I'm a data analyst by day and a proud bibliophile. I'm originally from Wisconsin.
Tips for How to Save Money If You're Poor
I grew up with very little. My family used to shop at the discount stores before the school year and going out to eat was very rare. I knew that growing up I wanted to make money and feel secure in my path. Besides seeking out an education at the university level, I also changed my relationship with money and it started by living frugally. Here's what I learned along the way about how to save and get the life I wanted. I have since been able to travel, purchase things that bring me happiness, and generally live with financial freedom. Here are my tips.
1. Examine Your Relationship With Money
The very first trap people fall into is trying to show that they have money when they really don't have it. For example, you should take pride in saving money and living a humble lifestyle and not be in debt rather than purchasing things that will further propagate your money problems.
Too often people try to show they have money buying things they don't need that degrade with time. Instead of showing off and purchasing the latest tech, leasing the latest car, be proud about having money in your bank account and saving. Set saving goals. Showing off is just a game and a trap. You probably will never feel satisfied if you're always trying to compete. So skip the designer labels, the car of the year, and the latest trends. If you really want to be smart, invest in things like property rather than items that devalue with time (most things) because these are only going to further sink that whole into your wallet. Think about being frugal first as the first step to financial freedom.
2. The Do's and Dont's of Financial Success
Here are some do's and dont's of financial success:
- Do not take financial advice from people who are broke. They are broke for a reason.
- Have an emergency fund with around 3 to 6 months of money saved up. This will vary depending on where you live and your lifestyle.
- Don't use credit cards as loans (a lot of them have 20% interest). Pay them off immediately and take advantage of offerings that have a point system but only if you are sure you can use them responsibly.
- Buy used cars not new cars: Always buy use cards rather than going for a new car. Cars devalue quickly. Also purchase makes like Toyotas that are reliable and don't devalue easily. Brand new cars depreciate quickly. A used car with 2-4 years on it won't make you lose on your purchase all that much. Also, never spend too much on a car (they depreciate quickly).
- Focus on spending money on assets: purchasing a house or stock is smart; these assets often don't lose value over time.
- Don't eat out and instead cook at home and save your money. If you do eat out, eat at cheaper places. It is an absolute waste of money to spend $100 on a meal eating out when it would cost 1/5 the amount buying groceries and cooking at home. Rather than that $100 meal in a night once a week, spend $200 dollars on groceries and eat for two weeks (it's obvious which choice is better!).
3. Tips for Investing
Here are some basic tips for investing when you do get to a place when you would like to start:
- Remember that personally managed funds don't outperform index stocks; I like to put money into index stocks (they have the lowest management fees); in my opinion, fidelity index 0 is the best (there are no fees, overtime, nothing outperforms index funds, even managed funds, and on top of that, managed funds have high management fees so you actually lose a lot of money on them).
- I put 15% of my income into retirement (this will be different depending on your situation). Simple make it happen, I'm serious. Change your lifestyle to make it happen (eat cheaper meals, shop less, etc.).
4. Where to Find the Best Free Financial Advice
You can find a wealth of financial advice just be reading books and listening to podcasts (I listen to Howard Clark). You can listen to podcasts when you go for walks or workout and exercise. You can read financial advice books in your down time before bed rather than watching Netflix or scrolling on social media. Smart financial management starts with self-education, so take the time to do so and invest in your future, literally.
5. Best Tips for Beginners Looking to Build Wealth
In summary, here is what would help get you on a fast-track to saving money. Some of these points I've already mentioned above:
- Have emergency funds
- Put away 15% into retirement
- Buy cheap food (don't eat out as much, buy discount or cheap groceries like Grocery Outlet and Trader Joes instead of Whole Foods).
- Skip the boutique coffee and get a coffee maker.
- Purchase things that make you happy but are not expensive. Keep in mind that companies spend billions of money trying to convince you to buy their products and that their products will make you happy. Life is hard for everyone but buying products will not make you happy. Start by being content with the way your life is and think deeply about what you want out of life rather than what you can buy to make you happy. Shopping is a band aid and buying products can become addictive.
- Read books and listen to podcast. I personally listen to Howard Clark.
6. Advice for Saving Money in an Expensive Place
If you live in an expensive area like California or New York, make sure you give yourself a good reality check. Don't go out and buy the most expensive car just because you see it everywhere. Find the cheapest rent that you can find and even get roommates if you need to. If you can't afford to live where you live, move out of the area or move out of state. Reminder yourself that this just might be temporary anyways. Just because you see your friends going out and spending 100s on cars, food, and going out having a blast at expensive concerts doesn't mean you have to do the same. They might actually be broke or in debt, don't make that your problem, too.
7. Tips for Getting a Higher Paying Job
Lots of younger people jump from job to job because they are trying to find their passion but this often doesn't get them anywhere. Why not try staying where you are and see if your current job can pay you what you want by stepping up in the company. If this is the case, develop your skills and make yourself valuable to your company. Do your very best and get recognized for your talents. There might be outlets for your current job to offers ways to advance your existing skills through webinars or training.
Sometimes being passionate about your job comes from being good at the task that you do. If you grew up in my generation (millennial), you were fed the fairytale that if you keep switching your path you will find your passion and the perfect job and everything will click. This is the case for some but not all. This is rare for most people.
A lot of workers will ask what it is they can get out of a job rather than looking at how they can contribute and get recognized. Think about how you can contribute and get recognized. Maybe start by watching who has been successful at your current job and see what it is that they did to get there.
If you are truly unhappy in your current position, however, you will want to look for with another job. Use your current skills and build out your resume. Switch jobs now rather than later so that you don't have to start over again. While you are looking into what route you would like to pursue professionally, always keep an eye out for companies that will pay for your continuing education. If you have not pursued higher education, consider doing so now rather than later. A lot of community colleges offer great supported routes for transfer into top tier universities. Vocational schools that offer 2-year plans also can go a long way depending on your industry and are often affordable. A basic degree (A.A., A.S., or bachelors is a good place to start).
© 2020 Brynn B Lewis