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FOUR Financial Lessons from the Homeless

New York is one of the biggest financial capitals of the world. Finance is everywhere in this city, whether in the billion dollar hedge funds that are making million dollar deals or the restaurant owners calculating bar tabs, brunch receipts or tenants saving for the unruly rent they owe their landlords at the start of each month. 

One lesson I have learned from observing the homeless on my street, is that being a pure minimalist has its benefits. These people carry with them only what they need and nothing more. It would be inefficient to carry around dead, excess weight. We as millennials need to understand why excess is bad and recognize how our spending habits are based on desire instead of necessity. If we all became more aware of the things that we buy and their ability to clutter our lives, we might start to realize that material goods do not help us meet our goals or delay the process.

The second lesson we can learn from the homeless is how we can market ourselves well to attract the attention of others. I regularly encounter homeless individuals on the subways and in the streets. They are holding signs that tell their story or are yelling at passengers about their specific misfortunes. Many of them have had a lot of practice doing this, so they know what works and what doesn’t. They are forced to put their best foot forward and try and try again to sell the bystanders on a few dollars of investment into them. They are essentially pitching themselves to an audience of investors, like you see startups do on Shark Tank. When you want money for an investment or business, or are trying to land the perfect job, you need to market yourself to your best ability. This means looking the part and connecting with the given audience on a personal and real level. The homeless live it everyday. Their survival depends on it.  Since yours doesn’t, if you were to apply the same sincerity and passion into improving your current state, you would likely get very far.

The third lesson is utilizing the resources around you to the best of your best ability. I was in the train station one time and a homeless man was cleaning all of his clothes in the bathroom sink. Since the station is a public facility, this was free to him. He was being resourceful. I also see many homeless people using public places for shelter or the public library for entertainment to pass the time and read or subway seats as beds. We as millennials also have boundless resources around us that will cost us little to no money to utilize things such as books, mentors, the internet, newspapers, other people in our field willing to help us if only we just ask. Many of us do not use these resources to our advantage as we should.

The fourth lesson is that homeless people ask for what they want. If asking doesn’t work with one person, they try and try again. They are relentless because they need to survive. They will badger so many people and most of the time it works. I know because I see so many people fall prey to their tactics and reach into their pockets to grab money. Its human nature to feel empathetic towards other people and want to help them out. Ask for what you want and if you get denied ask someone else.

The final lesson to consider is that homeless people use a cash based accounting model. These days everyone is in debt. Debt is a tool, but most of the time people, especially people our age, abuse this tool. Homeless people collect cash, use that cash and simply go and try to get more when they run out. They don’t just put their purchases on a credit card. People need to realize that we should only spend what we have available. Try carrying around a specific amount of cash each day, spending only what you need and nothing more. Don’t always be putting the little things in life on a credit card because it creates bad habits that are hard to stop.

 

How The “Little Things” Can Control Your Financial Health As A Millennial

The other day I was in my apartment after a long workday and the Internet was down. Seeing as though I didn’t have much else to do without our beloved muse, I decided to re-watch one of my favorite movies: “Vanilla Sky.” For those of you who have not seen the film (shame on you), Tom Cruise gets in a horrible accident and is left with a deformed face. He must then go through life wearing a mask, reinventing his identity and hiding himself from his former life. The movie ends with a quote that I will never forget, “the little things in life…there’s nothing bigger, is there? In the context of the movie, Cruise’s character was referring to all the little moments in life that add up and can bring you happiness. While this is definitely true, I also think it can be applied in other areas of life, such as your finances! 

It’s the little things expenditures in life that add up and can lead to the biggest sum of debt. It’s the Starbucks, the fast food, the taxi rides, the drinks, the hair products, toothpaste, the gum or the dates that you pay for and buy every week that add up. Compared to more serious investments like your monthly rent, these expenses don’t seem very damaging to your wallet, but over time these costs combined can be very detrimental. 

