In my short 28-year life. I have made a number of mistakes with my money that have cost me hundreds of thousands of dollars. When you consider what it could have been if I invested those dollars. But rather than lamenting the mistakes, I have learned from them and now I can share them with anyone so they can learn as well.
1. Don't Grow Up Too Fast.
After getting my first job post-college, I thought I was a baller. My salary was $70,000, more money than I had made in all my life COMBINED. So to me, there was nothing I could not do. Everything I have ever wanted could be mine. I learned a bit later that $70k is not the same as having unlimited funds. Things I regret doing with that first paycheck:
Getting a 2 Bedroom Apart for all of me, myself, and I
Buying first class tickets when I traveled and paying for luxury cars
Trying to impress people
Overspending on groceries because I thought it was beneath me to compare prices
Buying clothes, shoes, etc that I would end up never wearing
Buying random tech gadgets that I never used
It is okay to live a lifestyle that some people may find appalling for someone of your "caliber". If you just graduated from college, I implore you to continue living like a college student. There is no rush for you to start doing all the overgrown stuff.
Have roommates or live at home if possible
Travel cheaply with friends
Wear out-of-season clothes that you spice up with your own style. No need to keep up with the ever-changing trends of IG or the fickleness of the Fashion industry
Find the best cheap eateries/restaurants/bars
Host your friends for game nights or social events no need to always have to go out to have fun
Share passwords with friends for streaming services or subscriptions
Stay on your parent's insurance and cell phone plan if possible,
Continue to finesse for extra dollars
Take free food from work or events at home
Like in college make your grocery dollars stretch but you can buy healthier foods
Continue thrift shopping for things you need or want.
Just because you earn more does not mean you need to spend more. The trick to doing well with money is learning one slogan, "It's not about how much you make, it's about how much you keep." The less stuff you have to maintain the easier your life is.
2. Save JUST SAVE
Learn the art of saving money for no main goal. I always thought I was good at saving but really all I was doing was just consuming at a later date. Meaning, these savings are not for a car, a house, a new dress, a new iPhone, or computer, or whatever else we save for.
Now do not get me wrong saving for those things is great but you have to learn the art of saving for no reason other than LIFE is UNPREDICTABLE. As Morgan Housel puts it:
Only saving for a specific goal makes sense in a predictable world. But ours isn't. Saving is a hedge against life's inevitable ability to surprise the hell out of you at the worst possible moment.
Savings without a spending goal gives you options and flexibility, the ability to wait and the opportunity to pounce. It gives you time to think. It lets you change course on your own terms.
Every bit of savings is like taking a point in the future that would have been owned by someone else and giving it back to yourself.
The more money you have saved the more risk you can take without having to worry about life falling apart. I learned this the hard way.
The first job I ever had, was working in the middle of nowhere North Carolina at a lumber mill and I HATED IT!! I wanted to quit but unfortunately, I could not. I had no dollars to my name and I was in debt (more to come on this one). I was grasping at straws. I remember applying for hundreds of jobs just looking for any way out. By the Grace of God, I found my exit strategy that was better than I could have hoped (but it did come with a pay cut, $70k to $60k). If I had my savings, I could have quit that job and moved back home. Then take my time to decide on my next move rather than just jumping to anything. It worked out for me but the alternative could also be true. I could have gotten another job just as bad as the one I was leaving. Then I could easily fall into the pit of despair and believe there will never be anything better for me. You never want to be in this place.
Side note: When I use the word "save" in this context, it is two parts:
Having an Emergency Fund.
Investing Regularly
3. Ignore The Noise and Be Honest With Yourself
Spend time to understand how much it costs to be you. Four questions to ask when you look at a monthly expense statement:
How much do I make?
How much are my core monthly expenses aka bills?
How much do I actually spend each month to live my life?
Am I spending money on the things I want to spend money on?
When you answer these questions honestly, you can design the life you actually want. Rather than one that is lived on default and moved according to the whims of everyone else. You also have to be honest about the stage of life you are in. You have to decide if you can actually afford the lifestyle you may want to live or if you CANNOT.
For the longest time, I have struggled with trying to live up to the expectations of other people. This only got worse when I had money because the expectations just cost me more. From clothes to shoes to cars to houses to education. I wanted people to look at me and be impressed. I wanted their respect and adulation. Unfortunately, no matter how much I spent and how much I went into debt. I never really got the respect I wanted.
Don't Do stuff just so you can post about it on Instagram. So people think you are cool. This is the easiest way to hate your life and to hate money. Spend money on the things you ACTUALLY enjoy, with people you ACTUALLY like.
