By Jessica Wee
Most people I know who are living in debt seem to carry a monthly car payment.
About a decade ago, Joshua Becker, author of Becoming Minimalist who is passionate in helping people own less stuff and live more life, wrote a piece about The 7 most life-changing pieces of financial advice he has ever received.
Here is the summary:
1. Review your monthly spend on housing, car and entertainment (dining, tickets, holidays)
As the bulk of our income goes into these three items, it makes sense for us to review the expenditure and cut back if you are feeling burdened by it.
2. Begin your marriage on just one income
By living on one income and saving the other, the situation will train a married couple to live frugally.
When the time comes if one partner decides to stop work, you will not feel the strain and will be financially prepared to continue living a frugal life.
3. Buy your car with cash
Whatever you have in savings, make that the budget for your car instead of taking a loan. With the passing years, your savings will increase and therefore your car budget will also increase when you decide to change to a new car.
4. Use a spending plan if you cannot keep a monthly budget
A spending plan provides flexibility as it offers more of a snapshot, moment-in-time glance of your current spending.
First, determine your monthly take-home pay. Then, subtract your fixed monthly costs. The money left over is your monthly discretionary income. With that number in hand, you are in a good place to decide how you’d like your money to be spent.
5. You are never too poor to give
Generosity has rewards of its own and is always worth the sacrifice. You could be earning paycheck to paycheck but there are those who are not earning at all because of situations that are beyond their control. When possible, make it a point to give a portion of your earnings to those who are in a worse situation than you are.
6. Money in a job should only be a consideration, not the determinant factor
A job that pays too little or seeks to take advantage of you will ultimately add stress and worry to your life and keep you from doing your best work. So you have to consider your options carefully.
Never let it be the most important, determining factor in your job search. Always consider your talents and skills and strengths and the opportunity to make a difference in the world first.
7. Make an extra payment to your loans every year, it will shorten the length of repayment
It is a simple fact about the mechanics of amortization schedules which will shorten your repayment. Even if it’s just an extra RM100. In the end, most years it’s added up to a full extra monthly payment.
What is the single most significant piece of financial advice you have ever received? And how has it improved your life?