Penny Saved Is Penny Earned
Let’s look at a scenario together.
“Too many people spend money they earned..to buy things they don’t want..to impress people that they don’t like.”
The girl goes to school so that she can become whoever she wants to be. Girl gets a degree. The girl has to get a job where priority #1 is how much she gets paid, thus implicitly letting go of the “whoever she wants to be” part for now. Phew.
The girl is talented and smart. She becomes successful at the said job and gets compliments from her peers and family. She can’t stop not being “whoever she wants to be” now. She’s too invested in being someone else.
Girl creates financial stability but she begins to hate herself.
The girl is the story of everyone’s financial life. What girl does at this point determines whether she creates a financial future that’s filled with happiness, or one that’s about covering shame. She will think it’s easier to keep going down her current path, becoming more and more exhausted from the pressure.
At some point, she will disconnect to survive. From herself and the people around her.
All financial stability is not built the same. For every person it’s different. It’s all about what you do with your money. It’s about doing what you love. And for that, planning is needed.
We call it Financial Planning.
The one which is built around who you are, not a misfit, cliched idea which is harder to sustain.
“You must gain control over your money or the lack of it will forever control you.”
– Dave Ramsey
The only alternative that works
From the beginning, create your financial stability in a way that is true to who you want to be. Hold that goal and never lose sight of it.
Read about stories of real people who have crushed their financial goals and are living their best life. I find it personally inspirational and I hope it provides you too with inspiration and actionable items to whip your finances in shape.
Money, to me, always meant having more pleasure and being able to buy stuff
Having money meant less stress and the gift of options. Money could buy me a relaxing holiday, or a better car, or a fancier house.
I am terrible at saving money — it’s pretty much the opposite of skill. An anti-skill, if you like. I don’t seem to ever go bored to shop for new clothes or other fancy things which I honestly don’t need. But Financial freedom means being intentional with one’s money—not just trying to survive, but being able to plan, save, and give.
The art is not in making money, but in keeping it. Let's learn how?
It’s not about how much you make. It’s about how much you save
My dad used to say this all growing up, but again, this is a lesson you have to feel and encounter in your own life to truly understand.
We know plenty of people who make Rs 250,000 per year and save Rs 5,000 per year. They live terrific lives, but they also put themselves at an unnecessary amount of risk.
I strongly encourage you to not live like that.
Hook your bank and credit card accounts up to any number of free apps out there. mint.com is a good one to start with. Or as I recommend, print out your statements, grab some highlighters, and start getting down and dirty with your financial habits by hand.
There’s something about manually calculating your cash flow(at least for the first few months) that makes your numbers feel very real. Apps seem distant.
Amp up your awareness regarding your numbers. You’ll begin treating the money in your life with the respect it deserves.
Create a love account and stick your money in it
Take a moment to think about something you want. It could be starting a business, or taking a vacation, or LOUIS VUITTON BAG.
There are no rules around the goal except
- You have to be able to measure how much money you need to make it happen, and
- You can’t fund it with debt.
Do you have a dream in mind?
Today, make an appointment at your bank to open a separate savings account, just for the deposits you make toward that goal. Call the account something funny, like "My Louis Vuitton Account". Call it whatever it means to you.
Then make regular deposits toward that goal. Once you fund the account fully, either withdraw the amount to make good on the promise you made to yourself or if you’re not ready yet, open a new account for another goal and repeat.
Be an unconventional thinker
You hear cliches like “Think outside the box” all the time. What does that even mean?
Simply, that you don’t assume.
Neither Steve Jobs, Mark Zuckerberg, nor Bill Gates graduated from college or got formal management training. They didn’t drop out of school to be unconventional. They were just willing to consider doing unconventional things to achieve their goals in the most effective way possible.
When you think about your finances this way, the whole world blows open. You’re not held back by mental constraints.
It’s very easy to think about making improvements in your financial life through the process of creating. Making new money, perhaps through a side gig, or making new investments.
Sometimes, to brighten your financial future, you need to know what to keep.
Invest in sound mutual funds or a fixed deposit or any other thing. Just invest unconventionally.
