Things I am Good at Part 2: Money Management
someday, this could all be yours!
I find it simply astounding that at no point in our lives as freedom-loving, all-consuming Americans, we are not taught how to manage money. Sure, some of us are, thanks to our parents, but in between phys ed and beginner French, schools don’t bother to say hey: here’s how to make a budget and manage your money. Luckily, I have a blog where I share my thoughts and happen to be pretty good at it, so for you, my huge readership, here’s my take on it.
Now first off you should know, being an extreme journalist is not as glamorous as it sounds. I can think of many jobs that are worse and pay worse, but it’s not like I am going home and swimming in piles of gold coins here. But despite my modest income, I own a house, drive a new car, and can buy basically whatever I want/need. Hell, I even go out to lunch everyday! Now you probably think I must be drowning in debt, but no. The only debt I have is a manageable car and mortgage payment each month. So how do I do it? Money management.
(I should also note that as a freelancer, my income varies from month to month and I still pull it off, so if you’ve got a regular paycheck coming in, you really have no excuse.)
Step 1: Don’t spend more than you make. The value of money is completely relative, so if you are making $8 an hour, you can’t buy the same things you are when you are making $20 an hour etc. Simple really. And while doing something like buying in bulk might “seem cheaper” in the long run, if you have $5 and need one bottle of shampoo that costs $5 alone, spending $20 on 8 bottles of shampoo isn’t really a good deal for you at that moment.
Step 2: Save for a rainy day. Not to sound like your parents here, but shit is going to come up. If you have money put aside you can pay to say, get your car fixed, or buy the new Canon 7d, without going into debt. The easiest way to save is to do it automatically. When you get a pay check, put some in a savings account before you do anything else. Then it’s like you never even had that money to begin with and you won’t miss it.
Step 3: Make money work for you. I don’t have any credit card debt, but I sure as hell have a credit card. I get airline miles with my card and I put every single thing I purchase on it initially. I then pay it off every month. So basically, I got free airline miles out of the deal. It’s also a great way to keep a record of how much you are spending. In addition, my savings are in a money market account, earning a small, no risk percentage every month, and easily accessible should I need them.
Step 4: Figure out what’s important to you. If you are working hard, you should be able to spend money on the things you want. For me, it’s eating out. For other people I know it’s going to the bar, clothes or camera gear. It’s ok to buy stuff, as long as you can afford it. But remember step 1.
Step 5: Think about the real cost of things in the long term. I mentioned I drive a new car. At one point in my life I realized that by driving old beaters that were purchased for a few thousand dollars, I was actually spending more on repairs and overall upkeep, than going and buying a brand new car. Now obviously you can get an “nicer” car used than you could get brand new, so that goes back to step 4, what’s important to you. For me it’s getting from place to place and my Corolla is awesome for that.
And that’s basically it. Obviously if you are already in massive debt, this stuff is harder to implement. Unfortunately you must not have followed these principles at some point (thanks awesome education system and credit card vultures!) Also, not everything I am saying will work for everyone. But basically, if you spend a little bit of time thinking about how to manage your money, your entire life can and will improve. Now I just need to figure out how to make more of the stuff!