When I hit my 20s and started living on my own, I must admit that I made a fair few money mistakes. My financial track wasn’t golden-standard. I had zero savings and I found myself always scrimping just a few days before payday. In short, I was living paycheck to paycheck. And that was the first time it hit me: man, adulting is hard! When you’re living on your own and you start to feel the pressure of saving, spending, and investing, you quickly learn that it’s difficult to navigate your finances when there’s no manual to start off with and no one to tell you exactly what to do.
But, as they always say, experience is the best teacher. Here are the things I eventually learned along the way on my personal journey of becoming more financially independent. Given, I haven’t reached the level of wealthy where I can comfortably retire at age 35, but here’s what I thought may be useful to some of you who are new to the realm of independent living.
Anything you can afford to pay in cash is a good buy
Today, we live in a world where cashless payments are better in terms of convenience and safety. Businesses in New Zealand are looking into more ways to integrate non-cash payments, like QCards or AfterPay. Though there are several obvious benefits to these systems, they don’t necessarily advertise the financial repercussions they can have on people’s finances.
After all, it’s quite tempting to buy that pair of shoes you really like and justifying it by saying, “I can pay in monthly instalments!” No, sis, it’s a trap!
These seductive payment methods are now everywhere! And so, although I’ve never ballooned in debt, I learned to ask myself if I can pay it off in cash in full before swiping my card.
For example, if I needed to buy a new appliance I ask myself, “Do I have on-hand cash that can pay off its total worth?” If I can pay it off with cash right then and there, I then ask myself how it will affect my current finances. If I know I have wiggle room to make that purchase without feeling the pinch of the transaction, whether in cash or credit, then l know it’s a good buy. If you have to “borrow” money to afford something, chances are, you’re not being smart with spending your money.
Basically: don’t spend money you don’t have!
Designer items don’t always mean a smart investment
I’m definitely guilty of shelling out a few hundred dollars on a luxury handbag that just sits in the closet. And it’s barely used. These are the kinds of bags meant to be stored and look at from afar. It’s just isn’t fitting to use a Chanel purse on my commute to work, right?! Well, if you think you’re buying yourself an investment piece that you’re not even planning to use on a regular basis, you might as well skip the designer. It’s not worth it.
As a young adult, I always felt like having a good designer pair of shoes or bag meant that I “made it”, or that a high-end brand meant success. However, this isn’t true in terms of spending your hard-earned money. A new bag, clothing, or pair of shoes, no matter the price tag, doesn’t determine your financial wealth.
After all, if you have a hundred dollar wallet with just 30 bucks left to spend for the whole week, that’s not financial independence, hunty. That’s a ridiculous financial decision, and we all need to stop making them!
Cooking yourself a good meal is as good as taking yourself out to one
Little luxuries, like going out on a dinner date with your boo or sharing a cocktail or two with your friends, aren’t always bad. What’s bad is when going out to these fancy places spending heftily on overpriced food hinders you from attaining your financial goals.
Do you often find yourself having juuust enough money to spend but not enough to save? Well, you should reverse your thinking. What I learned early on is to direct my goals first towards saving, and then use the rest for spending. The cost you spend on a high-end chain restaurant will be so much more compared to a good home-cooked meal. Plus, cooking at home will be healthier, and you’ll have leftovers!
I mean, it’s not bad to treat yourself once in a while, but there’s almost always a way to save more, and still get the finer things in life.
Ignore the SALE signs
As young adults who live in an influencer-ran culture, we’re intuitively taught to keep up with trends. And whenever we see the word SALE, it automatically tells us that we’re getting the best deals.
“Beyoncé wore this and I’m getting if for $50 less!” Sound familiar? Girl, we stan a queen, but we don’t stan an impulse buy. Buying anything “on-sale” isn’t always the most sustainable approach to our spending habits. Yes, you got it for cheaper, but you’ll later realise that you really have no use for these items in your home. And this gets more frustrating when you see the amount of material stuff accumulating behind your closet doors taking space in your home, and hurting your finances much more than you originally thought it would. After all, money not spent is money saved.
So, I learned to be more conscientious with every purchase. If I really need it—not in a way that I need it because I want it so I’ll definitely have it — and if I believe the purchase will last me a lifetime or long enough not to buy a replacement for a few years, I go ahead with the purchase. Yes, even when it’s not on sale. Quality over quantity!
Spend with a purpose
For me, it all boils down to one simple rule: give every dollar you earn a purpose. Whether you want to stay motivated by saving, or you want to spend on little luxuries, it’s important to pay attention to the reason behind every dollar you shell out. Whether that’s investing for health insurance, giving back to your family, or setting money aside for a trip, treat your money with respect.
Like I said before, there’s nothing wrong with splurging as long as you have the financial capacity to spend on little luxuries. However, make sure that you create a plan so you can afford an item and not just spend on it whenever you feel like it, and just because you can at that moment. When you plan, you’ll discover that there are fewer reasons to stress over money.
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