Managing money for social change agents

I’m hardly a financial wiz, nor am I fabulously wealthy.  But I’ve managed to do a reasonably decent job of saving and managing money over 15 years as an underpaid social change activist.  Here’s some big-picture advice:

1) Live beneath your means, even if you’re not making a lot of money.  If expenses > income, you are screwed.

2) Have a credit card. Use it. Pay it off every month. Never, never, never run a balance. This helps you build a credit history, which will matter when you want to buy a home.

3) Start saving. Compound interest is your friend. But if you’re not-so-young, start saving anyway.  15% of your income is a good, aggressive target.

4) First savings priority: an emergency fund with 6-9 months’ living expenses. Keep it in cash or a money-market fund. This is your “oh no, I just lost my job” fund, or the “gosh, that was an unexpected car repair bill” fund.

5) Next priority: retirement. Take advantage of any 401k or 403b matching that your employer offers–that’s free money. Saving is easier when it comes directly out of your paycheck and you never get the chance to spend it.  Invest in low-cost index funds or ETFs. David Swensen’s “Unconventional Success” is a fantastic guide to asset allocation that will help you avoid the traps of the mutual fund industry.