Life is all about choices and some of the biggest decisions you’ll ever face revolve around money. Every single day, you face minor and major money decisions that shape your overall net worth either positively or negatively. There’s no doubt that making the right money decisions is the greatest contributor to financial success, which is why I’m going to share with you 7 money decisions you cannot afford to get wrong!
Decision #1: Your Education
There’s no denying that education is the primary driver of a sustainable career, and overall fruitful life, at least to some extent. Unless you have an explosive business idea in mind that can bag you millions of dollars without much schooling, you’ll need education to navigate today’s social and economic setting.
Nevertheless, education, and specifically college education, is a financially draining venture that’s bound to spill over to your financial future. It takes no less than thousands of dollars to fund a four-year college degree, and if we factor in other personal expenses during that time, this figure shoots to a couple hundred thousand dollars for a private university or college. This expensive price tag could pretty much buy you a fancy, top-of-the-line car model, but hey, not so fast.
Of course, it’s easy to fall into the trap of easily accessible student loans and turn a blind eye to cheaper college options, but you shouldn’t. Don’t be part of the numerous students that exit college with hefty debts waiting to eat into their salaries as soon as they land their first job.
Even if you must take a loan, strategize on how you’ll get rid of it fast. Always get a second opinion from different sources on other ways that you can attend college cheaply, whether it means attending an online school instead, or taking a heavier workload to help reduce your intended college years.
If you can acquire that same education at a cheaper school without compromising on quality, I’d advise that you go for it!
Another great option is securing a scholarship. For graduate school, consider working for a company that offers tuition reimbursement to its employees, and if not, you can take up a job as a research assistant within your school. With the big tuition expenses out of the way, you can now think of ways of catering for your survival while in college.
Decision #2: Your Career
There’s a high likelihood that you’ll spend a big fraction of your adult life immersed in your career. Even if you choose to venture out on your own in the business world, you’ll find it easier binding yourself to what you studied in college, or an industry you’ve worked in before. For this reason, your career remains one of the most important decisions you can’t afford to get wrong, not unless you want to keep going back and forth switching between jobs your whole life.
While it’s true that a good career bears different meanings for different people, it boils down to these three things; sustainable income, passion, and long-term prospects for growth. Your job is the primary source of your income, it’s going to determine how fast you climb the financial ladder and how long you stay there. A satisfactory paycheck is one of the key drives to a flourishing career, and to add on that, it’s only sensible that your highest pay comes from where you spend the most time.
Now listen. The idea that you can’t get rich off your salary is flat out junk. It’s possible to sustain a comfortable lifestyle and build solid investments without having to give up your 9–5 job. You can do this by setting up a retirement fund earlier on in your career, such that by the time you clock in for work that final time, you will have accumulated enough wealth to sustain your lifestyle. That’s why you can’t afford to settle for a job that doesn’t pay you enough.
Besides pay, loving your career will pave way for you to improve yourself. Nothing beats arriving at work every morning bearing renewed energy to smash your goals and become a better employee. Passion will keep your fire burning even on those long, tiring workdays and as a result, you’ll be better positioned to secure a meaningful appraisal from your boss, a raise or even a promotion.
Lastly, an ideal career will have a ripe potential for growth. You won’t get anywhere with a job that closes all doors that come your way, or one that doesn’t open any doors, to begin with. Choose a career that has enough wiggle room for your individual growth, and on multiple levels. This means a career path that will remain relevant years from now, and one whose light won’t dim as technology becomes bigger.
Decision #3: Your Significant Other
Gone are the days when romantic relationships solely thrived on superficial physical appearances and good character. Today, financial compatibility is an important recipe that anchors romantic relationships and guarantees their success. No wonder money is such a sensitive topic in relationships, and it’s common to see couples split because of financial issues.
Truth be told, how you choose your life partner is a critical decision that will greatly touch on your relationship with money and wealth. Being so intertwined with your personal life, your significant other can either support or ruin your chances of accumulating long-term wealth, which is why you should choose him or her wisely.
Concerning wealth-building and financial freedom, make sure your significant partner is on the same page as you are, and one of the best ways to do this is to monitor their daily money habits from the get-go. Are they reluctant to split the bill when you go out? Do they throw away money on just anything? Can you entrust them with your own investments? What are their beliefs about money and wealth building? These questions will help you choose a life partner correctly, and save you from experiencing financial wrangles when your relationship matures.