What’s a couple bucks here and there? A couple of bucks here and there is $3,000, 5,000 or 10,000 dollars worth of small instant gratifications spent over a year. One thing you can do to prevent these small costs from getting out of hand is to plan ahead and budget exactly how much you have spent in the past, over a certain time frame. I’m predicting the results will blow your mind. Just the other day I was looking at some of my daily spending habits. Every day I get breakfast for about $4.50. Multiplied by 261 workdays in a year, I am spending $1,174.50 on a breakfast that could cost me $0.75 if I prepared it for myself at home. Lunch was even more costly, at a daily rate of around $9, meaning I have been spending $2,349 a year. If I cut that down to $3 a day, I could save $1,566 a year. Taking this out of your yearly salary on an annual basis makes that delicious lunch much less tasty. 

Every day I see some of my co-workers take their twice-daily trips to Starbucks. If we are saying on average a Starbucks order costs $3- $4, so x2 can be as much as $7-8. This then equates to $2,088 a year. Is it really the coffee they want? Especially when we have a Kurig machine right in our break room providing the office with FREE COFFEE in over 15 different flavors. Now some of this can be justified with needing a break from work and a friendly ritual with co-workers, but the point I am trying to emphasize is that you should really consider just how necessary these small purchases are in your life or if there are ways you can cut down on your spending with cheaper alternatives. If you want to be financially successful throughout your life you need to always be analyzing your wants over your needs. Do I really need this or do I just want it? 

A good way to counter this mentality is to focus on the why you are spending so much money on these things and if you can do without them in your life. Try to find substitutes if possible with smaller unit prices. If you’re out of college, maybe you want to buy your first car, a trip or a house in the near future. Setting larger goals will help detract from spending so much on the smaller stuff, especially after you have realized just how much every dollar counts. Staying away from instant gratification purchases will make you happier and more successful in the long run. Just remember that its the little things you buy that can be the biggest threat to you’re financial health, so always be aware!

Stepping Up Your Budget Game

Recently, while attempting to tackle a vast amount of credit card debt, I came across the much-needed concept of Budgeting. Budgeting is an unusual verb that is not often used in this generation, I too was a little lost. Especially after spending way too much last year on bars, food, beer, lunch, dating and anything else that drains your wallet. I felt like I hit rock bottom financially. I realized I had spent way too much money on too many perishable goods and services. This was a sign I needed to take better control of my financial habits soon or else this terrible pattern was bound to continue.

When it comes down to it budgeting means control, and control is a product of knowledge. Back when I was spending too much, I was lacking knowledge. Financial knowledge about where I was and what I was doing with my money. That was my biggest problem. I wasn’t thinking about how all of my expenditures were adding up. I would always think I had more money in my account than what was actually there, forgetting about the small things that I had bought for lunch or at the stores after work. Note: Small amounts add up the quickest!  So after my card declined a few times I finally forced myself to take control. My first attempt to regain control was an approach any millennial would do in this day—turn to technology. Technology in the form of Mint.com

Mint.com is a budgeting website and application that you can easily download onto your phone, laptop, or other smart devices for free! Mint.com provides personal budgeting tools that allow users (your futures selves) to add all of your financial accounts and display all of your balances simultaneously. This is done in a similar way to an instantaneous balance sheet showing your personal assets and liabilities. I was able to add all of my loans (school and car), bank accounts (checking and savings), credit cards, 401K, and even my brokerage account on Mint.com. At any given time you can view your exact net-worth down to the penny. With Mint.com I am able to see my balances and account activity anywhere I go. This application provides an accessible display of my spending habits in the form of helpful visualizations.

The best part about this service is the categorization tool and the budget planning aspects. Within the site I am able to see all of the purchases that I make on my various credit cards and withdrawals from my accounts in real time. I also have the ability to put these purchases into specific categories to see where my money is going every month. Using these categories I am able to customize personal budget plans. I therefore am able to manage the amount of money I am going to spend on certain necessities such as alcohol, fast food, work lunch, breakfast etc. Mint.com service will even send my cell phone alerts when I am spending too much or have gone over my set budget. These budget limits also tell me if I am saving the appropriate amount so that I am able to pay my loans and credit card bills on time.

This service helped me tremendously with my spending habits and keeping my debt under control. I highly recommend this service to anyone and everyone who wants to be proactive about their financial budgets! See Mint.com for more information and remember, knowledge is power when it comes to taking control of your finances.

Below are some relevant screenshots of Mint.com.

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