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?
Richard says
Before making any purchase (no matter whether big or small), always ask yourself: “Do I really NEED this?” It’s amazing the number of things we want but don’t really need (including that coffee or fast-food lunch).
Lacey P. says
I read a book a while back (I can’t remember the name, lol) basically, the philosophy was to spend some, save some, give some. I always refer back to that when I’ve become derailed in my budget or shopping sprees….it’s simple and true! ????
Jenny says
My dad always asked me after a purchase, “How many hours did you have to work to pay for that?”
This question still rings in my ears when contemplating a purchase and helps me decide whether it’s truly worth it or not.
Teresa says
My husband says the same to our children!
John says
Save until it hurts.
Juliet says
Live well below your means and save the rest. Don’t buy things that everyone else considers a need, but really isn’t. Evaluate your own true needs and skip the rest. We have saved so much by cloth diapering, opting to take our trash to the dump etc. it all adds up!
Annie says
My mother encouraged my sister and I to be sure we knew how to support ourselves and handle money so we wouldn’t be dependent on a man to do it for us. I am married and we pool our funds for common expenses/purchases, but I know that if something happened to our marriage or him I would be okay financially.
Also, keep some of what you earn separate so you can spend on things your partner might not see as necessary without starting an argument. I’m not saying that you should be deceptive, but this way I don’t criticize his buying the occasional comic book and he doesn’t do the same when I buy myself flowers for my home altar.
Stacey says
Mind your pennies and the dollars will mind themselves.
There’s a reason why Starbucks has been so successful. People might not/can’t treat themselves to a lavish vacation, but they will buy themselves a $4-5 coffee every day because they “deserve a treat”. $5/day ends up being $600/month.
The other one is magazines. If you look at a stack of magazines and you add up how much you’ve spent in a year, it can end up being hundreds of dollars.
Sigi says
Gosh, yes! I stopped buying magazines when I realised how much money was just sitting in piles around the house (also not a great thing!), flicked through once for ‘entertainment’. If I still desperately want the information in those publications, I can just read them free at my local library! No more piles of mags now, and more money in my wallet.
Tom says
This is a big one!
Leah Marshall says
Libraries are great for books, magazines and also borrowing Dvds.
Michelle says
Growing up, I saw my parents live on a cash budget, put money into savings and give generously. Great examples. In college, I read the book The Richest Man In Babylon for an Economics class, and it stuck with me. As a single person, I lived on very little, but still managed to save and give a little, and to stay out of debt. Now as a wife and mom, I am hoping to pass on these values to our kids. Joshua, I appreciated the insight about the career. Good thoughts there.
Andrew says
My wife (19 years) and I make an annual spending plan around new years day; including how much we want to invest, pay down the house, vacation allotment etc. We have kept a balance sheet for almost a decade now that tracks investment accounts, real estate values, real estate debts (only debt we have) to keep tabs on our net worth. We ‘meet’ the first weekend of the month following the end of the quarter to review progress of the annual goals; takes about 10 minutes anymore but keeps us on target for our goals.
Michelle says
Hi. Thank you for your article. We try to remember it’s God’s money on loan to us and fully pay off our credit card bill every month. We also try to follow the 10% back to God, 10% to savings, 80% on us — which also can mean more back to God or savings. A financially debtless life is peaceful. We are so thankful to the Lord for how He has provided for our every need.
Liz says
Amen! It’s all about Jesus!