For a fact, a partner who cares less about their financial future is a surefire way of sending your own money down the drain. So don’t let love blind you into falling for someone with foolish investment strategies, and non-existent saving culture.
Decision #4: Your Car
Here’s a decision I see people getting wrong all the time. See, purchasing a brand new set of wheels is not as easy as buying a microwave or fridge. Right after a home, a car is the second most expensive purchase you’ll make in your life, and to add on that, you can’t buy a new car as often as you’d want. Unlike a fridge, buying a car spans a longer decision-making process and requires intense financial planning on your end. If you move right, you’ll save yourself unnecessary expenses, but if you make even a slight mistake, it could cost you a ton of money down the line.
At a time when auto-companies are rife and thriving, you can access a car loan at the snap of a finger. Auto-loan companies have mastered enticing marketing techniques that will convince you to jump into a car loan without even thinking. But before you do it, think about this; why would you subject yourself to debt of almost $500/month for God knows how many years?
It’s a fact that car payments are a leading cause of the debt filled lifestyles many people lead and unless you want your life to take a similar road, you’d better aim to pay with cash.
Decision #5: Your Investing Strategy
If one of your life goals is to become rich and financially liberated, you need to evaluate your investment strategies. Investing is a popular and trusted avenue of becoming rich, and to guarantee tangible positive results, you need to tread carefully.
The first step is to ditch the herd mentality and adopt a more individualized perspective on investing. As you mature, you’ll learn that the best investment strategy is not one that is embraced by many investors but rather, it’s a strategy that works for you as an individual. Before hopping on any investment strategy, no matter how heavenly it looks, make sure it coincides with both your present financial situation and your future financial goals. With these in check, you can then factor in other elements such as your risk appetite, the time horizon of your investment, and any fees involved. All these factors will help shed some light on the type of investor that you are, and as a result, direct you towards a game plan that works for you.
Decision #6: How To Use Your Free Time
The next money decision that you can’t afford to get wrong has everything to do with how you spend your leisure time. Typically, we all get a few extra hours within our day when we are not working; hence, we have the freedom to do whatever we want. Where you channel your energy and time during these extra hours will reflect on your overall quality of life and your financial net worth.
Actually, higher-income individuals have a tendency to engage in meaningful activities that either sharpen their skills or improve their physical health. Top CEOs mostly spend their free time playing golf or exercising in a home gym, and as we all know, there’s no greater form of wealth than having good health. Another common leisure activity among rich people is reading. Passing time through reading is a guaranteed way of acquiring new insights about life and staying up to date with the world around you. If done right, reading will aid your self-improvement on multiple levels, from being a better communicator to gaining new, tangible skills to help you scale the professional world.
Unfortunately, you’ll find the average Joe opting for lazier activities like watching TV, playing video games, and sleeping during their free time. While it’s easy to lie to yourself that such meaningless activities are stress relievers, they do your body more harm than good. For one, inactivity greatly reduces your quality of life and paves way for depression and unhappiness to creep in. Secondly, sitting at home will make you miss out on valuable opportunities that could have touched on your life positively.
So the next time, you have some hours to spare, choose to spend it wisely and you’ll be pleasantly surprised by how much of a difference it will make.
Decision #7: Your Living Arrangement
Buying a home is probably on every person’s wish list, hence the first idea that comes to mind when you mention housing is a mortgage. I’m sure you know one or two people who’ve bought themselves fancy homes through a mortgage, which raises the question, is it good for you?
Albeit enticing from a distance, homeownership is a huge purchase that can potentially lock you in debt for decades. More so if done the wrong way, you’ll end up with the terrible feeling popularly known as mortgage regret, and trust me, you’d rather save yourself the emotional torture.
Before buying a home, it’s important to consider factors like location, availability of cheap schools, crime, your present financial capability, and most importantly, timing. Don’t rush to buy a house unless you are ready to do so, and if you aren’t yet ready, renting is a better option. If you have to buy a home, choose a neighborhood that is growing, such that when you decide to resell your home later, you’ll do so at a profit.
Additionally, look out for other social amenities like affordable schools and cost of living as a whole. If you are not yet where you want to be financially, it’s more advisable to live in a neighborhood that supports a lower cost of living as opposed to one that promotes unnecessary keeping up with the Joneses. And if you ever find yourself with a few rooms to spare in your home, rent it out to a roommate and split the renting costs accordingly. A frugal living arrangement will free some extra bucks off your budget which you can choose to save, pay off your debts, or invest.
There you have it! Those are the 7 money decisions that you can’t afford to get wrong.