Let’s be real, take all advice with a grain of salt. In particular, financial advice from a 19-year-old, with an internet connection and a lot to say.
1. The Latte effect is a myth.
If you have ever, even accidentally come across any sort of financial advice it was likely the latte effect. The idea is if you took the money you spent on a daily latte somewhere, you would be a millionaire and financially independent before you knew it. The reality is if you had anyone from $3- $10 to spend on coffee, you aren’t really struggling to begin with.
2. If you have an emergency fund, you are doing better then a lot of people
Most people would have to any sort of emergency expense on credit because they do not have an adequate emergency fund. It is suggested to put 20% of your take home pay into savings, and that you r emergency fund should be enough to cover you expenses for six months. The reality is in the majority of Americans whether it be from choice, or necessity live pay check to pay check and therefore do not have this buffer.
3. It’s all choices
There is a ton of money advice out there on the internet. You don’t have to listen to all of it. What you do with your money will be and should be completely different from how the person next to you does. Lifestyle should impact how you spend money, not the other way around. The amount of money I have already spent this year on music, and music related stuff may seem insane to you. But spending money vinyl makes me happy, this conversation? Not so much.
You should never feel like you have to justify how, when and why you spend your money. And if you feel you have to someone, evaluate whether you really need them around.
4. Automate Everything
Seriously. automate your bank taking money from checking and putting it into savings. Automate paying your bills. Automate everything you can.
It should be noted however, that you need to be sure that you aren’t automatically paying for services that you don’t actually use. You also just need to keep a close eye on you bank statement at all times to make sure that you aren’t being charged for things that you didn’t actually purchase.
5. Your savings account is a bill
Did you read #4 where I said automate your savings and bills? Well, I could have just said your bills. If you think of your savings account as bill, it becomes a lot harder to not put money it Realistically having an emergency savings account is like running a really small insurance company. The only client is you, and your also the only investor. So pay into your insurance.
Any other type of savings account, can almost be thought of as an investing account. You are investing in your future self, by putting money into this account now.
6. Always know what you have
Most banks will charge you if your account balance falls below their magical number. I would suggest finding out whatever that magical number is, and begin to tell yourself its double that. Before you go somewhere or buy anything online, check you account balance. This way you know how much money is there and don’t do anything that stupid.
7. Good versus Bad Debt
There exist an idea in some circles that there exists good and bad debt.
Good debt would be the kind that is almost unavoidable student loans, house payments, car payments and maybe even medical bills.
Bad debt would things like credit cards and pay day loans.
Really, no debt is good debt. That being said, some forms of debt are nearly unavoidable and never having debt means you have no credit history, which can stunt your financial growth in the long run. View debt as a necessary evil and only use it necessarily.
8. Ask For help
The internet is full of great resources. I have learned a ton over the past year from watching The Financial Diet on YouTube. Money for so long has been a sort of taboo subject that is spoken about in polite society. The awesome thing is that we live in the world of the internet where polite society is being thrown to way side so people can talk about the real issues facing this world. Read your bank’s website inside and out so you know what is available to you, read some blog posts, and watch some YouTube videos, and use the internet to learn how to conquer the world!
