Tag Archives: personal finance

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.

 

So you want to be Rich? 9 tips to get you started

The other day I read a fact on the internet: “The middle class today is 20% poorer than the middle class 30 years ago, in 1984.” At first I was startled by this statistic, but then I thought about it more. It all started to make sense to me. I thought about money… how money in this day and age, has become such a taboo topic. It’s like, we sit around looking at Instagram and Facebook photos of everyone flashing their wealth or attempted portrayals of lives they want to appear to be living. Money is a tool, and while it may seem to cause more problems than good, we all want it. If you are serious about obtaining this tool, as we often don’t like to admit, continue reading. I have compiled a list below of tips to help you take yourself more seriously and make more money.

1. Go where the money is. Wealthy people don’t become wealthy by staying in one place, simply hoping to win the lottery. You have to be proactive by relocating yourself to areas where larger influxes of money are more common. Money breeds money, it’s a natural fact of life. So if you want to increase your chances for making some, you first have to find where it is being made.

2. Don’t show off. Showing off your money is for people who either don’t have it or have just come into a lot of it too quickly—new money, for lack of a better term. As I’ve mentioned previously (and will continue to mention) investing your money is key! Yes, while it may be a fun drunk activity to try to impress girls by buying bottle service in meatpacking with your $10k bonus, but everyone sobers up eventually and you want your money to be there when you do too. Be smart, and let your money work for you in the future. Whether it be investing in your 401k or in a small business venture, both options have a greater return value than a one-night stand with a social climber.

3. Show up. Another quote for you today: “80% of success in life is just showing up.” Even when it’s a struggle, you don’t want to miss a day taking a step toward achieving your goals. Perseverance is very important, even when you feel discouraged. In sales they use the phrase “pounding the pavement” to represent this idea. This means physically going out and making sales happen, shaking hands and kissing babies… basically doing whatever it takes to get ahead. Keep this in mind. Alcoholics don’t go to one AA meeting and call themselves sober. It takes time and effort. Always show up.

4. Find a mentor. If you don’t know how to make money on your own, there are plenty of people out there who do. Network and ask successful individuals for advice and guidance. A lot of times people will be more willing to help out than you might think, or they might have other connections that may lead you to future job opportunities or business ventures. Remember money breeds money.

5. Avoid debt when there is no return on the charge. My father once told me “don’t put it on your credit card unless it will pay you back or last you for more than a few months.” He was right. Only invest with money you don’t have if it’s going to pay you back the same amount or more. Do not ever put yourself in a position where you have to work for your money. You always want your money to be working for you. So be smart, invest wisely, and think thrice about what you are swiping your credit card for.

6. Shoot big. So you want to be wealthy!? Instead of aiming for $1 million, aim for $10 or $20 million dollars. Lofty goals will keep you hungry and make you less likely to settle after your first big paycheck. Many people stop working hard after they feel comfortable enough. This is why lottery winners never stay millionaires for long. If lotto winners had a financial savvy mindset (side note: they likely wouldn’t be playing the lottery in the first place), they would invest their money. And the disappointment that 80% go bankrupt after a few years (fact), would not exist.

7. Understand that Money doesn’t sleep. Just like the Michael Douglas in the classic Wall Street. You have to be a hard worker. Even though your job ends at 5pm, this does not mean the opportunities to make more money do as well. Opportunities to make more money are always arising, day or night, you just have to go out and find them.

8. Treat money like its a girlfriend. Keep a close eye on your wealth and money. If you don’t make your money your number #1 priority, it is going to leave you and walk right into the hands of someone else. So don’t ignore money because after a while it will end up ignoring you.

9. If you want to be rich avoid embracing the idea of being poor. If you want to truly be happy, this does not make sense. Yes, yes I know the saying that goes something like “it’s not about they money, it’s about being happy.” Well let’s be honest for a brief moment here. Whoever said that, definitely did not live in our generation. Money can bring you a lot more happiness than financial insecurity. No matter how happy you think you are, nothing is worse than not knowing when your next meal will be or how you will make next months rent. Stress resulting from financial insecurity can make even the most optimistic person unhappy. Money gives you more freedom in life… freedom to live how you want to live. As selfish Americans, we know how important our freedom is.

Don’t Redline your Financial Health, Stay Under Control

Continuation from the last article..

