If you wanted to make the biggest changes in your finances, which of these would you try to change?
Buying a Starbucks that costs you about $20 a week
A $1000 monthly car note
Obviously, the answer is the car note.
For the entire year, your Starbucks will only cost you $1040 which is just one monthly car payment. On the other hand, you will be out of pocket $12,000 in one year just to own the car. This does not even factor in the maintenance cost of owning the car. Or the gas you have to put in the car (unless you happen to own an EV).
If we are trying to make headroom with your finances, we have to start asking the RIGHT questions. Too often we get way into the weeds in our finances, focusing on ways to save $1 by buying non-brand items at the store or spending hours or days looking for a discount code or cutting coupons. When we have other things that are really weighing down our finances like our housing cost or transportation cost or insurance cost or mobile phone or the number of subscriptions we have and don’t use.
WE have to start looking at our finances from a more critical perspective and actually target the things that will make the biggest difference in our bottom line. Now do not get me wrong, I am not saying you should not do any of the things listed above. I think it is a good habit to get the most bang for your buck, especially with some of these brand-name items.
But I am also saying you need to pay attention to where most of your money is actually going. Just like Apple cares a lot more about iPhone sales than iPad sales because more than half of its revenue and profits are generated from iPhones. You should also care about the biggest parts of your finances.
This is not me coming from a place of "I know better".
This is from a place of I DO THIS ALL THE TIME.
My siblings can tell you, I will delay buying something I need just because I do not have a discount code for it or I don’t think it’s cheap enough. For example, I need a new pair of vans (vans because they are literally the best slip-on shoes even though they have no feet protection).
This is not a want, it is a NEED. I have had my current pair since my junior year of college that was in 2015. The shoes have no soles anymore and are just done. A pair of vans cost about $55 but I keep looking for a discount.
Like WTF! Bro just buy the DAMN Shoes!
.. is what I would like to say to myself. But in reality, I go through this whole stupid "if this then that" nonsense in my head of how I can save the money and use it for something “more” important like a house down payment.
In reality, $50 is not about to make a difference on a $20,000 decision. The real thing I should be focused on (which I eventually did) was making major adjustments in other areas. Some examples:
I brought my monthly living cost down by almost 1/3 of what it was in 2019 by living with a roommate.
I reduced my car insurance because I work from home a lot now so I called my insurance provider told them and they reduced my monthly payment.
These are the things that actually moved the needle in helping me save as much money as fast as possible in 2020 and 2021. It didn't matter whether I bought the shoes or NOT (btw I did not buy the shoes, still learning). Because the other LAMBO SIZE decisions made up for it massively.
So stop only asking yourself whether to buy the $3.50 organic bananas or the $2.50 regular bananas. Start asking yourself:
Do I need to spend $1000 on a brand new car note?
Can I reduce my insurance cost by calling my provider or shopping around a bit?
Can I reduce my cell phone bill by switching to another carrier?
For students or early career folks, may be living with roommates may be the best thing for you temporarily.
But there is another side to this.
We focus so heavily on the expenses part of the equation (Wealth = Income - Expenses).
When it is not that scalable.
There is a limit to how much you can actually cut from your expenses before you start to bleed. We have to start focusing more on the Income aspect. Your income as long as you continue to develop and grow is practically UNLIMITED. There is literally no limit on how much money you can make in a capitalistic society like America and most capitalistic nations.
So the question we have to ask is "What are ways that I can increase my income?"
Can I get a raise at work?
Can I get a job with better pay? (not saying for your to sacrifice your happiness for money).
Can I start some kind of side job using my job skills? (maybe you work your 9-5 and then do some wfh stuff to help a company)
Can I get a side hustle I enjoy like babysitting or reffing?
Can start a business from things that I have been told I am good at like making hair or designing or fill in the blank?
Maybe you have the gift of gab and want to start making videos or podcasts (which is hard to monetize but you never know)?
Or maybe you can write so you decide to start sharing ideas through blogs that can maybe eventually be monetized?
Essentially what are ways that we can continue to increase our income?
So stop asking Latte questions, they barely move the needle
It is time to start as my Mom would say "I am chilling with the big boys!" and start asking LAMBO Questions
Thank you for reading.🙏🏾
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