Life is a long enterprise.
And in a long enterprise it pays out to have long a strategy.
When it comes to money, it’s no different.
Yet, many (most) people fail to commit to a strategy better than “I have the money: let’s spend it!” and “I don’t have any more money. Let’s take credit!”
We could talk a lot about instant gratification, evolution, the simplified meaning of carpe diem but we’ll skip it this time.
What can you do to do better than this?
– measure. Use a (free) application to get to know your spendings (and income). I’ve used MyFinances
– save 10% of whatever your income is
– go down to the small details (rather than all kinds of sports – say to take 9000 steps daily; rather than gifts for my kid – my kid’s happiness; rather than the newest phone as a status symbol – a gadget that allows me to phone and check my emails) and pay only for what you really need)
– if you have financial goals, make a plan (this type of car, house, college fund, etc.), start working towards it
– if you have dreams that need money: count how much you need (an extended Thailand vacation for 2 costs more like 5000 USD than 50000 USD)
– get rid of what you don’t need – let it be a big house you rent, a large car, a gigantic fridge, 250 books you weren’t going to read the first place, tools you don’t use, etc.
When it comes to money in the Western world it tends to be forgotten that one can live a very good life without spending much money.
When it comes to money in the Eastern world it tends to be forgotten that one can earn good money and can make his life better with it.
In both cases saving money tends to be an issue.
Even though people tend to overcomplicate, money is a simple story. (read more here) If you have more than what you need you can tick it off the list. (As long as making money is not your life goal. I sincerely hope it’s not.)
Money is a can of something that can be exchanged to certain values. But unlike other values like time and love and friendship, money needs little care. Money can be stored on a bank account and most probably it will be able to be recovered after a long while.
Money can buy basic goods. Safety. Esteem. It’ll help with belonging and love. And not worrying about money will certainly have a say in whether you’ll dedicate your life to self-actualization.
Money’s one of the issues people rarely leave behind as a worry. But let’s not forget, money’s an asset. What people don’t manage is not money but their own wishes and desires.
A friendly couple was looking for an apartment for 100.000 USD (average Budapest price. The girl inherited unexpectedly 100.000 USD. Did they buy the apartment the originally wanted and kept the money to have savings the next 2-3 decades? Or invested the money to have some passive income?
WRONG: they bought another apartment for twice the price.
Another couple decided to buy an apartment. They looked and looked and looked as 3 years passed and by the time they were forced to buy one they decided to get the maximum credit possible – and bought a place for the full amount.
A former colleague needed a car while being on a minimum salary with some extras for working the nights. He bought a new, shiny car that he could show to everyone.
Most of my colleagues work from March to November. Being independent contractors they earn well. Yet, when I often meet them in February they are down to their last penny and sometimes can hardly afford a coffee. “You know it’s soooo easy to spend money when you don’t work.”
I always listen and I can never relate.
And these colleagues and acquaintances are very good with money, all-in-all, compared to most in the society. (I read recently that only half of Hungarians have any kind of savings while in US an average household saves 3,6% every month).
I’ve even heard from a friend how exciting it is not have enough money: life seems so much more alive then.
I could relate to this one. I remembered my 5 week bike trip where problems “were real”: getting shelter (I had principles of never to pay for accommodation), buying food (supermarket most of the time), climbing mountains, meeting my daily goal (at least 100 kms a day but I ended up doing more than 30% more on average).
Not having money is the real thing and a certain type of excitement: but I hope most can find more useful hobbies…
All of us are wired to do the default thing (check out David Wallace Foster’s “This is water” commencement speech). And the default thing in our society is believing that you need to earn more. And you need to buy more. And money is never enough.
This is a default viewpoint you have to leave behind to stop worrying about money. What you earn is (most probably) enough to keep a life in dignity going. And do you really need expensive things to show who you are? Grow up, man: you are not your credit card…
What’s your biggest issue when it comes to handling money?
Let us know in a comment or on the FB page!