If you drive a stick shift car, then you are likely well aware of the dangers of redlining. Redlining refers to the red area on the RPM meter; This is the area above which the engine is designed to be safely operated. In terms of spending habits, riding the redline consistently will not only hurt your financial health, but will surely cause you problems down the road. When driving a stick shift car, it is important to shift when necessary so you don’t break your car, or your bank account. In terms of finances, redlining can be defined as spending or taking on more debt than your income can afford. Which is the opposite of creating wealth.

In last week’s article, I emphasized that becoming wealthy means that you absolutely must spend less than you make. This still rings true, but it is very important that this principle  isn’t over simplified or misinterpreted.

Living by this simple principle means that you must spend less than you make at every spending opportunity. The simple mind will look at their spending on the most basic of levels. I am very much guilty of this, as are most of my millennial friends. It seems so easy to justify spending $400 of your $600 dollar pay (post rent) on clothes, sunglasses, shoes, clubs, restaurants, bars etc. because technically, you are spending less than you earn. You may even think to yourself, ‘If worse comes to worst I will just skip a couple of meals.’

When most people think of the word expenses they think of the bare minimums such as

  1. Rent, water, electricity
  2. Food
  3. Going out

As a 20-something these are probably, the big expenses that you have to pay. From my personal experiences I have justified my frivolous spending on material items by making sure that these three bases were somewhat covered before I just went for it. This mentality is flawed, there are many other expenses that we tend to forget about, these include: lunch at work, Netflix, Spotify, gym membership, late night street meat, refilling bathroom supplies, dry cleaning/wash and fold, that extra round you bought everyone when you were already wasted, movies, dates, 5% to savings and many other random expenses that come along with living in the city. These are the extra expenses that will cause you to redline your personal financial health that you need to remain cognizant of (and don’t forget, just because the charge went on your credit card doesn’t mean that it shouldn’t be counted in your expenses).

When we’ve already spent all the money that we have early on in the pay period because we decided that we needed new Allen Edmond oxfords or those Jimmy Choo heels we are left with a credit deficit because it turns out they were just not our 20-something year old personal budget, go figure.

When I tell you to spend less than you make this means spend less after every single expense has been accounted for and sometimes this means that you actually don’t have enough money to drop $500 on a new suit or hand bag one Saturday of the month because it just doesn’t work within your means (also remember to base your income on your take home pay and not the amount you get before taxes). You can’t afford to be redlining. Redlining is bad for your financial health and makes saving impossible. The hardest part about credit card debt which is inevitable at our age is trying to save and pay off the debt at the same time. If you really really want to be wealthy you have to be consistent and strict with your money until you actually can afford to spend a little. I will be the first one to tell you that every once in a while its fun to rev the engine and redline a bit, splurging on something big but making a habit of this can become a downfall to any wealthy person.

Now is the time to save and skip the redlining because it only gets harder as life goes on and gets more complicated!

Stay tuned for part three of the spending sections.

Don’t Skip On Your Taxes, Keep Every Penny

Approximately one month ago, I had a big decision to make. Do I pay a professional or do my own taxes. After about 3 seconds I knew the answer was clear. It’s like I had forgotten that I just graduated from business school with a major in finance. When people hear the word taxes many tend to cringe because of thoughts of endless paperwork and boring meticulous detail. Thankfully this isn’t 10 years ago and technology has advanced tremendously. We have TurboTax at our fingertips, and for all of you who don’t know, even a child can use this product. It makes doing your taxes as easy as those computer games they make for 5-year olds with the colorful pages and big text.

Here are a couple of reasons to do your own taxes.

  1. The software is easy to use, TurboTax does a great job making their product as unintimidating as possible.
  2. You are more aware of your own money, how much you are making and how much you are saving.
  3. Understand more about politics and where your money is going, if you don’t like how much you’re paying; make sure you vote in the next election.
  4. Saving money. Why pay your local accountant $150-350 when you can use turbo tax for free; if you qualify for the free version. If you make more than $55k, the other version will run you about $90.
  5. 1-step closer to becoming financially independent and more of an adult.
  6. The more you know about taxes the more you can benefit from deduction such as student loan Interest, job hunting costs, and moving expenses.

As a young millennial, most of us will be filing single with no dependents. This means that for most of us our taxes will be simple and less complicated than our parents. We can see our deductions and get every penny that is ours in our tax return. The average tax return is just shy of $3,000, which is a pretty big incentive to just get them done.

It may be tempting to just spend this money on frivolous toys such as a new laptop, expensive sunglasses, shoes or bottle service, but I would recommend investing in your student loans, credit card debt or investing for the future. With interest rates and loans as high as they are it’s almost as if you’d be paying yourself more.