One of the good things about going through tough times, is that it gives you a lot of needed wisdom.
For example…
Back when I first started making money online, I had a $100k year after barely making $30k the previous two years.
Which was awesome.
But I also did some really stupid stuff with that money.
Like leasing a $50k Jeep that I could barely afford.
Or not saving any of the money I was bringing in.
I look back now and know how stupid this was.
But that’s the kind of stuff you learn in tough times.
Here’s a few things that I know now about money that I wish I would have known back then…
1. If you start making more money, don’t let your expenses go up in proportion to what you’re making
This is one I see all the time.
You’re making $50k a year, then all of a sudden you’re making $200k a year.
Which is great.
But at the same time you start spending a lot more on your car, apartment, traveling, clothes etc…
And at the end of the year, you’re still not saving any money.
You’re better off keeping your expenses the same as they were.
Sure splurge on a few more things…
But use that next 1-2 years to really build up some savings/investments.
I know that’s not sexy at all.
But it’s one of those things that you’ll be glad you did when there’s a big downturn in the economy.
2. Stop trying to keep up with your friends in regards to their spending
One of the things you’ll start to see as the economy dips is that people who you thought were doing well aren’t actually doing well at all.
Why?
Because they spend way too much money.
I know people that make $300k a year and live paycheck-to-paycheck.
Seriously.
And their biggest problem is that they hang out with people who make more than them, and they try to keep up with them.
You can’t do this.
You have to know your own spending limits.
And stick to them.
3. Have a 6-12 month emergency fund
This is another one of those things that makes me sound like a grandpa.
But it’s crucial.
You’re going to hit a rough patch at some point.
It’s not a matter of “if” but a matter of “when”.
So you need some savings to bail you out if this happens.
I know most experts recommend 3 months for an emergency fund.
But I feel like if you’re self-employed, or you’re a freelancer, you probably need 6-12 (especially if you have a really high income).
You’ll be glad you did.
4. Take 100% responsibility for your money/investments/finances
I was just talking to my mom about this earlier this morning.
Right now I’m helping them get their retirement accounts in order so they can retire in two years…
What stood out to me is that my mom handles everything in regards to their finances.
Literally everything.
My dad doesn’t even want to think about it.
He doesn’t look at their statements.
Doesn’t know how much money is in their bank accounts.
Couldn’t tell you the difference between a stock and a bond…
He’s completely out of the loop.
So he just defers everything to my mom.
The sad thing is that this is not unusual.
A lot of people don’t want to deal with their finances.
They don’t know what to do…
Or they’re scared to make a mistake…
So they just try to pawn it onto someone else (like their spouse or a financial advisor).
But here’s the truth.
If you want to be truly successful, you have to understand this stuff.
I didn’t know a damn thing about money, investments or personal finance until about 3 years ago.
And then I read 2 books that changed everything for me.
One was John Bogle’s book called The Little Book of Common Sense Investing.
And the other was Ramit Sethi’s “I Will Teach You To Be Rich”.
Both books go hand-in-hand.
And I learned enough from those two books to get started.
I learned about index funds, 401ks, savings accounts, and how to manage my money.
This was all stuff that was new to me.
I didn’t learn it in school.
My parents didn’t know anything about it.
So I learned it on my own.
I took 100% responsibility for my finances.
And I highly suggest you do the same.
Think of it this way…
You’re going to make multiple millions of dollars over the course of your life.
Wouldn’t it make sense to know what to do with that money?
Of course it would.
It’d be dumb not to.
That’s why leaving it for someone else to figure out is just setting yourself up for trouble.
You take to take responsibility for your own finances.
Cause that ability will allow you to survive in the bad times…
And thrive in the good ones.
Make sense?
I hope so.
I nerd out talking about money, so I hope this was helpful for ya.
Enjoy your Saturday.
– Justin
If you want to hear more from Justin, he has a private email list for top marketers, copywriters and business owners. To apply to be on the email list simply click the button below that says “apply now”.
