This is a guest post from a fabulous 20-something finance blogger who writes under the name Money Rabbit.

Money Rabbit is a 23 year old personal finance blogger currently living in Toronto, Ontario.  She likes investing, saving for travel, and long walks on the beach.

MoneyRabbit.ca was started as a form of cataloguing her journey from basement-dwelling twenty-something to millionaire by 30 years old.  Her current obsession is paying off her car, and saving up to climb Mount Kilimanjaro in 2012.

2011 Goal:  Complete a novel.

Taking the Red Pill: 5 Steps for Taking Control of Your Finances

In my second year of University, I had what I now call my “Matrix Moment”.  I was sitting at my computer, staring at my online banking statement and feeling an oh-too-familiar sense of dread.  There was nothing special about this moment; I had been doing the same thing pretty much every day since I started my post-secondary education.  But that afternoon, a thought formed in my head that had frankly never occurred to me before:  “I am in control of my finances.  My finances do not control me.”

Hence the title of the post.  That was the moment that I decided to take the red pill.  Remaining helpless was kicking my butt, and the only way to fight back would be to wake up and learn everything I could about personal finance.  Because guess what, kids?  The education system failed us. We were never taught about investing, planning for retirement, emergency funds, automatic savings, down payments, or really any tool that could assist us with making smart financial decisions in the real world.

The point is, YOU are in control of your financial future.  Regardless of your situation or circumstances, you have the choice to change your life for the better, beginning immediately.

It was very slow to start, but I began right away.  The next day I set up a mutual fund at my bank, and every month $50 would be invested into my new medium-risk fund.  At the time I was working as a hostess in a restaurant on evenings and weekends, so after every shift, I would take my tip-out and put it in a jar on top of my desk.  Wham!  I had the $50 I needed in order to continue investing that month.

However, it is all too easy in your twenties to feel helpless financially.  So many of us are drowning in student debt, or are working entry-level jobs that can barely cover the rent, or are frantically trying to pay off the first car.  Maybe you haven’t decided what you want to do with your life, or have second-guessed your choice of degree, or are currently going through a quarter-life crisis screaming, “WHO THE F&#K AM I?!?!”  It is so easy to sink into the mindset of, “It’ll all be okay when…”  It’ll all be okay when I get a higher paying job.  It’ll all be okay once this car is paid off.  It’ll all be okay when I figure out what I want to do with my life.  It’ll all be okay when I get some success and recognition.  It’ll all be okay when blah blah blah.

Well, if you’re getting a little sick and tired of waiting for that mystical date when your life will magically click into place, I would recommend the following steps, which are relatively painless and you can do right away:

1.  Do something different with your finances – They say the definition of insanity is doing the same thing over and over again while expecting new and different results.  Show your money who the real boss is.  If you’re not currently saving a cent, set up an automatic savings system bi-weekly or monthly.  Even if it’s just $10, it’s a clear signal to your subconscious that YOU are in control, and you are taking positive steps.
2.  Monitor your spending for a week – Part of feeling in control is knowing EXACTLY where you’re coming from, vs. where you want to be.  Observe your spending habits for a week (Mint.com makes it really easy, as long as you use entirely debit/credit for a week.  That’s what I use.)  Then, once you are able to see where your money is really ebbing and flowing, you can start identifying your spending habits and priorities.
3.  Figure out what it is that you want – if it’s to pay off debt, that’s short term.  If it’s a down payment on a house, that’s mid-term.  If it’s for your retirement, it’s long term.  There are different financial strategies for every situation under the sun.  Putting money aside in a high risk mutual fund is suicide for a down payment on a house or vehicle, but it could be the most rewarding option for your retirement.  Start thinking of your ideal financial circumstances (eg. “I am happily debt free, working on saving up for a trip and a house, and every week I tuck away money into my retirement fund”) and shift your strategy to match.
4.  Make sure your bank is working for you – I like to book an appointment with a financial adviser at my bank twice a year, and they shift everything the way I need it, free of charge.  If your bank isn’t doing it for you (eg. charging high fees, doesn’t offer automatic savings/investing plans), then shop around and see if there’s another bank that would be more than happy to do it.  I ended up at my first bank because that’s where my parents banked.  But that doesn’t mean you’re stuck with them for life.
5.  Educate, educate, educate – Visit the personal finance section of your library and get the wisdom of the ages for FREE.  Some beloved titles are, “Think and Grow Rich” by Napolean Hill, “The Wealthy Barber” by David Chilton, and “Automatic Millionaire” by David Bach.

The fact that you’re reading this post means that you’re ready to wake up, or have already woken up, to the financial reality that surrounds us.  W.C. Henley wrote, “I am the Master of my fate, the Captain of my soul.”  I truly believe this applies to your finances.  However, even after taking the reins of your financial future, it still won’t be perfect.  It’s the journey, not the destination.  If success were handed to you on a silver platter, well, it just wouldn’t be any fun (don’t forget, there is no spoon).

Regardless, it starts with you.  The most important step is feeling that yes, you ARE in control.  You hold the debit card, you hold the visa, and it’s your name stamped across the top of your credit score.  So why not own it, accept any past mistakes, and enjoy the new direction you’re taking?

So to all you twenty-somethings out there, I offer my sincere admiration for toughing out the decision to make your life the best it can be.  I am honoured to be writing to you, and I wish you prosperity and success in the New Year.

I remain an imperfect companion on this wacky journey,

Money Rabbit

Amanda Abella

Amanda Abella is a freelance writer and language instructor based out of Miami, Florida. She has been writing professionally since 2009 and holds a degree in English Literature from Ave Maria University. Amanda Abella is available for freelance work, why not hire her?

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