuances and asterisks when it comes to managing your money while understanding that there are also plenty of simple things anyone can do that will pay dividends, literally and metaphorically. So simple, in fact, that we may overlook them or think they’re not worth doing, since the payoff doesn’t seem that big, at least at first. But life is hard enough—you might as well take the easy wins.
Our favorites:
- Keep your cash savings in a high-yield savings account. Right now, you should be earning at least a 3% APY on your savings account. It might not seem like much if you don’t have a ton of savings yet, but why not collect a few extra bucks a month? Make sure your account is fee-free and held at an FDIC-insured bank, and you’re golden.
- Automate your savings and investment contributions. There is so much research out there on the effectiveness of automating savings. As we are all infinitely fallible, automation gives us one less thing to worry about and stress over.
- Invest up to your employer 401(k) match if you are offered one. This could be 3%, this could be 6%—whatever it is, don’t leave it on the table. This is technically part of your total compensation, and if you wouldn’t willingly take a 3% or 6% pay cut, you don’t want to miss this money. It’s one of the best investments out there—a 100% return guaranteed, which is otherwise unheard of.
There are probably a dozen more easy money wins we’re missing—sound off in the comments with yours!
Don’t miss our September sale! Annual subscriptions are 10% off!
7. It’s smart to save even if you think it’s the end of the world
Thanks to advancements in artificial intelligence, the world may very well end in 2030. (Though we have our doubts!) You should still try to save for retirement.
Financial nihilism is all the rage right now, and for good reason. There’s no denying that the average person is up against a lot: high prices, an unstable job market, ever-widening inequality, and more. It feels extremely silly to care about your 401(k) or your credit score or paying off debt when the richest men in the history of the world are trying to make your job obsolete—and maybe destroying humanity in the process.
But ultimately, you are only hurting yourself (and your family) by not at least saving a little for the future. We’re optimists—with a little planning and financial know-how, we believe you can really set yourself up for a better future.
Alicia Adamczyk
8. Don’t worry about the Joneses—and certainly don’t try to keep up with them
It’s so easy to fall into a comparison spiral on social media, as you scroll by friends and strangers who seem to be living the most enviable lives. They live in four-story Brooklyn brownstones! They vacation in the Dolomites! Their kids are star students at $60,000-a-year private schools! (This might only be Lindsey’s comparison spiral!)
But going back to principle no. 3: There’s no one right answer for everyone. And the same thing applies when it comes to trying to keep up with the Joneses. It’s not worth it! Your life is richer if you can figure out how to live it on your own terms and make spending, saving, and earning decisions that make your life better, regardless of how you think others will respond.
That can mean all kinds of things. Choosing to take a lower paying, more flexible job to prioritize your health or family time. Staying in a small home and prioritizing vacations. Deciding to have just one kid. Driving the same car forever. Or never saying yes to brunch with friends.
Amy Poehler may have said it best when she wrote in her memoir, “Good for them, not for me.” It’s a mantra to return to whenever you feel overwhelmed by the pressure from others—real or imagined.
9. Being “good” with money has nothing to do with morality
Many uber popular personal finance gurus of the past have a tendency to make people feel bad about their financial decisions. Often, they call the advice-seekers “idiots” or talk down to them as if they can’t grasp certain financial concepts. These experts call this “tough love,” but there’s nothing loving about it. It only serves to reinforce the societal message that being “bad” with money is a moral failing.
You’re not a bad person if you have credit card debt. And it doesn’t matter if you accrued that debt because you went on a shopping spree at Bloomingdale’s or because your health insurance sucks. You’re not a bad person if you don’t have a fully funded emergency fund. You’re not a bad person if you have to ask your parents for financial support sometimes.
We want to drive this point home because it explains why we emphasize the importance of being kind in the comment section of Home Economics. So often people are quick to judge others’ financial decisions and declare them unilaterally “bad.”
But none of us are making financial decisions with 20/20 vision. We’re inevitably going to make some mistakes. And yeah, it sucks that those mistakes have to do with real cash money. Still, it’s not a moral failing.
10. Financial success is often unfair
Another reason we don’t consider being “bad” with money a moral failing: So much of the system is inherently unfair, built to punish certain types of people while rewarding the already rich and powerful. Some aspects of financial success are not available to everyone, by design.
Tracy Hume
But that doesn’t mean you shouldn’t try. We wouldn’t be here if we thought there was no way to better your financial situation—we know you can, and we want to do it together.
In fact, a little encouragement and support can do wonders for a person’s confidence, outlook, and financial future. No, we’re (probably) not going to fix systemic inequality or everyone’s individual money problems by discussing brokerage accounts or how to best budget. But we can discuss time-tested strategies, share our own stories, and help each other feel less alone.
We summed up our money philosophy in just about 2,500 words—when in truth it could be a book. (Maybe it should be a book?!) What did we leave out? What is on your list of financial principles you live by?
More from The Purse:
Lindsey Stanberry
Alicia Adamczyk
This post includes affiliate links. The Purse may receive compensation if you click the link and make a purchase. It comes at no cost to you.
