Motivational speaker Jim Rohn famously said we are the average of the five people we spend the most time with.
One significant reason this happens is because of their example and model. As we recognize their positive aspects, we seek to emulate those characteristics in our own lives.
Another reason is because of the conversations we have and the advice we share. The more quality time we spend with people, the more nuggets of wisdom we begin to hear from them.
Over the years, I’ve been blessed to have countless positive influences in my life. Their example and their wisdom have shaped me in every way—including my financial practices. Here are seven specific ways.
The 7 Most Life-Changing Pieces of Financial Advice I’ve Ever Received
1. “Most people who overspend their income do so in one of three ways: 1) Too much house, 2) Too much car, 3) Too much entertainment.” // Financial adviser, 2008.
I made a passing statement to a financial adviser friend of mine one particular evening over dinner. I had no data to back up the claim, it was purely an observation made on anecdotal evidence. I told him that most people I know who are living in debt seem to carry a monthly car payment. That’s when he offered the financial advice above in the form of his own personal interactions.
There are outstanding circumstances for sure (medical emergencies, tragedy, job layoffs, etc.). But generally speaking, if you have a hard time living within your income, check your spending on your home, your car, or your entertainment (dining, tickets, trips). I have tried to keep all three modest ever since.
2. “Begin your marriage living on just one income.” // Boss, 2000.
My wife and I got married in June 1999. During our first several years of marriage, we both worked full-time jobs. My boss at the time, a man I looked up to in countless ways, offered me financial advice one day during a short conversation by the coffeemaker. He suggested, even though both of us had steady incomes, as a newly-married couple we should work hard to live on just one of the incomes and save the other.
So we did. My wife’s income each pay period went immediately into savings and my income went into the checking account.
One year later, that savings account became the down payment on our first home. And four years later, when we had our first child, we were still living on one income which freed up my wife to choose to stay home if she desired.
3. “Buy your car with cash.” // Friend, 2004.
My first car, a Chevrolet Corsica, I bought from my parents and paid them back monthly over the course of one year. When that car began to sputter eight years later, I entered the marketplace to purchase another. Talking it over with my friend one day over a roast beef sandwich, he offered me his thoughts:
“Whatever you have in savings,” he said, “make that your budget for your next vehicle—even if it isn’t much. Then, rather than making a payment to the bank on your existing car, begin making a monthly payment to yourself for your next car. Whatever you would have paid for a car payment, put into a savings account. When your next car dies, you will have a bigger budget for the next one—then, repeat the cycle. You’ll be surprised how quickly you are able to upgrade your vehicle over the course of your life.”
This is advice I have never strayed from. And it’s totally true.
4. “If you can’t keep a monthly budget, use a spending plan instead.” // Writer, 2009.
In 2009, as we were just beginning our journey into minimalism, I was introduced to the idea of a Spending Plan. Contrary to a monthly budget that requires detailed tracking and frustrates many, a spending plan provides flexibility as it offers more of a snapshot, moment-in-time glance of your current spending. But the knowledge and lessons learned from the snapshot view of income vs. expenses provides valuable insight for course correction.
The idea is worth the effort for everyone. First, determine your monthly take-home pay. Second, 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 determine where you’d like that money to go. Here’s a more detailed explanation.
5. “You are never too poor to give.” // Parents, 1979.
Growing up, there was not excess money around our home. In fact, only years later did I begin to hear the stories and understand how tight it was at times. The most significant involves a local grocery store raffle contest that happened to draw my parents’ names on the very week they seemed entirely out of options to feed their young family. And yet, through it all, my parents lived with a simple philosophy on generosity: “We will give to charity, and we will teach our children to do the same.”
Their example and their advice have revolutionized my life and my view of money. No matter how tight my money situation has been over the years, I don’t think I have ever missed the opportunity to give away at least a small portion of every paycheck I have received. This is not because I made lots of money. Quite the contrary, it is because I learned from a young age that generosity has rewards of its own and is always worth the sacrifice.
