33 Money Lessons I Learned Before 33: Part 3 of 3

The final part in the series of 33 lessons I learned before turning 33! See part 1 here and part 2 here if you missed those.

When I first sat down to right this, I had spent hours on it and was almost in tears since I had so much farther to go and it was almost midnight. I’m so grateful that Mr. FinanceRox suggested I cut this post up into 3 parts; it was WAY too much content for one post.

Without further ado, here are the last 11 lessons! Enjoy!

23. Wealth and frugality go together more than people realize. Warren Buffett’s breakfast costs about $3.17 per day. His house costs about $652,000 even though his net worth is upwards of 86 Billion and he could easily afford a mega mansion. MillionaireFoundry.com reports that on average, it takes a millionaire 32 years to hit the $1,000,000 mark, dispelling the notion that most get rich quick from a windfall. While it isn’t unanimously true that wealthy people are frugal, it is encouraging to me to know that frugality is part of the equation. Reading “The Millionaire Next Door” by Thomas J. Stanley first brought this to my attention and now I notice it everywhere. Your habits follow you to wealth. Frugality is a good one to take with you.

24. Confidence is required to improve your income. Myself, and almost every family member, friend and client I’ve talked to about pursuing higher income has struggled with their self-confidence. Without confidence in yourself, it is difficult to convince your clients or employer that you are worth more money or worth the better paying job. It seems pointless right? Why try if you aren’t going to get it anyway? But the problem is that you don’t really know that you won’t get it. The lesson here: It’s not your job to decide if you are qualified for a job or a raise, it’s their job. It’s your job to muster the confidence to try and apply.

25. Rox says Lifestyle creep is the devil. Lifestyle creep, also known as lifestyle inflation, is a phenomenon that occurs when as more money is spent towards standard of living, former luxuries become perceived necessities. We are so lucky in the US to be so out of touch with the difference between “wants” and “needs”. I hear people use the word “need” inappropriately all the time. “I need to have this expensive vehicle for my job” or “I need to buy name brand clothes for my son so he can feel confident”. Differentiating between luxuries and necessities isn’t something that people like to do so they often just neglect to think about it and then lifestyle creep slips in. Sneaky! Isn’t it? Nothing will stunt your financial growth faster than believing that luxuries are necessities.

26. Gifting money can be a blessing and it can also ruin lives. I know a 60-year old that had to move back in with her parents because she still hasn’t figured out how to support herself. She hasn’t needed to learn to support herself because her parents gave her money every time she ran out for her entire life. Sometimes people really don’t need money, they really need to learn that the life they are living isn’t sustainable and need to learn how to solve their money problems themselves.

Now, I’m not against helping people as long as it is done responsibly.

Scenarios where I think it is helpful to help:

Accidents. The scenario causing them to need money isn’t self-inflicted like if they are in a car accident.

One time gift. The aid is one gift, one time.

Short term. The scenario is a temporary issue that should be resolved in a reasonable amount of time.

Starting or starting over. The person is young and just starting out or if for some reason like a divorce the person is starting over.

I’m against long term perpetual giving. I believe that it is human nature to choose easy survival over difficult survival. It’s extremely difficult to say “No” to easy. When I was broke and unemployed, even I heard the whisper; “Ask your grandparents for money” it said. I had to say “No…self…no…I promised I wouldn’t ask them for money, so I have to find another way.” Had I not seen the wreckage of constant support I probably wouldn’t have been able to resist “easy”. I’ve gained so much confidence from finding those bootstraps and figuring out my own problems. Don’t rob others of the opportunity to be self-made.

27. Small then large even though small isn’t satisfying. People resistant taking the small actions that help build the habits that help us achieve our ultimate goals. We don’t want to do one sit up because we know that one sit up isn’t going to get us the result we want (lose weight/gain muscle/be healthy), so what’s the point? The point is that any action is better than none and one sit up is a sit in the right direction. The cruel truth is that you must achieve small goals to build the ability to achieve big goals. Goal achievement begets goal achievement.

I wanted my money situation to be changed…like yesterday…but yesterday wasn’t a real option. I had to increase my emergency fund a little at a time, I had to research over time ways to save money and become more frugal, had to work every year to become more valuable in the marketplace to make a higher income. It just doesn’t happen overnight, or at least it didn’t for me. You can’t set and achieve big money goals without first setting and achieving small money goals. 

