Thursday, March 15, 2007

Is Financial Savvy Compatible with a Creative Lifestyle?

I was having brunch with a friend, recently--an old friend who's currently pursuing a career in theater and also working a couple of part-time jobs to support herself. She's been living with her parents to save money, and living frugally on top of that, and she's done a great job of it--she has enough to get herself a two-year Master's degree at a theater program she's been looking at. She's not sure that's how she wants to spend the money, but it is there.

Anyway, we were catching up, not having seen each other for a few weeks, and she mentioned that one of her jobs was in jeopardy since she's the most junior staff member at a sole proprietorship the owner of which took a serious hit in the stock fumble at the end of February.

"Me, too," I said, casually. "I mean, percentage-wise. Not in terms of, like, actual dollar amounts."

She stared at me like I had two heads. "You have money in the stock market?"

Perhaps my assumptions have been somewhat changed during my personal finance education kick, but I was sort of surprised. I said, "Of course."

We were, briefly, like two ships passing in the night.

But, see, this is totally what I mean about young, creatively-inclined people and money. We don't learn to manage our money because we have this ridiculous idea that people like us--people who listen to indie music and have liberal-arts degrees and want to make art--don't focus on money. This is dumb. It's dumb because we, of all people, need to be profoundly careful about managing our finances--if you want to be able to pursue a markedly un-lucrative life, you'd better be able to make the most of what you have, is how my reasoning goes. She's got a hefty savings sitting in the bank--I'd bet in a passbook savings account earning less than 1%. It would be really easy for her to open up the exact same Roth that I have: internet access, low fees, one target fund, done. Why doesn't she do it?

It's not venal to want to get your financial house in order. It doesn't make you some Wall Street moron, some stuffy Young Republican with briefcase and slicked-back hair. Financial disorganization isn't necessarily a demonstration of your free spirit, your unworldliness--mostly, it's just willful blindness. I do not know what I want to do with my life, but I do know that I want to have as many options as possible. I don't want to have to suck it up and take an office job I hate because my retirement savings are scrawny. I always want to have the freedom to pursue what I really want to do--and making smart financial decisions when I'm young is a good early step towards that opportunity.

7 comments:

Strange Bird said...

Bravo! When I was your age, though (ha! as if it were so long ago!), I had nothing invested simply because I didn't know what I was doing. Rather than look at you like an alien if you'd said that to me, I'd start grilling you for information. :)

Jon said...

Hey,

I found your blog the other day and read the whole thing in one sitting. I am also a 23 year old who just opened up a ROTH and have found your entries to be relevant and entertaining.

I'm studying to be an opera singer and I realized I will never have a 401(k) and probably not social security, so who else can I depend upon for my retirement than myself? It amazes me that people who spend so much time planning for auditions and the near future spend no time concerned about the distant future.

Keep up the great work!

Jon

Jenn @ Frugal Upstate said...

You know, if she was actually interested, I would advise that she read the book "the wealthy barber". It is a very easy read and a very basic introduction to the ideas of personal finance (not the nity gritty of how to pick a mutual fund or anything). The biggest thing I learned when I started to do the who PF and Frugality thing was the whole "Pay yourself first" idea-and that went right into the retirement savings. It sounds like it would be so easy for your friend to do that. Heck-even if it was only a small amount each month, at least it would be SOMETHING.

db said...

English major -- what you say is spot on -- especially since I'm growing more fond of the "Law of Attraction" mindset (ok, I'm not a total convert but it's got a grain of truth to it).

It seems to me that if you want to be free artistically, if you know that you have a financial cushion to fall back on you'll be able to pursue bigger risks than if you are living hand to mouth. There's nothing ennobling about struggling to pay for rent and groceries -- it's simply a burden and it can be a dead weight.

Good for you! If you haven't read "The Richest Man in Babylon" give that a try or recommend it to doubters.

P.S. -- I was an English (and philsophy) major too, and so I've been there. My first years out of college were really rough -- hang in there you seem like you are doing great. And my above comments are cold hard experience -- through all my times of being cash strapped, I've found it impossibly difficult to take big risks on my writing and art like I'd like to. Instead I stuff my creativity day by day in the interest of getting financially free.

db
www.debtblitzkrieg.com

Wanda said...

I have a non-pf question ... what's the difference between toward and towards? I always get confused on that point.

finance girl said...

Your friend could really learn from you. Here's hoping she does! I have a friend (45 years old) who prides himself on being "creative" and not copping to the conventional "go to a job" type of life (he trains artists in Africa to go to market with their product; sounds cool, yep)but he has NO savings. NOTHING. When I have broached savingw with him in the past (incl. retirement) he makes it clear that he is NOT into it at all and I suspect sees me as a crazy selfish capitalist. sigh.

Anonymous said...

Hi EM:

If my experience is anything to go by, I think you may be making a lot of assumptions about your friend's lack of financial sophistication.

As an artist myself, I currently work full-time day job hours in order to support my "art habit". Yet in the past, I have worked contract-to-contract, never knowing when it would come to an end and my income would dry up for an unpredictable period of time, leaving me to subsist on whatever money I had managed to save while working.

Back then, I was also saving as much money as I could towards the lump-sum tuition required for entry into art school, without the luxury of being able to save by living with my parents, etc.

I've been in continuous employment for four years now, though not always in the same job. (Not an art job, sadly!) I believe that it is in finding some income stability that opens your mind up to the possibility of saving for the future.

Not that you can't do this if your income isn't stable; but that in that instance, your mind is predisposed to worrying about if you can make next month's rent, bills, etc. It's harder to see, or be inclined to see, the bigger landscape when your income next winter is uncertain.

So don't judge her, give her a break: while we all could stand to manage our money a bit smarter, your financial independence may just be on a bit more secure footing than hers is right now, or is likely to be in the near future.

Your faithful reader,
Meadow