Good With Your Money? A Minimalist Approach To Personal Finance
For most of my life, I wasn’t very good with money. I made it and I spent it. The money came in and went out. Since many of us live paycheck to paycheck, I’m guessing that’s something you can relate to as well.
After four years of college, I left with a degree in mass communications and $97,000 in student debt. Then I bought a brand new car. I told you I wasn’t very good with money. There was something holding me back from even looking at my personal finances. It had become a weird joke. I had dug myself into a hole so deep, it didn’t even seem possible that I’d get out. The crazy part, all that debt wasn’t stopping me from spending. After I got a new car, I added a new TV, computer and even a leather jacket to my running tab (that leather jacket was pretty cool though).
Soon after college, I came to the realisation that I needed to make a change. I couldn’t pretend that I wasn’t in massive trouble. It was one of the most challenging things that I’ve done in my entire life but over the course of four years, I was able to pay off every single student loan. Even that car payment.
That’s what I want to talk about today, money or problems with it and how minimalism has helped me. There’s a basic formula to win at personal finance and it’s this:
Spend Less Money Than You Make
In practice, it’s not that easy. Money seems to slip through our fingers. No matter how much money we make, our bank account seems to have a completely different agenda. One of the reasons that we’re bad with money is because money is taboo. We can’t even talk about it with co-workers, with family members without people feeling judged or down-right offended. Ultimately, we can only improve if we start to have honest conversations about money. We need to remove our egos and actually try to learn.
One of the best ways I found to learn about personal finance is through books and I’ll give three recommendations:
All three of these books layout trusted advice and I think you’ll find a lot of value from them.
Don’t Fall For The Lifestyle Creep!
Whenever we get a pay rise or start to make a little bit more money, the first thing that we want to do is upgrade our apartment, buy a better car, increase our lifestyle. So that way we’re in some way rewarding this win. But if we were instead to be more mindful about our spending, if we were to keep our lifestyle in check and not inflate it as our income rises. Then 5 or 10 years down the line, we’re going to be able to live far more comfortable and we’re going to have so much more security than if we continue to increase our lifestyle every year.
Let’s be honest, we buy a ton of unimportant stuff and we convince ourselves in a lot of sneaky ways we deserve it. Not all advertising is bad, but a lot of it is driven to make us feel as if we deserve the indulgence. You’ve worked so hard and you deserve this handbag or these sneakers. The truth of the matter is that what you deserve is to be debt-free. You deserve not living paycheck to paycheck.
You Don’t Have To Keep Up With The Jones’
Keeping up with the Jones’ or the Kardashians is a very real thing. If we’re not curating and mindful of our newsfeeds and our social media feeds, it can be tempting to want to keep up and have the things that everyone else has. Otherwise, we’ll have the fear of missing out.
Here’s the thing. Rich people are rich because they make smart decisions with their money. They don’t go out and lease a brand new BMW and they don’t rent an apartment they cant afford.
‘The Myth Of I Don’t Have’
The last type of pressure that we face is pressure from ourselves. There’s this thing called ‘the myth of I don’t have’. It’s something that we tell ourselves to convince us to go out and buy that thing. So as a filmmaker, you might say “oh I really want to make that film or video but I don’t have this lens” or “I can’t start that workout routine because I don’t have that pair of sneakers”. But really, the only thing it’s doing is procrastinating us from getting started with our goals and our dreams. It’s convincing us that buying that extra thing is going to solve everything, which it won’t. You need to make sacrifices.
When I graduated, after three months, I decided to move home with my parents. I lived in my parent’s basement for two years. I didn’t date much, didn’t spend much, didn’t go out much because I knew that I had to make some sacrifices to get to a point where I could take risks. You have to be completely clear with why you’re doing this in the first place.
Financial Freedom. Here’s Why You Need It!
When we truly understand why we don’t want to be living paycheck to paycheck, why we would want to be debt-free. Everything else comes a little bit easier. When we think about having the security and safety of being able to take care of our family and our friends if they run into trouble. It becomes more obvious why this is so important. You’re able to take more risk. To challenge yourself. Push yourself outside of your comfort zone in ways that you otherwise wouldn’t be able to.
For myself, if I wasn’t debt-free, I wouldn’t be where I am today. If I hadn’t taken that first step and realised that I had a problem, I wouldn’t have had that domino effect that led me to where I am. To be able to take pretty ambitious and risky decisions, to move across the country or leave my business and start a completely new one. These aren’t easy decisions and when you’re in debt. It’s going to be that much more difficult. And that less likely that you’re going to succeed.
The Strategy Couldn’t Be Simpler
Spend less money than you make. But as you know, we face a lot of pressure to do the exact opposite. But if you can outmanoeuvre these forces, you can build a healthy relationship with money and create positive habits that stick. You’ll be able to become financially free.
What things have helped you on your financial journey? I’d love to hear your side of the conversation to open up a dialogue on this topic. I think we should be encouraging each other and really rewarding each other for making positive steps in our lives. Try not to feel threatened or discouraged if other people have a great success story. See it as potential in yourself. If somebody’s able to get out of debt, that means that you probably can too!
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