6 Simple Pieces Of Financial Advice That Will Change Your Life
1. Don’t buy one of something if you can’t buy “two of it.”
This advice is from a good friend of mine whose father taught them how to live by it. While it does not apply to the biggest purchases that you will ever make in your lifetime, it does apply to a generation of people who will sometimes choose to go out and live it up on their last dime. When it comes to small to mid-size purchases, like eating out, buying clothes, etc., it’s good to ask yourself if you can pay “double” for whatever you want to purchase. If you can’t, reconsider, because chances are that money is best not spent at all.
2. Before you buy, calculate how much you have to work to earn it.
This was the best piece of advice I received from one of my mentors this year and I use it every single time I want to buy something that is not a necessity. While my sources of income are variable, and this works better if you do have fixed income, most of us can calculate how much our time is worth per hour. When you want to buy something, calculate how many hours of work you would have to put in to afford it. Trust me, once you make this a habit, you will realize there are so many things in life you thought you wanted badly that you can in fact, live without.
3. Being able to buy something is different from being able to afford something.
I became very good friends with a family in college and I remember the dad would often say, “If you can’t afford it, you probably don’t need it.” I believe he strictly meant that for people who can afford most of their basic needs but I have chosen to build upon it. While I will admit that I have been very fortunate when it comes to money matters, I am by no means carefree. For example, in theory, I can go to Starbucks and buy a small tea every day for 365 days a year. If memory serves me right, with taxes and everything, a small tea costs $2.15. That amounts to approximately $784.75 per year and should come up to about $65.40 per month. I just cannot justify, and “afford” to spend $65.40 per month on café tea when I can go to the store and get good tea for $10, give myself a $20 per month discretionary café tea budget, and save the other $35 for something else. Just because you can buy something, it doesn’t mean you can “afford” it.
4. Be personally financially conservative, not stingy or cheap.
In terms of full disclosure, I have very little personal debt. However, I am also a foreign grad student restricted to how much I can work and the types of work I can even do, so my cash flows are not as free-flowing as they were prior to entering grad school. All that being said, I got into a heated argument recently with a friend who doesn’t believe that institutions should call their alumni and ask for funding. Because I knew that we were both recipients of merit scholarships, and as someone whose first college job was doing just that, I vehemently disagreed. Without the financial support of previous alumni, many merit scholarships would not even exist. And as a direct beneficiary of that for all of my higher ed. life, I believe it is absolutely necessary to give other future students the same support. And I believe it would be stingy not to do so if you can afford it. (And yes, even the smallest gifts make a difference.)
A word on being cheap versus being financially conservative: Someone explained it to me like this – you are cheap if you go to a restaurant with your friends, insist on not eating, “mooch” off everyone’s meal, and insist on not paying. You are financially conservative if you decide to stay home because you didn’t want to spend money on eating out that day. Take that for whatever it’s worth.
5. Get a side hustle.
If there is anything I have learned out of college – it is the importance of having multiple sources of income. Granted, if you have a job that keeps you busy for 80 + hours a week, that might not be possible. But a side hustle is possible for most of us who may have creative skills or skills that can be learned. It can be anything from tutoring to ghostwriting to editing to working at a clothing store or restaurant, a few days a week. Side hustles of course, should always be consistent with any non-compete clauses you have in your regular job(s). But this income can be the thing that allows you to pay for your vacation, save money, pay off your debts, etc.
6. Money is important but it must be put in its place.
Culturally, I will always be a traditional African when it comes to resources. I will never ever believe that I got anywhere out of “my own hard” work without the direct and indirect help of others. I will always help someone out financially if I know they are in need, and if I am able. It’s how I was raised and it’s how I choose to be. If I give someone money, it’s because I have it to give. Furthermore, I have learned from the experiences of others that when it comes to friendship and money, give a person a “gift,” not a loan that you expect to be repaid. My dad’s money lesson to us was never to define ourselves by the figure on our bank accounts no matter how big or small. My mother reiterates that, “we should owe nobody anything apart from love.” Together, they taught me that if you can’t give when you have a little, you won’t give when you have a lot.
Money matters, but you have to put it in its place – do not love it at all costs because that is when we get into trouble. Treat it with respect and value it, remembering of course that what you earn is more valuable, even if not always monetarily, than what you are given. When it comes to money matters, it’s a balancing act. (Pun absolutely intended.)
You try, and you try, and you try, and you try. But sometimes, love is not enough. You don’t understand. You don’t know what to do.
“Has anyone ever told you that you kind of look like Mr. Squidward from SpongeBob Squarepants? Only when you squint and make that face — the one I really hate.”
We neglect that we are one, an entity.
I may not be with anyone, but I’ve got enough self-respect to know that I deserve someone who values me. I don’t deserve someone that treats me so appallingly, and neither does she.
By Katie Cole