Have a plan for the worst-case scenario
Like what we’re experiencing right now.
One of the biggest reasons I’m so adamant about saving money is to be able to navigate another recession.
Every 20-something, regardless of how much you make (I was saving 2000 per month back when I first graduated college and was making just about minimum wage), you should work to save and build a financial foundation.
It’s one of those things that seem impossible or even insignificant when you aren’t making very much, but you have to continuously remind yourself that small steps do add up.
The first few years of saving are always the hardest. But after about ~3 years of cultivating the habit, and as soon as you see that first comma in your savings account, your entire mentality will change — and you’ll realize the value of saving over the long term.
Spend time around financially prudent people
This is a statement that should scale based on income level.
Again, some millionaires who spend every penny they make. Other millionaires who save or invest a large % of their income. You want to hang around the ones who live like the latter, and not the former.
The biggest reason this is so important is that, especially in your early 20s, you won’t have very much extra income to save or invest, which means, of what you do have, you want to put it to good use. And if you hang around people who blow their money, chances are, you will too.
Instead, I encourage you to seek out people who are very responsible with money. For me, I sought out people I knew were successful and yet didn’t live overly lavish lifestyles: family friends, people in my network, etc. I wanted to know how they treated their money, so I could learn how to do the same.
Don't ever "bet it all
Please, please don’t!
If you are ever faced with an opportunity for a financial upside that requires you to “put it all on the line,” do not accept it.
When you’re young, these kinds of decisions are fairly easy to recover from. Even if you were to “bet it all” and lose, you would still have years upon years to make it back. You’d be fine.
But the reason I strongly discourage this way of operating is that it is the beginning of an even worse habit that can linger over time. You don’t want to get used to “betting it all.” You want to get in the habit of betting what you’re willing to lose, without compromising your long-term financial position.
Give to get more
A lot of wealthy people have come to realize that the joy of money is not in accumulating it, but having fun with it and doing good. Two of the richest people on the planet, billionaires Bill Gates and Warren Buffett, started what they called the Giving Pledge. Practice Gratitude.
Predicting the future of the financial market is an impossible mission, but with the help of smart investors, you can learn how to respond to normal market fluctuations.
To invest successfully, it is important to focus on factors that one can control.
Savvy investing means making educated, informed decisions, such as determining which of the various asset classes to invest in and whose financial advice to accept.
Managed mutual funds tend to perform poorly over the long term and often charge hefty fees for service, which makes them less profitable.
Successful investors regard investing in the financial markets as a long-term game; they don’t jump in and out when they get nervous.
Your financial life is perfect when you’ve found your balance. Financial success DOESN’T look like
- Anything that you own or lease.
- Any TV or print ad on what your life should look like.
- Any school that you got your kids into or club you’ve managed to get into.
- Any choice you’ve made based on a bunch of should’s.
- A life built to impress others.
Financial success DOES look like
- Believing that what you need, you can get (how resourceful you are). No more, no less. (This balance will *physically* look different for everyone).
- You owe no money to anyone, therefore no one owns you.
- You radiate gratitude. The way you use your money does as well.
You’ve built a financial life based on your truth, whatever that looks like.
“An investment in knowledge pays the best interest.”
– Benjamin Franklin
The biggest assets to invest in
This one is going to sound so corny, yet it’s true: invest in yourself.
Use your hard-earned money to complete courses, go to events, and get outside my reality bubble, which is anywhere in the world.
To buy back time, you need to invest in yourself which allows you to see all the ugly parts and harsh truths you have avoided and put them to good use.
The person you develop into by investing in yourself you can earn more money, spend less money, save more money, invest more money, and work out through this process what the best use is of the time that money can now buy you. (That was a mouthful, I know.)
Use the money to buy time. Spend that time on whatever the hell brings you joy.
Investing takes time, discipline and patience. No matter how great the talent or effort, some things just take time: You can’t produce a baby in one month by getting nine women pregnant. — Warren Buffett
It will take longer than you expect. It will be harder than you expect. Trust that if you continue to level up your skills, the rewards will come.
Until then, keep hustling ❤️❤️