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?
Henny Tasker says
One easy “trick” that worked well for me all my life. Every time I got a pay rise – say $50 per week- I added half, $25 per to our spending budget – so I felt richer – having more money – enjoying my pay rise – but the other 50%, which I never missed, was invested – in the early days, used it to increase mortgage payments and paid it down much faster. Once house paid off, directed those pay rises (and ex mortgage repayments) to buy investment properties or invest in shares in retirement fund. Now very comfortably retired.
Tom Robertson says
When i was 15 or so, my father gave me 2 shares of A T & T and said it was the best investment. And a few years later, when I had loaned some of the money he was using to put me through college to a friend and asked him for more, he said that the non repayment rate on loans borders on 100%. By now, I’d probably replace A T & T with an S & P 500 index fund, but other than that, I wish I had listened to him.
christina waern says
A generous life style pays off
I want a generous life style. I’m happy when I can give our children and grandchildren some extra money, and going to church I feel like “doing my worship service”. I’m healthy, has the privilege to still teach at university 40 % of full time in spite of being 73 years old.
Teacher 2023
Vicki Bartik says
We built a home that we could afford. A small home with no extra frills. We felt we were blessed to even be able to do that! We refinanced after a few years to a lower interest rate, and bi weekly payments. Our home was paid off 5 years sooner, with the monthly payment being less. Always be sure to check interest rates and what lending institutions may be offering. We have lived on one income for over half of our married life. I quit my job to stay home and raise our grandchildren while everyone else worked. Best job I ever had! We lived in a budget for many years, even after we could afford to not watch every penny. My advice is plain and simple…always be mindful of your money.
Mary garvey says
A charming irishman, michael Cornelius mulvihill, said to me.. you worry too much about money. You’re irish. You can live in a ditch. And I thought.. oh yeah.
Geena B. says
Live below your means. Just because you can afford something doesn’t mean you need it.
Andrzej says
Spot on!
Ludmilla says
Exactly!!!
Mary says
I try to tell family and friends this! Just because you like it, doesn’t mean you have to HAVE it!
Alexis Kuiken says
Do what Dave Ramsey says. We have no debt, including no mortgage, and financial freedom.
Carol Humphreys says
I think it was more of an example of how my mother lived, rather than specific words.
Dave says
My dad told me in high school that “debt is the worst 4 letter word in the dictionary.”
Richard G says
“Invest Early!”
This advice I received in college from my Engineering Economics Prof.
We were learning about the “Time-Value” of money and he showed us how the early investing had the greatest impact in the long run.
As a result, I was able to retire comfortably at 56!
Ludmilla says
Same here. My parents instilled in me that debt is the worst (w exception of a mortgage but even here it needs to be reasonable).
Holly Cavanaugh says
My mom taught me how to use a credit card wisely by using it like my debit card but paying it off every month. I never carry over a balance on a credit card. By doing this I actually get extra money at the end of the year thru whatever the credit card has to offer.$$
Nina Lazzeroni says
We do the same and have for years. We have not paid one cent in interest in all the years. This year we are using the rewards to pay for a trip to Italy to visit family. We will use only about half of the rewards, so will be able to use them to go again in another year or 2. By that time we will have even more rewards saved.
Melody says
Me too! I even bought a car on one once I knew the price would be the same whether I paid cash or card. Big cash back points for that one.