6. “Never take a job just because of the money. Always consider the money, but never let it be the determining factor.” // Mentor, 1998.
In 1998, following a two-year internship after college, I began the search for my first full-time job. I remember, at that time, seeking the counsel of a spiritual mentor of mine. Sitting across from his desk, I asked about money and how much I should let that factor dictate my decision.
He responded with some of the best advice I have ever received: “Joshua, you need to consider the money. 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 it. But never let it be the most important, determining factor in your search. Always consider your talents and skills and strengths and the opportunity to make a difference in the world first.”
I have tried, throughout my life, to consider income in the jobs I have taken, but have never allowed it to be the most determining factor. And I have literally no regrets concerning the path that career advice has taken me.
7. “One extra monthly payment per year on your mortgage shortens the length of your loan by years.” // Real Estate Broker, 2001.
While working through the specifics of our first home purchase, our real estate agent made a passing comment concerning our mortgage payments. For her, I think it was just a simple fact about the mechanics of amortization schedules. But for me, it became a life-changing goal—make one extra monthly payment each year on my mortgage.
Over the course of the next 16 years, we’ve worked hard to add a little extra each month to our mortgage principle—even if it’s just $50. In the end, most years it’s added up to a full extra monthly payment. As a result, we’re on-track to have our mortgage fully paid well before 2031. And for that, I’m forever grateful.
I don’t always ask a specific question for the comment section. But I’d love for you to add your wisdom to this post:
What is the single most significant piece of financial advice you have ever received? And how has it improved your life?
About Joshua Becker
Zach you sound a lot like me… I’ve had a myriad of health problems most of my life, including extreme chronic fatigue with its own host of symptoms including anxiety, brain fog and inability to do much else other than work for the past 30 ys. I’m 53 now. But I’ve pretty much always worked as a non-negotiable. When I look back I’m glad that I just worked, no matter what, because there’s no one left, no parents to care for me, and I am financially stable. I remember seeing a 100 year-old woman (if I remember correctly) on the news who had never missed a day of work, and her motto she’d tell people who wanted to stay home when they were sick was, “You’ll feel better when you get there.” We’re much stronger than we give ourselves credit for. If you can exist at home doing the minimum, or you can exist at a minimum-responsibility job and get paid for it, but have the joy of being at least somewhat self-sufficient. Warehouse work, office work, library, picking up dog poo, landscaping, answering phones, anything – my advice is to get someone to write a very professional and flattering resume and look for something that’s a good fit online – daily. You will eventually find something you enjoy and are good enough at, that it will give you motivation you never thought you had. That’s been my story. I can’t judge your particular situation but I do feel that if we kick in 50% and pray, God will kick in the other 50% to sustain a will to keep going in our lives. Pray and do your part to have financial stability as much as you’re humanly capable, and see how it works. Prayers for you!
I only make 50$ a week where i work. I have intense health probelms but the doctors don’t see it as an issue. There isn’t any compensation for it. It is hard to work even part time jobs or even at all. I put in hours but only get 50$ at this “work training program”. i am stuck at these very low level jobs, i am directed by people 10 years younger then me, and live at my moms whim. I am 31. but feel trapped. i have so much motivation and creative talent.. but i can’t even get the ball rolling. i don’t like to take on big projects (that could make money) in ongoing stations that involve years of high stress.. panicked about having enough to eat. very precise limited spending. limited options of where to go and what to do. even just 25$ more a week would make a big difference with food experience.. and then i could feel more conflicted about my projects. this is not a healthy way to live. and everyone treats it as normal. or they say “work more”. i am sounded by a lot of people who are ten years younger and very energetic. i also have a lot of intsne health probelms that are not normal for my age that started as young as 25, but i have no disability support and have begged for years. people just give me a cold look and say “we could give you an extra 25.. but what difference will it make really.” it just feels like a very counterproductive way to live. I’m not a big spender. but there is a certain minimum threshold to reach healthy living and get the momentum going to take on bigger projects. i know I’m not crazy. people normalize it so much. it’s really bad and has gone on like this for years. it would be different if i was in peek health. but even then not recommended. 75$ a week is not a lot.. but I’ve calculated that this small improvement would go a long way. but i am surprised how hard it has been. “working more” may not be completely impossible. but there is some kind of minimum i need just to do the things that matter. i have intense heart problems and don’t want to put any more pressure on it. often the solutions people gofer seem to create more problems. I tried selling my books but their was a glitch on amazon and the money never gets to me. it feels like a crazy way to live. like this never ending “catch 22” where i loose either way.
