Money Advice – Whether we like it or not, we live in a deeply capitalistic world. Everything is measured in terms of money. If you are creating a product and want to know how many people it’s going to help, all you have to take a look at is your sales. Your hard work is measured only in terms of how much money it can create. I know that it sounds selfish and evil, but that’s our reality, and we all unconsciously follow this concept.
On average, there are 700 movies produced in Hollywood per year. How many of them do you watch? A fraction! Although people have spent countless hours and money to create these movies. In other words, we are all capitalists to a certain extend. It’s human nature, but here is the problem. The subject of money is not taught in school. We are taught chemistry, physics, literature, which are all important. We memorize a bunch of facts that we never use just to pass the test, but when it comes to money which is an essential part of our lives, we somehow skip it and consider it as something unimportant. That’s why we go and get a 100K dollar student loan to get a degree that doesn’t even guarantee a job.
And the funny part is that there is no way around that debt. Even declaring bankruptcy isn’t going to help you. You still have to pay for it. Don’t get me wrong. Student debt has worked great for many people, but it also ruined a lot of lives, especially when 40 percent of college students never graduate. That college degree is useless if you don’t graduate.
Only if these people have been taught financial literacy back in school, they would have measured whether taking a 100k loan is a good investment in themselves. Fortunately for me, I didn’t get a student debt. I worked tirelessly throughout my college years to be able to pay for my tuition without getting into debt.
Yes, I have missed a lot of parties, but I don’t regret it. Student debt is just part of the problem. Even once they graduate, they keep repeating the same financial mistakes over and over. Even a thousand-dollar emergency can push most Americans to go into debt. Less than 40 percent of Americans can cover unexpected thousand-dollar emergencies.
The Best Money Advice From Well Known People
So here in this article, I am going to give you the best money advice no one told you. Your school should have taught you, but it didn’t. Your parents should have taught you, but they are the victims of the system.
Be rational with money. Handling money is not as difficult as many people might imagine. It’s a lot easier than you think, but the keyword is – think. Most of our financial decisions are made without really thinking about them deeply. Why did you take that student loan? Because everyone else does. Wait for a second, did you think about how useful it’s going to be to you? Not really! Let me give you another example. When you buy a stock, for example, or an asset. You always think in terms of why buying that asset is a good idea. Maybe because it’s undervalued, maybe because it seems to you like it’s going to double in the next year or so.
But what most people don’t consider is that and lose money when investing is because they don’t ask themselves – why that person wants to sell this asset? When you are buying bitcoin, for instance, for 50K dollars, no one is creating a bitcoin out of thin air to give it to you like iPhones. You are buying it from someone else. The question is if you are so deeply confident that the bitcoin price will double in the next few month or years if you know that it’s going to reach 100K dollars or a million dollars. Why is that person or that investment bank or one of the early Bitcoin holders who own these bitcoins selling them to you for just 50K dollars? Doesn’t he want to keep it and sell it once it crosses a million dollars?
Maybe because he knows something that you don’t? Maybe the reality is slightly different from what you might think. Especially when you are competing from your dorm room with investment banks that have thousands of analysts working for them, analyzing every aspect of this asset. Let’s take another example.
Most people don’t care about the small day-to-day expenses. A few dollars on avocado toast or 4 dollars on a Starbucks coffee should not make a difference. Those 4 bucks that you spend on a fancy cup of hot drink do not seem to make a difference. At the end of the day, we work hard to earn money so that we can afford a more luxurious life. What is the point of denying yourself that pleasure if it’s not going to make any difference at the end of the day? 4 dollars a day is just 120 bucks a month and $1440 a year. This is a lot of money but still isn’t a deal maker since you are getting instant daily pleasure. Even if you look at it from a long-term perspective, like 30 years, it’s just $43,200, which is not even enough to get you a house. Maybe enough for a downpayment in some states. But by then, you will be an old man.
And secondly, if you do not buy that morning coffee, you will probably spend that money elsewhere. Let’s be honest, Chances that you will put aside every morning 4 dollars aren’t high. There are a ton of people who do not buy a coffee every morning, and yet they are in no better financial position than you!
However, there is a different side to that story! Let’s try to look at everything from an opposite angle where that cup of coffee can be a deal maker between you becoming a millionaire or not! What is the opportunity cost of that daily coffee? What if you do not just save that 120 bucks but invest it every single month over 30 years. If you take the historical average rate of return, which is 10%, that would be $285,685 which is a decent amount of money. It’s way more than $43,200, but it still isn’t going to make you rich, especially after 30 years.
However, when you start looking at it from that perspective, you start counting the opportunity cost of everything else. The avocado toast that you buy together with your coffee, your iPhone that you update every September. Every time you eat outside instead of cooking at home, all the clothes that you buy but don’t wear, all the money that you spend on alcohol, and the list goes on and on. And if you take the total sum, it starts making a difference! A real difference! You realize that your chances of becoming a millionaire are very high if you choose to be more conscious of your spending.
But, you may say, what is the point of sacrificing my entire life so that when I am 70, I can sit on a pile of cash? And you are right! You shouldn’t! That’s dumb! Your time is limited here on earth. You are not going to live forever. You won’t be able to take all that cash with you to your graveyard. You should do your best to spend as much as you can, except if you want to leave something behind for your kids. But at the same time, you don’t want to worry about money all the time, throughout your entire life.
That’s why you should try to reach a point where your investments are much higher than your expenses, and you will keep getting richer every year regardless if you buy that coffee or not because your investments are growing. And that takes me to the next point – always think long term. Let’s say you are about to get into college.
If you think strictly in terms of 4 years, then getting a student debt, for example, is great because you will have the time to party, hang out with friends, and have fun while getting your degree, but if you think in terms of 20 years, you realize that you will have to pay off that debt once you graduate.
The point isn’t whether student debt is good or bad, but when you take any financial decision, think about whether, in the long run, you are going to be doing well financially.
Of course, we don’t know how long are we going to live, but life expectancy in the US is around 78.5 years, so it’s better to plan that way even if you might not end up living that long. But here is another misconception that people have. Let me make it clear and simple – money is not going to solve your insecurities.
You can be driving a Lambo, flying private while still being insecure. So if you are chasing money to feel more confident, attract more attention, or build friends. Then that’s a bad idea. Money solves a lot of problems, but insecurities aren’t one of them. People realize too late chasing money their entire lives only to discover that there are problems that money can’t solve. So, while it’s important to strive to become financially independent, there are plenty of ways you can improve your life even if you are barely paying your bills.
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