I’ve been tagged by MoneySmarts! I’m supposed to answer this question: “If I were asked to give just one — just one personal finance advice — what would it be?”
Apparently, this meme was started by a blog called Moolanomy, and it has a round up of all the one-finance-advice’s so far.
Now, I’m not sure I’m the best person to give financial advice – this blog being, so far, an account of my struggling to get out of credit card debt and putting my finances in order – but as the saying goes, experience is the best teacher.
And so, based on my experience, here is my little nugget of wisdom: Good financial management is not concerned with the amount written on your paycheck.
Allow me to explain. People often think that if they earned a little bit more, they would be better off financially. Not true. In my first job right out of college, I was paid just a little over minimum wage, and I stayed with that job for about two and a half years. I lived from paycheck to paycheck, constantly borrowed money from my mom, and often had my cellphone or credit card suspended because of late payments.
In my next job, my salary almost tripled. You’d think, being single and all, that I would have been able to save tons. Unfortunately not. I moved out of my mom’s place and rented a condo near my new office. I applied for new credit cards, left and right. I took up my master’s degree in an expensive school. I went out more often and ate in more expensive restaurants, I shopped more, and I went on expensive vacations. And so despite my drastically increased income, I was still living from paycheck to paycheck, and racking up even more debt.
The point is, financial management is about how you spend, not how much you earn. This is something I wish I knew way back when I was still earning close to minimum wage. If I did, I would probably be a millionaire now.
Now, for the three people I have to tag:
Ismangil – an ardent advice-giver in this blog
Twoyearstops – a now debt-free friend who used to be in the same boat I am now
Jinoe – who thinks he’ll be working on his finances for life