(This is Part III in a series about challenging traditional measures of financial success. Part I was The “Ivory Tower”: Reconsidering the college investment. Part II was Challenging traditional measures of financial success: Homeownership.)
It was the first semester of my first year of college. My friend and I were driving around our small town, looking for something to eat. But we didn't have much money, so our options were limited. Chili's sounded good, but neither of us could really afford it.
"It's weird to think one day we won't have to worry about this," my friend said. "In a few years, we'll graduate, and we'll have jobs that pay us like, $30,000 a year and we can go to Chili's whenever we want."
Landlords and property owners have their fair share of problems: They have to manage, accommodate, repair, etc., their property. It's a lot of responsibility, and with great responsibility comes great headache.
But it ain't all roses for renters, either. We've got rent increases, security deposits, and unannounced, inescapable construction. Last Saturday, I woke up to the sound of drilling on the wall next to which I sleep. It was 7:30 in the ever-loving morning!
As a renter, there are a handful of important laws and considerations that many of us overlook. At least, I know I've overlooked them. So I figured they were worth sharing. Here are some money-related things to keep in mind if you are a renter.
(This is Part II in a series about challenging traditional measures of financial success. Part I is The "Ivory Tower": Reconsidering the college investment. Part III is The 9-to-5 job: Challenging how we earn a living.)
Last week, I was having dinner with my neighbor, a magnetic woman with a free spirit and a really youthful soul. She's been renting the apartment above mine for something like 30 years.
"Do you ever think about buying a home?" I asked her.
(This is Part I in a series about challenging traditional measures of financial success. Part II is Challenging traditional measures of financial success: Homeownership. Part III is The 9-to-5 job: Challenging how we earn a living.)
Not going to college was never really an option for me. "Don't even joke about that," my mom once said when I brought up the idea as a teenager.
My parents never went to college and believed they suffered financially because of it. Statistically, they may be right. According to the data, a bachelor's degree can help you earn significantly more than a high school diploma.
Lately, life has been a little hectic. I have a full schedule of work. I'm trying to plan a surprise party. I'm working on three different passion projects. My laundry needs to be washed. Hell, I need to be washed. It's noon and I haven't even showered.
I don't mind a packed schedule, and I've learned to better manage my time. But for those moments when a lack of time gets the better of me, and my stress level rises, I've noticed something unsettling: I have a really careless attitude about money.
In short, I've been stress spending. Some of it is emotional, and some of it is spending out of convenience. Here are a few examples of my recent stress spending:
I'll admit it. I'm a sucker for money psychology studies. And it's not just because I write about money. On a sheer curiosity level, they're fascinating.
But they also serve as a great reminder that money is more about mind than it is about math.
It's interesting to see exactly how our brains work when it comes to habits like spending and saving. And not only is it interesting, it can be helpful too. Understanding how we're wired helps us have a better understanding of our own individual money habits. This is why articles on sneaky marketing tactics are so popular -- they're helpful! It helps to know how our subconscious is manipulated to spend more so we can consciously do something about it. Continue reading...
I recently discovered the book "Scarcity: Why Having Too Little Means So Much." To be honest, I don't even remember how I came to find out about the book. Maybe someone recommended it; maybe I read about it somewhere. Lately, I've been overwhelmingly busy, and, as a result, my short-term memory is shot.
Coincidentally, that's what the book is about. Authors/researchers Sendhil Mullainathan and Eldar Shafir explain how our mental bandwidth changes when we don't have enough of something -- namely, time and money.
Contrary to the belief that poor decision-making leads to poverty, the book's authors sought to prove that it's actually the other way around: poverty (or scarcity) leads to poor decision-making. What's more, scarcity creates an awful cycle of bad decisions. The authors point to study after study that proves this to be true.
In an ideal world, you wouldn't need to go negotiate. In an ideal world, the weather would be perfect, there would be no war, and your employer would simply say, "Hey, your value to our company has increased. Here's ten thousand dollars."
If only, right? When it comes to earning more, negotiating is usually a necessary part of the equation. The negotiating masters among us have a serious leg up.
I do not have a leg up. In most circumstances, I dread negotiating. I'd rather watch paint dry than negotiate. I'd rather eat a chard smoothie. I'd rather give someone a ride to the airport at 8am on a Monday.
I fight splurges less often than I used to, but the urge still pops up occasionally. Sometimes, it's okay to splurge; but mostly, I find myself wanting to resist temptation. There are a few questions I ask when I'm mulling over a purchase:
- Do I have money saved for this?
- Do I feel like I'm stealing money from a financial goal?
- Am I simply being impulsive? Will I regret this in an hour?
Another way I decide on my spending is by considering my future self. The first time I ever came across the phrase "future self" was in a personal finance book. In the money world, the idea of "future selves" is discussed a lot. And rightfully so -- a study found that, just by picturing ourselves in the future, we save more money.
In Increasing Saving Behavior Through Age-Progressed Renderings of the Future Self, researchers tested the savings behaviors of college-age participants. They showed some subjects a digitally altered image of themselves at 70-years-old. The control group was shown a photo of their present self. Researchers found that those participants who viewed a photo of their "future self" saved twice as much money in a retirement account than the control group.
Frugality isn't very sexy. I'll admit that.
For most people, the concept of thrift probably conjures images of coupon clipping, stock photos of piggy banks, and Benjamin Franklin -- none of which are terribly glamorous.
Frugality, is, however, in line with the concept of getting rich slowly. We've learned that building wealth has much to do with living below your means. You have to increase your income, yes. But in the process of looking for ways to earn more -- whether it's negotiating, switching careers, picking up side gigs -- frugality is your friend.