28. Responsible with money? Tough rocks. I haven’t always been rewarded for being responsible with money, there are some downsides.  My parents used to take us to this tourist attraction in Colorado called Cave of the Winds. I loved going there. Loved the smell underground, the strange landscape, the stories the tour guides told. And I loved the gift shop, particularly the tumbled stones like the ones in the image below.  

One time my family was there, and as I sifted the rocks carefully to select the best ones to buy with my leftover Christmas money, my younger brothers started hassling my Mom for money so that they could buy some of these awesome rocks too.  When my Mom started handing out money I turned around for my share but instead she said “You have your own money, you still have Christmas money left”. This felt really unfair to me.  Why should my brothers get more money because they spent their money already? Maybe she was just tired and was trying to prevent their melt downs, I don’t know. But I learned that sometimes people will be less generous to you the more responsible you are.

29. Don’t expect your budget to be perfect. It took a good 6 months for my husband and I to generate a budget that was reasonably accurate. Seems like a long time? I agree! And this causes a lot of people to give up on budgeting. Either they don’t want to create one because they can’t predict, to the dollar, how much they will spend that month or they created budgets in the past that failed and they don’t try again.  

Your budget is a tool for you to use. Don’t be afraid to change your budget if the numbers for your month change dramatically. Keep tweaking and comparing to actual spending and eventually you will be able to get one that is a good balance between realistic and ambitious. Continue to expect that there will be months where things come up and wreck the budget because that’s just how life works. Create imperfect budgets anyway because they help us to stay on track for our goals and keep us engaged with our finances.

30. I don’t care how much you make, what impresses me is how much you are able to keep.  Someone making $150,000, saving $10,000 is so less impressive to me than someone making $50,000, saving $10,000. The financial discipline required is much lower. Savings rate (savings divided by income) is the most important indicator for your finances. Plenty of people are out there making and spending $200,000 per year (savings rate=0). That’s not how debt is paid off, that’s not how emergency funds are filled, that’s not how savings goals are achieved and that’s not how wealth is built.

31. Make saving sustainable. If the way you are trying to save money is painful, you won’t be able to keep up the habit for the long term. While there are times when this drastic cutting is necessary (facing bankruptcy for example), this kind of “saving” leads to yo-yo spending or binge spending which can be counterproductive to your goals. This is like fad dieting for your wallet. Perhaps you go hard for a few weeks, cutting everything to the bone and then are so exhausted and deprived that drain your bank account spending on things you hadn’t planned to buy. The best way that I know of to make saving sustainable is save money in alignment with your values.

Examples:

You value health: You could bike to work instead of driving. (Saves money and better for health)

You value family: You could swap out taking everyone to the movie theater for a family hike. (Saves money while still having quality time with your family)

You value the environment: You can buy used clothes instead of new or hang dry your clothes instead of using a dryer. (Saves money and better for the environment)

You will save much more if you create habits that you can keep for the long term instead of binge cutting in the short term. Identify the things you most value and make sure any saving strategy supports that value.

32. Time + effort = improvement. According to Motley Fool research, Americans spend less than two minutes a day managing their household finances. This is the equivalent of checking your bank balance a couple times per week. Would you expect to see any kind of improvement in any project that you only spend 120 seconds on per day? They also reported that we spend almost 3 hours per DAY watching TV, so we likely do have time to allocate towards money management. If you want to see improvement in your finances, you must put some time and effort into them. Instead of just checking balances, read extremely long blog posts about how to save more money (GOOD JOB YOU!!!), take the time to review your quarterly and annual spending trends, make budgets, plan out your cash flow, brainstorm how to make more money…do something. It doesn’t have to take 3 hours per day but it certainly takes more than 2 minutes to see results. Nothing will change unless you take the time to make change happen.

33. Your finances can rock! It can be hard to believe that something that causes so many people so much pain can be fun and create joy. Conquering my finances has been one of the greatest joys of my life.  You only live once, so why live like everyone else; stressed out about money all the time, barely scraping by? It’s not easy to change your financial situation, but it can be done. I turned my greatest fears and shame into my greatest confidence and pride and I want that for you.

For Discussion:

What lesson do you most agree with/resonate with?

Any that you disagree with?

What’s a lesson that you have learned that isn’t on this list?