The weirder people find your habits, THE BETTER. The weird thing is when you stop trying to impress people. People become more impressed by you walking your own path. So ignore the noise and focus on what you want for yourself. Always remember: NO ONE CARES!!
Part of this process is also learning to say NO. Remember No is a complete sentence. You do not have to help everyone or be a part of everything. Learn to be comfortable telling people you love and people you don't know, NO. You do not have to give to every birthday or every Christmas or to every baby, wedding, or whatever else showers.
To do all of this, I suggest creating something like Ramit Sethi's Conscious Spending Plan, where you decide how your money will be spent ahead of time or having a Zero Based Budget.
4. Penny Wise, Pound Foolish
The first credit card I ever got was the Discover IT card. I got 1% cashback on everything I spent money on. Sometimes I could earn 5% cashback. In my head, I was like FREE MONEY!! I never EVER turn down free money. So I begin using it for everything because "Hey, I was gonna spend the money anyway, I might as well get some money back. RIGHT?"
WRONG
Problem is that quickly became, "Well, I don't have the money for these shoes but I will get paid next week so I can pay it off then." Quickly that spiraled out of control and I woke up one day, with more than $10,000 worth of Credit Card Debt. What did I buy? Hell if I ever remember.
I was chasing 1-5% returns while being charged 15-25% interest on the card. I was breaking my back to pick up pennies, while dollars were flying out of my pocket. I thought I was so clever too. Counting the hundreds of dollars I made each year. While the credit card company was celebrating the thousands they made from my "cleverness". As Warren Buffet says, "Never risk what you have and need for what we don't have and don't need." Do not chase credit card reward points or cashback. It is all designed to be a trap to keep you enslaved to the system.
The Bible says in Proverbs 22:7
The rich rules over the poor, and the borrower is a slave to the lender.
If you do not have a handle on your spending, DO NOT USE CREDIT CARDS. This is gonna sound very condescending. But you have to earn the right to the privileges that credit or debt affords you. Otherwise, every future dollar you earn will be spoken for and taken out of your hands aka slavery.
Debt is wonderful because of the flexibility it allows you. But it is also very dangerous because it can DESTROY you. Do not take it lightly. It is something to be taken on with extreme caution and with great understanding. This leads to the Final Lesson I have learned
5. Money is a game, LEARN THE RULES
There are rules to money, the more you understand the rules. The more you can make the system work in your favor.
There are many different aspects of the game. From budgeting to saving to investing to debt to taxes to psychology, etc. You do not need to be a finance nerd like myself, who lives and breathes this stuff. But you must understand the BASICS. You must understand how to make decisions on:
investment options and the power of compounding
taking on debt
making large purchases
Because as you go through life, people will always come to you with their idea of what you should be doing with your money. But one of my money rules is
Good Advice is not always Good for Me.
Meaning You have to decide what actually works for you, which was lesson 3. However, to be able to make these decisions. You have to learn and understand how money works. You have to get comfortable running the numbers around the decisions you make. So when you speak, you can speak confidently. As Ramit Sethi says,
To be Confident with money, First you must be COMPETENT with money.
It affects too many parts of your life to not learn about it. You can use books, podcasts, YouTube, TikTok, and Instagram. I do highly recommend starting with books because they are succinct and can actually give you complete and actionable ideas. My top three recommendations are:
Ramit Sethi - I will Teach You TO Be Rich
Morgan Housel - Psychology of Money
Nick Maggiulli - Just Keep Buying
Or find people in your circle who just have a good understanding of this stuff. This means you have to talk openly about these things with your friends and families. Regardless of the information you get, always Do Your Own Research. Tips on how to find good advice:
Data-backed information, not just random generalization based on what they've heard
They have some level of nuance in their answers
They can show you proof based on what they have done.
When I say proof, I mean they can talk you through a process.
Investment returns or home appreciation returns do not count.
Ignore anyone who tells you to make extreme decisions
They make a distinction between Insurance and Investments
The good news is you are reading this blog post. So therefore you are already learning about money. Make it a part of your life where the topic does not scare or challenge you.
These are the lessons that I have learned from my mistakes with money. I hope this helps you on your journey with money. If you have any advice please share it in the comments below. I always want to learn.
If you want to work with me to help you figure out your finances. You can email me at ramblingmindshow@gmail.com or reach out on IG @bykelechiwuaba.
Thanks for reading
Remember, Generosity>greed
🤞🏾
I can definitely relate to getting a decent job out of college. I was still living like a college student, (shared room in a house, rent $435, no car, etc) but was making a lot money. And idk what I spent it on either but I always spent all of it. From this post, your saving tip resonated with me. Even tho I budget very well, I realize now that I save just to spend it later. I’m gonna work on that. Thanks.