Birthday week. Usually that sentence would have an exclamation point instead of a period but I have always been afraid to be 33 years old. I’ve had this superstition about age 33 since I was in elementary school. It all started when I heard a Christian comedian, named Mark Lowry, do a bit about how he was sure he would get married at age 33 since that’s how old Jesus was when he lost his life (paraphrasing here since I couldn’t find the sketch on Google or YouTube). Since I heard his routine I always worried that I wouldn’t make it to 34. It’s hard to explain, just have a bad feeling about it.
In case I do die this year, I wanted to share a summary of the big money lessons I’ve learned so far in my life. You will probably notice that I am not very good at summarizing (one of the down sides of being detail oriented) but this is my stab at it.
Warning: Opinions ahead!
Some of these are things I believe to be universal truths, some represent lessons I’ve learned and some are opinions that I have come to hold.
33 Money Lessons I Learned Before 33
(in no particular order…prioritizing is not a strength either)
1. You don’t get the bank balance you want, you get the bank balance you have to have. There is a Tony Robbins quote that says “If you want to change your life you have to raise your standards”. I believe this is so true when it comes to your money. It is so easy to settle for having just enough money to “get by”. It wasn’t until I drew that line in the sand and said “never again will I ever have less than $1000 in my account” that things finally changed.
2. Adopt “frugal” as part of your identity to save money and grow wealth. James Clear in his book Atomic Habits talks about the importance of aligning your identity with goals you want to accomplish. You are more likely to work out regularly if you adopt “athlete” as part of your identity because your brain wants to have continuity between actions and identity. Labeling myself as “frugal” has helped me to save so much more money.
3. The little stuff matters. But more importantly, the belief that the little stuff matters…matters. Why do one sit up? You aren’t going to lose those 20 pounds by doing one sit up, so what’s the point? The point is that small actions compound to help us to make big progress. Believing that saving 20 cents per item at the grocery store doesn’t matter often prevents us from saving our first $10, $100, $1000, $10,000 dollars. You can’t save $10 without first saving 20 cents; you can’t first save $1000 without first saving $100, you can’t first save $100,000 without first saving $10,000. Those little decisions add up.
4. If you get the big stuff right, you can have flexibility with the little stuff. Saving 20 cents on a box of frosted mini rectangles is not going to have AS significant an impact on your finances as choosing an apartment that costs $225 per month instead of $600 per month (so glad I was paying $225 for rent when I went broke instead of $600 like most of my friends at the time). Now that our housing is basically free (own our house outright), I’m reminded all the time that getting the big stuff right allows us to relax with the little stuff. Get the big stuff right so you can pay 20 cents more for decent mayonnaise and not have to sweat about it.
5. Money stress consumes mental energy. If you are constantly worrying about how to feed your family, it is almost impossible to learn new skills that would help you increase income and get out of the situation. People in poverty experience more acute decision fatigue because each decision is more painful. I used to lay in bed and try to decide that if, push came to shove, we should buy toilet paper or shampoo. That is time that I could have spent making money or learning new skills that would have a much higher ROI.
6. Frugality is more about prioritizing based on value than just saying “no” to everything. Prioritize the purchases that you value. We all have to say “no” to some things since money is a finite resource. It is good to say “no” to some good things so that you can say “yes” to some better things. It is empowering to identify what you really want and then chose that.
7. Money can buy happiness, up to a point. Research shows that there is a correlation between increased income and happiness, up until the point when income hits $70,000 and then people experience no more happiness for increases in income. I haven’t had significant increases to happiness since I hit $40,000 of income per year. I have felt a lot of happiness because of money in my life, but perhaps that is because my life’s mission is money related and the achievement of goals can bring happiness. If money isn’t your top priority and you already make $70,000 per year, then I agree, money can’t buy you any additional happiness.
8. We all use the word “afford” too liberally; as in “I can afford it”. When I use it and hear it used, the definition usually is “I have money to make the payment” or “I have room on my credit card” or “I have this amount in my bank account right now”. A better definition would be: I can afford it if… “adding this to my budget will still allow for a 30% gap between income and total expenses and if I already have 3-6 months of expenses set aside in a savings account”.
9. Don’t lend money. If you must, just give it. I’m probably jaded since the first loan I ever made was never paid back (my sister asked for me to cover her share of the cost of Mother’s Day flowers when I was like 7). Loans to family members and friends can ruin relationships. And even worse, they can make things awkward. Giving instead of lending also prevents you from giving money that you actually need. I’ve seen people “Loan” their emergency funds and then not receive them back. If they were gifting, it would probably be a smaller amount that they could actually afford (see definition above) to lose.
10. The goal is guilt-free spending. Spend money on what you can afford (see definition above) and what was budgeted for and don’t feel guilty about it. During my debt paying years I developed a habit of feeling guilt about every purchase I made that was not a necessity. While that helped me save money, that habit is a hard one to break. I still often feel guilt when buying “wants” even if we budgeted for and saved up to buy that… $200 pair of boots…for example (which I still haven’t been able to pull the trigger on). This is not a healthy mental habit to have. We should have the discipline to say “no” to what we planned to say “no” to and the courage to say unapologetic “yes’s” to the things we want.
11. Give time until you can “afford” to give money. After all, they do say that “time is money”… I applied this rule to both charitable giving and gifts to loved ones. When I was trying to build an emergency fund, the only charity I did was volunteering in the homeless shelter kitchen. I also transitioned to making gifts for friends and family for a few years and never had any complaints. Surprisingly, I also found that giving less in monetary value made me act a little bit nicer to people since I was trying to find other ways to make them happy. This was a temporary solution, now that we have stable finances, we can give freely and really make a difference. “You are not required to set yourself on fire to keep other people warm” ~ Anonymous.
Check in next week for Part 2!
For Discussion:
What is one money lesson you have learned?