First-gen financial literacy

When I get my first job after I pass the bar, I’m going to make more money than my parents ever have. It’s an incredible accomplishment and a testament to their sacrifice that I am able to make this financial leap. Yet, since my first paycheck when I was fifteen, I’ve never learned how to set money aside "responsibly."

My first job

My first job was at El Pollo Loco which was a ten-minute walk from my home. I got the job because I did what my parents told me to do: walk in and ask if they were hiring. I had already done this at several other fast-food chains within walking distance and been summarily rejected. I remember joking with my friends that I couldn’t even get hired at McDonalds. At El Pollo Loco, though, I was rewarded for my “persistence and grit.” 

My parents encouraged me to get a job but they insisted that I wouldn’t be helping with bills or giving any portion of my paycheck to them. I know I could have helped but they didn’t want me to work for the sake of money. To them, a job meant learning responsibility and sacrifice. It meant that I wouldn’t be able to hang out with my friends whenever I wanted because I was scheduled for a shift. It meant that a movie and a dinner literally cost “two hours of my time.” 

I learned the value of time management and responsibility soon enough, but I didn’t know what to do with the money coming in. My parents were focused on keeping us in school and keeping food on the table. I asked my older sister for advice, and she told me to “just spend it on what you want.” So that’s what I did.

Poor habits

My dad helped me apply for my first Discover credit card when I started college. I could use the card to front the costs for textbooks, class registration, and anything else I might need. He instructed me to pay off the statement balance in full every month, but he didn’t explain why. At that point, I didn’t know what a credit score was, and I was already in the habit of spending money on whatever I wanted. 

Eventually, I just tried submitting a minimum payment on my credit card bill and waited to see if anything would happen. The bank accepted the payment and sent me a bill the next month with another minimum payment due. I was so excited that I thought I had hacked the system. I didn’t tell my dad because I would technically be disobeying him, but he never asked about my bills so I never took the initiative and talked to him about it. If the bank didn’t have a problem with it, why would he? I wasn’t living in poverty but after reading excerpts from Hillbilly Elegy, I realize I was always planning what to buy with my next paycheck. 

For a lot of students like me, the idea of a credit score was so intangible. I had no idea I needed to “build up” my credit score? Why? I was just an undergraduate student making minimum wage. If I needed to buy a car or a home, I’d worry about that when I was making more money. 

I think this is a big struggle for a lot of first-gen students like me; we never experienced the benefits of accrued wealth. We are more likely to graduate with debt and much more likely to drop out of college. It’s difficult to convince myself to set aside money that’ll be a boon to me 40 years later when right now, my student loan debts are going to compound on itself every single month. The ever-present problems that have stood before us our entire lives, such as paying for groceries or rent, have built poor habits that make us want to spend in the present. Furthermore, the costs of social mobility, such as student loans and buying our first car, make it even harder to break these poor habits.

One step at a time

Today, I know what a credit score is and how stupid I was for thinking I had figured out a loophole when I was really accumulating interest and undermining my credit score. I read Dave Ramsey, and I asked financially literate people around me for advice. Every weekend, I go through my bank statements and input charges into QuickBooks to keep track of my spending. I set monthly budgets for myself on food, personal spending, and hobbies. 

I told my parents about the stupid minimum payments I had been making and they wanted to help me. They helped me co-sign on a new car they bought so my credit score could slowly get back up. With my monthly budget, now, I'm always paying off my credit card statement in full. When I was working full-time, I started saving money in my Roth IRA and mutual funds account with an eye to the future.

Financial literacy is an ongoing process, especially when you don’t have a safety net to fall back on. Having worked full-time at a few jobs now, I’m still learning. Now that I’m going to have a salary that eclipses my parents, I’m going to have the luxury of setting aside money, but I’m constantly worried that I’m making a mistake. I’ve resolved to take it one step at a time and to not stress over money I don’t have. It's an odd reversal of my prior bad habit of spending money I didn’t have.