28 Sep The Only 3 Ways to Directly Control Your Money
Do you ever find yourself in the middle of your day and then you run into a situation that seems pretty basic, but you don’t know what to do about it? These type of events tend to fall under #adulting. They’re things like cooking rice, changing a flat tire or managing money. I remember hearing tales of long ago, when schools had useful classes like Home Ec and P.E. that prepared you for life. Right…and everyone got around by flying on their dragons and whistling magical tunes. A bunch of useful classes that prepared you for life skills in school sounds like a fictional novel to me. A boring, but useful one.
I’ll never forget 2 months before graduating COLLEGE. Not high school. Four years after that in what they call ‘higher education‘. It hit me like a ethereal bully slamming its fist into my brain and rattling my conscious world. I was sitting on my bed and looking out my window. I had just accepted a job, scratch that…I had just accepted a career. I got off the phone with a person in human resources and they started speaking a different langauge to me talking about “benefits and salary”. The number I understood. $48,000 plus commission. Helluva a lot more money than I’d ever made working at Dominos or any other job I had since I was 15. But then she started speaking a different language.
Do you want to opt into the 401k with a match program? Do you want the HSA750 plan or the HMO? There is a contribution for company stock that we can deduct from your paycheck at a 95% purchase price (this one I got wrong and it has to date cost me over $1,000,000 dollars, not joking, but that’s a story for another post). After guessing my way through what might as well have been a conversation with someone speaking Mandarin, I sat on my bed and almost cried. I was terrified. The bully that is reality had reared its ugly face and was laughing at me hysterically. I had a serious problem.
I knew nothing about money.
All my years of education including my “higher education” in college hadn’t prepared me for this moment, let alone the rest of my future. I was angry but what choice did I have? I was graduating in 2 months! Too late to go back to my school counselor and be like “Hey, umm…I know college is supposed to make you smart and ready for the real world…but I uhhh, I think I need to be let back in to take some classes around the most common thing I’ll deal with for the rest of my life…you know, money?”
Fortunately, I had one thing going for me. A skill that continues to pay off to this day and where I outpace most people. I can read and absorb books like a pack of starving hyenas devouring a fallen gazelle. This is where I got lucky. I went to the bookstore (an actual brick and mortar one since Jeff Bezos hadn’t completely started to turn the world upside down yet with Amazon). I ended up going with a book I still recommend to this day, Rich Dad, Poor Dad. It started my financial journey.
Since then, I’ve read hundreds of personal finance, economics, and business books along with over a thousand of hours of podcasts and videos. It’s the reason I’m doing this. I want to share what I’ve learned and to help people who could be thriving right now if they had been taught some basic principles.
So here are some very basic, yet important principles about money. There are only three ways that you can control your income directly. These aren’t difficult to figure out and most people could probably get 2 out of the 3 after thinking about it for a minute or so. But the point is that its not top of mind for the majority since it was never presented to us in an organized, educational environment. So here you go.
Number 1: Decrease Your Expenses
This one requires a budget. You need to know how much money you are spending on monthly expenses. If you don’t have a budget on a spreadsheet or paper, get one now and do it (you can download a free one on my main page by entering your email for more money info). Once you have created that budget, cut 10% of your monthly expenses. I promise, you won’t even notice it after a week. It is not hard to do. If things are really out of hand, push yourself to cutting 20%. See what happens. This is the easiest thing for us to control.
Number 2: Increase Your Income
Time to get a raise! Or a side hustle. Or a new job. Whatever it takes. Find a hobby that can earn you money. Go back to school or find online courses to develop new skills that make your value go up. Ask for that raise! I have friends that enjoy restoring old furniture and selling it. They make a few hundred bucks after adding a few screws and new coat of paint. There are dog-walking apps you can join. Sell things on eBay. Finding new ways to make money has never been easier thanks to technology. Use your imagination, follow a passion, and make bank!
Number 3: Invest Wisely
This is where people tend to let fear take over. Don’t let it! Investing sounds complicated and some of it can be. There is a funny character trait I have found to be true about most people in my lifetime; they don’t like to feel stupid. So when you start talking about bonds, stocks, and IRA’s they tend to nod their head in agreement, give the basic “uh-huh” and “oh yeah” verbal cues that they are listening but you can see the lost look in their eyes as if Neil Degrasse Tyson just started discussing astrophysics.
I admit, this part takes some work but its one of the most IMPORTANT steps. This is the step that really gets you ahead in life, not the first two. There are so many strategies for investing that you can choose something that interests you. Don’t do the hard work of steps 1 and 2 without the benefits of number 3. Let your money make money for you. Pay a professional CFP or CPA to help you in this area. But I highly recommend researching things for yourself so you understand basic concepts of what it is your money is invested in.
I hope these principles have shed some light into a dark area. Wasn’t that bad, was it? Money is not as difficult as people think and it can even be fun which is the goal of this blog. Do yourself a favor and take a moment to assess where your current financial situation sits within these 3 buckets and ask yourself these questions so you can start taking control of your money instead of letting it control you.
- Do I have a budget written down?
- Can I cut any of my expenses? If so, what?
- Does my current job/industry have upward mobility? If so, how do I get promoted/a raise?
- What skills do I need to develop to make more money either in my current job or a new one?
- What would I do with an extra $500/mo. of income? An extra $1000/mo?
- Am I investing? If yes, how are those investments doing?
- Do I have a plan for growing my investments?