Zach you sound a lot like me… I’ve had a myriad of health problems most of my life, including extreme chronic fatigue with its own host of symptoms including anxiety, brain fog and inability to do much else other than work for the past 30 ys. I’m 53 now. But I’ve pretty much always worked as a non-negotiable. When I look back I’m glad that I just worked, no matter what, because there’s no one left, no parents to care for me, and I am financially stable. I remember seeing a 100 year-old woman (if I remember correctly) on the news who had never missed a day of work, and her motto she’d tell people who wanted to stay home when they were sick was, “You’ll feel better when you get there.” We’re much stronger than we give ourselves credit for. If you can exist at home doing the minimum, or you can exist at a minimum-responsibility job and get paid for it, but have the joy of being at least somewhat self-sufficient. Warehouse work, office work, library, picking up dog poo, landscaping, answering phones, anything – my advice is to get someone to write a very professional and flattering resume and look for something that’s a good fit online – daily. You will eventually find something you enjoy and are good enough at, that it will give you motivation you never thought you had. That’s been my story. I can’t judge your particular situation but I do feel that if we kick in 50% and pray, God will kick in the other 50% to sustain a will to keep going in our lives. Pray and do your part to have financial stability as much as you’re humanly capable, and see how it works. Prayers for you!
Basically going through the same thing you’re going through. I’m an epileptic and can’t get disability. It’s tough to move, but hopefully it will get better. Stay up!
My Grandfather never used credit. He believed that “If you can’t afford it, you don’t need it.” So, like your friend’s car advice, (which Grandpa also suggested) he believed in paying yourself first (no matter how small the amount) rather than paying a creditor. That way you saved the interest and if you couldn’t make a payment, no one was going to come take anything away from you or charge you late fees, because “A penny saved, is a penny earned”. He also tried to negotiate the cost of just about everything because “It didn’t hurt to ask.” [The stories I’ve heard about his negotiations! For example: He took a treasured Mustang to a dealership to use as ‘trade in’ for a new car. When all was said and done, he was sitting in his new car about to drive off when he asked the sales guy “How much do you think you’ll get for that?” and the amount quoted was incredibly underpriced, so my Grandpa says, “Okay, I’ll buy it!” and he turned off the engine, pulled out his wallet and the salesman had to sell it to him for that super low price, which he paid cash for!]
He was a man who stood by the value of quality. If you can’t do it right, don’t do it at all. He employed a number of men in his construction business and if they couldn’t give him quality, he would make them do it over or he would let them go. He built his own house and most all of the furniture he had in it. My experience with his work quality is a the bookcase he built in the 50’s and gave to me for my High School Graduation in 1980. It still endures the test of time, weight, and being moved around. It is now in my daughter’s possession! He never bought “the cheapest”, but he also never lived beyond his means.
He passed away in 1993 owning everything and owing nothing!
The fact that there were a few million dollars in his savings when he passed validates in tribute to the values he lived!
When we were young we used to buy groceries for 8 days every week so that every 8th week we could pay our grocery money off our mortgage. Worked well for us.
Pay your total credit card bill every month.
Why not just pay cash and be done. Credit cards are terrible products.
Credit cards are a great tool if you pay off the balance each month. You avoid the interest, but earn perks such as airline miles, cash back, etc, and you build your credit. They only become an issue when people carry a balance they can’t pay off each month.