How to Manage Money When The Struggle is Real

Well, that title was a little real. So let us get to it...

When a person is concerned about their survival, they hold tightly to their resources, because tomorrow they might need them. It takes a lot for them to be convinced they have enough resources to spend them on a luxury item. Extra resources are much more likely to be saved for a rainy day. But what happens to our financial thinking if our concern about physical survival it taken away?

For an individual who is no longer concerned about their basic needs, a whole host of expensive desires are now free to compete for that person's time and attention. The goods and services that are TRUE NEEDS become undervalued, while the goods and services aka ‘lifestyle’ which provide a perceived status, dominate a person's choices and financial thinking. In this system, WANTS have replaced NEEDS as the primary concern for most and go against their ability to financially plan.

That last part was heavy. Let me break it down. We all have a basic set of needs that have to be fulfilled to ensure our survival. As millennials, those needs include shelter, safety, access to transportation, water, food, clothing and a job. When those needs are fulfilled at the most basic level ANYONE could begin the path to saving money. WANTS become NEEDS when a person decides that living at a basic level is below basic for them—they need the ‘new new’ all the time, regardless of the potential consequences or loss they’ll incur over time. We have been living in a culture dominated by a concern for luxury, status and wants rather than basic necessities.

Remember, since 1980 the wages of most workers salaries in the US have been flat or even slightly in decline when factoring inflation. Our raises are simply eaten up by the growing cost of food, car payments, rent, and that damn wall a fool is trying to build. 100!

So what does it mean to build wealth?

Who is actually wealthy?

A lot of people believe wealth means having access to all the consumer goods and services we desire. That wealthy people are the people who have the most stuff. That is not always the case. Additionally, stuff will not protect YOU from financial stress when difficult times arrive. Wealth is not equal to financial stability.

MEET WARREN BUFFET

WARREN BUFFET HAS A NET WORTH OF 73 BILLION DOLLARS.

In the image above, Warren is trading in his 2006 Cadillac to purchase a new 2014 Cadillac XTS (value 46k). Warren is legendarily frugal. Bruh resides in the same house in Omaha, Nebraska, that he bought in 1958 for $31,500.

Warren Buffet owns a flip phone.

So yes, you can do without an iPhone Forever, boo.

In order to build assets you MUST get back to the basics. I’m not suggesting denying yourself of things—I vacation multiple times a year. I traveled to New York, Atlanta, Houston, New Orleans and Cartagena, Colombia last year. The year before I took multiple trips within and outside of the United States. I budget for those trips. I find ways to save money while traveling (AirBnB, etc.). Daily, I live like a minimalist...

Let me share something with you: I live on a minimalist budget. I engage with the world like I’m broke, even on payday.

I created the following table for myself to determine my needs and wants. I tried to condense my wants to a minimal level. When I found a WANT that I was paying a significant amount for, such as cable, I needed to justify why it was a good use of my money and determine alternative solutions. I eliminated/cancelled many wants that I was unnecessarily spending money on (eating out).

Any money that I have left over at the end of the month goes directly into my savings account. And I act like I don’t have it!

• Start by creating your list of NEEDS.

• Pull up your bank account and determine the ratio of your needs to wants. Analyze your normal spending over two check cycles.

• Determine where your wants are exceeding your needs. I didn’t need cable for $100 a month, $1200 over a year. So I reduced my cable bill to $22 dollars. I went out to eat with my friends. When we all read Dave Ramsey we decided bring wine and food over to each other’s homes to cut costs. Small negotiations enable larger wins over time.

• Pay Yourself First.

• Set an amount and stick to it. I set $500 every two weeks. Yes, it hurt at first, but I was capable of doing it and stuck it out.

• Set a goal to save $1000.

• Set another goal to save 3 months of income in case of an emergency. The standard number shared by Dave Ramsey and others is $10,000.

• Determine your company match. Ensure that you are at least maximizing your employer 401k match. Attempt to exceed it.

• Open a ROTH IRA. Immediately. Create a plan to put $5500 in each year (maximum contribution). That’s a monthly allocation of $459 dollars or $230 every two weeks.

• PULL out cash that you can spend weekly.

• My fingers are always excited to swipe. I am the most cautious when I physically see my month and physically need to break my money down. If you are able to see your money you can make better decisions about going out, spending in various settings, and feeling empowered when making decisions. I pull out $200 a week. Sometimes I will reduce the amount to $150 if I have money left over.

• OWN over RENT whenever you can.

• By all means you should pursue ownership over rent whenever possible. Warren Buffet owns a flip phone. Therefore, I can do without an iPhone Forever. Buy a used car for cash down. You don't need a Lexus. Avoid buying furniture on installments. Check craigslist until you stack your paper.

• Save up a down payment and purchase a home. Try this RENT Vs. BUY Calculator from SmartAsset.com. If you find that you are currently paying $1200 a month for a place you are RENTING, you could purchase YOUR own home at $300,000 and in 15 years you could have $216,000 paid into your own dream rather than someone else’s pockets. (216k was determined by steady rent of $1200 over a 15-year period without inflation factored in)