I recently had a chance to have a conversation with Kimberly Palmer, author of Generation Earn, and writer for the US News. What an insightful, personable, and refreshing interview! I could tell after only a few minutes that Kimberly has combined both her personal experiences in “life” and extensive knowledge in personal finance to formulate her opinions. And some of her answers may surprise you! I’ve included an excerpt of the interview below:
Your perspective on personal finance is a very interesting one. It’s basically a dichotomy where you advocate “spending in this area” but “scrimping in this area.” For example, a professional wardrobe may be worth spending money on. It seems that this is a fine line to draw, especially for most young professionals who might take this as carte blanche to go nuts on new clothes for themselves. Most typical financial gurus advocate “frugality” across the board. Where did you come up with this perspective?
KP: I used to feel like a hypocrite because I am a personal finance writer but I spend a lot of money in some areas, like on time-saving services such as grocery delivery. But then I realized that I was behaving completely rationally and it doesn’t make any sense to apply a frugal attitude across the board. Spending on anything that will advance your career, like a new website, or coaching, can pay back big time later. And what could be a better purchase than something that saves you time?
Where did you get the inspiration for your book — from your own personal experience? And, if so, was this a type of “success story” for you? Or did you have good solid money habits from the get-go?
KP: It’s not that I have the best money habits, but I just didn’t relate to the “generation debt” stereotype that’s always being applied to our generation. It makes me kind of mad that anyone who’s part of generation X or generation Y is automatically stereotyped as being really bad with money and drowning in debt. It’s just not true. If anything, the recession has inspired us to learn more about the economy and be better with our finances. I wrote Generation Earn to help people in that situation – people who also wanted to focus on the positive side of money and everything it can do for them, from creating financial security to supporting their families to giving back.
What role do parents play in the personal finances of their children? As a recent first-time mother, that question must have already crossed your mind. It seems to me that parents play a huge role in instilling these values BEFORE graduation. Your thoughts?
KP: I completely agree. My mom wrote a letter to my sisters and me when we were in high school that basically explained to us why it’s so important to save and live below your means. Even more than that letter, she and my dad basically taught us that lesson by example. That’s probably the most important thing parents can do – I hope to do the same for my daughter!
Your book includes a lengthy section on giving back. What are some of the charities on your donation list, and why?
KP: I am really drawn to charities that work with young children or high school students. The movie Slumdog Millionaire inspired me to find a charity in India that works with street children. I’ve also really enjoyed supporting a nonprofit in Chicago called Literature for All of Us that promotes literacy and writing among high school students.
How do you think patience, or lack thereof, comes into play regarding savings and getting out of debt? Today’s society seems to have lost all patience. Everything is “faster, faster, faster” — news up to the second, and so on. But especially with regards to investing and getting out of debt (like with large student loans), patience seems to be the golden virtue. Can one “train” oneself to be patient? Can one “learn” patience?
KP: The people I interviewed in Generation Earn who most successfully mastered patience basically did it by starting small. Nicole, an executive in Chicago, decided to start saving just two percent of her income a month, and now she’s saved almost $100,000 by slowly increasing that amount. We can train ourselves to have better habits by making those kinds of small, daily changes.
Are you able to save one-third of your income? That’s a pretty tall order, whether you’re single, married, or anything, really. Any tips that have helped you save as much as you do?
KP: For most of my 20′s, I saved one-third of my income. I did this by essentially living like a college student long even though I could have afforded a few upgrades. For example, my husband and I continued living in a relatively cheap one-bedroom apartment until after our baby was born, and at first we skipped cable and kept our old tube television. We also cook almost all our own food and make pretty affordable dishes. We’ve still avoided buying smartphones with expensive data plans.
But despite all that, I am not saving one-third of my income now because, as I say in the book, it is impossible to do so at certain times in your life – such as after you have a baby. My baby, and the fact that we bought a house when she was three months old, pretty much knocked our savings off-course. I hope to return to saving that much in the future, though.
What’s your financial “weakness”? Clothes, travel, chocolate…?
KP: It’s really anything that’s for my baby. It’s like I have some kind of mental compulsion to buy her the cutest clothes and best educational toys. And when it comes to safety products, I’ve really lost all control. I realize I have a problem and I’m working on it!
You mention you should pay off all your debt as quickly as possible, you say don’t wait to invest, you say “give back.” Is there a place for spending on ourselves? Shouldn’t we be allowed some rewards/perks along the way?
KP: Yes! Rewarding yourself is so important. I’m a big fan of indulgences, especially when you’ve worked for them! Splurging on things that make us feel good can also make it easier to stay on track with making smart financial decisions because we don’t feel like we’re denying ourselves too much. Personally, some of my favorite indulgences include date night at a fancy restaurant, pricey microbrews, and massages.
What career-related investments did you go the extra mile on and how did they help you professionally?
KP: I’ve recently made two career-related investments: A podcast coach and a personal shopper. The podcast coach helped me figure out how to develop my “radio” voice. She basically told me to stop sounding like I’m smiling all the time, which was good advice. The personal shopper – which was free, by the way, but I paid for the clothes she recommended – really helped me figure out how to stop dressing like a college student all the time. As much as I love wearing fleece and jeans all the time, it’s not always office-appropriate.
Author Note: Kimberly writes about a variety of topics at US News, and the chance that I had to speak with her was both an honor and a pleasure. Thanks Kimberly, and good luck with your new baby!