April 2021
Howdy, ladies and gentlemen. Today, I would like to address financial freedom. My advice is to plan/live as if you will be broke tomorrow. Throughout recent years I have noticed a trend of the “YOLO lifestyle.” For those who are unfamiliar with this lifestyle, YOLO means “You Only Live Once.” Some take that quite literally. They go wild, party like crazy, spend money like that is what it was made for, travel unnecessarily and do silly things as if there will be no future consequences, since “You Only Live Once.” However, I tend to disagree. You live every day and only die once.
Keeping that in mind, it is important to plan as if you will be broke tomorrow. I constantly hear about people living paycheck to paycheck, spending their money unnecessarily and having no financial cares in the world as long as their bills are getting paid. Here are the top three scenarios I frequently see, and I would like for you to see if this sounds familiar or resonates with you on a personal level:
“I make 65k a year, thus, I can afford to live on 65k a year. I will buy a big house, travel, buy multiple cars, fancy clothes, jewelry and whatever else I want, since I make 65k a year. I can do whatever I want and not worry about saving money because I make 65k a year.”
“I am young and do not have to worry about stuff now. I just need to live. So, any money that I make will go to traveling, going out, partying, buying exclusive clothes, trinkets and whatever else I want now. I can deal with that stuff when I am older.”
“Money is meant to be spent, and I work hard for it. So, what is the point of saving it or putting it away? I work hard for it, and I deserve to enjoy it.”
About 95% of the people I have heard talk about money or things I have witnessed fall into one of those categories. I’m not sure if it is because of how they were raised, they just think life does not change or they have no concept of time, but I do not recommend it. Life can change in an instant. That big fancy 65k job you so highly covet could be furloughed due to a pandemic, or you could be terminated. Now, you are stuck with a 65k lifestyle and a 0k income. Slowly, you will have to sell off everything that you bought, foreclose your house and at an extreme, become homeless. If you decide that you are young and do not have to worry about money, so you just spend it on parties, traveling, clothes and whatever else, then you are putting yourself in quite a bind. The entire time you are more than likely not pursuing anything to improve yourself. You are job hopping or doing a job that is minimum wage and gaining minimal experience, while getting older in the process. If you do this into your mid-20s, you have already put yourself way behind career-wise and will have a ton of room to try and make up. Lastly, if you are just the type who does not care and thinks money is nothing more than just something to spend because you work hard for it, that is just a selfish mindset in the wrong direction.
The moral of the story goes back to my original advice of “plan as if you will be broke tomorrow,” because you honestly have no idea what tomorrow will bring.
A pandemic could start, causing the world to go into a multiyear economic recession.
Another great recession could hit.
You could have a catastrophic injury that puts you out of work.
You could lose your job.
You could be hit with an unexpected bill.
[Insert any of the other millions of unforeseen financial issues that could affect a person.]
A financial burden or mistake can ruin your life. Do not be foolish and think that it cannot happen to you. The “great” thing about life is that sometimes “life happens,” and you do not know what will come your way. Just like a loss of a family member, a breakup, a wreck and the other disastrous things of life, financial heartache can come out of nowhere. So, do not get hit from left field financially but start planning NOW! Open a savings account and start diversifying your portfolio.
A generally practiced and good rule of thumb is the 20-30-50 Rule. It is broken down in the following ways:
Hoping you bear your financial fruit,
Daniel Pall ;$
Daniel Pall is a master's student in the Department of Agricultural Economics.
Keeping that in mind, it is important to plan as if you will be broke tomorrow. I constantly hear about people living paycheck to paycheck, spending their money unnecessarily and having no financial cares in the world as long as their bills are getting paid. Here are the top three scenarios I frequently see, and I would like for you to see if this sounds familiar or resonates with you on a personal level:
“I make 65k a year, thus, I can afford to live on 65k a year. I will buy a big house, travel, buy multiple cars, fancy clothes, jewelry and whatever else I want, since I make 65k a year. I can do whatever I want and not worry about saving money because I make 65k a year.”
“I am young and do not have to worry about stuff now. I just need to live. So, any money that I make will go to traveling, going out, partying, buying exclusive clothes, trinkets and whatever else I want now. I can deal with that stuff when I am older.”
“Money is meant to be spent, and I work hard for it. So, what is the point of saving it or putting it away? I work hard for it, and I deserve to enjoy it.”
About 95% of the people I have heard talk about money or things I have witnessed fall into one of those categories. I’m not sure if it is because of how they were raised, they just think life does not change or they have no concept of time, but I do not recommend it. Life can change in an instant. That big fancy 65k job you so highly covet could be furloughed due to a pandemic, or you could be terminated. Now, you are stuck with a 65k lifestyle and a 0k income. Slowly, you will have to sell off everything that you bought, foreclose your house and at an extreme, become homeless. If you decide that you are young and do not have to worry about money, so you just spend it on parties, traveling, clothes and whatever else, then you are putting yourself in quite a bind. The entire time you are more than likely not pursuing anything to improve yourself. You are job hopping or doing a job that is minimum wage and gaining minimal experience, while getting older in the process. If you do this into your mid-20s, you have already put yourself way behind career-wise and will have a ton of room to try and make up. Lastly, if you are just the type who does not care and thinks money is nothing more than just something to spend because you work hard for it, that is just a selfish mindset in the wrong direction.
The moral of the story goes back to my original advice of “plan as if you will be broke tomorrow,” because you honestly have no idea what tomorrow will bring.
A pandemic could start, causing the world to go into a multiyear economic recession.
Another great recession could hit.
You could have a catastrophic injury that puts you out of work.
You could lose your job.
You could be hit with an unexpected bill.
[Insert any of the other millions of unforeseen financial issues that could affect a person.]
A financial burden or mistake can ruin your life. Do not be foolish and think that it cannot happen to you. The “great” thing about life is that sometimes “life happens,” and you do not know what will come your way. Just like a loss of a family member, a breakup, a wreck and the other disastrous things of life, financial heartache can come out of nowhere. So, do not get hit from left field financially but start planning NOW! Open a savings account and start diversifying your portfolio.
A generally practiced and good rule of thumb is the 20-30-50 Rule. It is broken down in the following ways:
- 20% for savings: Savings accounts, retirement contributions, loans, credit card payments, etc.
- 30% for everything else: Nonessential expenses like clothing, restaurants, monthly streaming subscriptions, gyms, etc.
- 50% for essentials: Rent and other housing costs, groceries, gas, etc.
Hoping you bear your financial fruit,
Daniel Pall ;$
Daniel Pall is a master's student in the Department of Agricultural Economics.