My mom didn’t know how to handle money, so she didn’t live on a budget. And she spent more money than she made. So even though she made $40,000 a year, she had to go to cash advance stores and pawn shops for additional money to pay her bills. Every pay period, she spent her entire paycheck to pay off cash advance centers and pawn shops. My dad was in the same situation, and he has a master’s degree. The financial burden became so overwhelming that my parents and I had to move in with relatives. Can you imagine graduating from college, living on your own making $70,000 a year, being a success in your career and having to move back in with your parents? That’s what my mom and dad had to do, and actually a lot of adults are doing that now while the U.S. recovers from the Great Recession of 2008. Many people are barely making ends meet. It just goes to show you that we are all missing out on a good financial education. Teachers deserve loads of credit for dealing with our pubescent behavior and setting our foundation by teaching us writing, reading, history, math and scientific analysis. However, financial education should also be a part of the core curriculum. Instead, most of us learn about money through The School of Hard Knocks. In that school of life, you get real-world training by spending your money irresponsibly for a number of years before eventually understanding how to be financially responsible. With many Americans now struggling through the repercussions of the worst economic climate since the Great Depression of the 1920s and 1930s, I’ve decided to share my story of financial hardship and the lessons I’ve learned to teach people, especially teens and young adults, how to develop healthy financial habits that will lead to a comfortable, secure life. I want you to learn from my mistakes so you won’t be burdened down with debt and so you have enough money to enjoy your life. You only have one life to live, and I want you to spend it in financial security. I know of adults who are in their 50s and 60s struggling to make ends meet and who feel the need to take out home equity loans on their house, which leads to them paying for their mortgage all over again up into their 80s, and some take out reverse mortgages, which robs their children of their house when they die. So the elderly become victims and prey to scam artists and get-rich-quick schemes because they never learned how to properly manage their money instead of letting their money manage them. Money is managing you when you don’t live or eat where you really want and bill collectors are hounding you because you can’t pay your obligations. You are managing money when you can fill up your gas tank without scrounging up change in between the seats of your car; when you can on a whim decide to go eat out at your favorite seafood restaurant or steakhouse; and when you get bored with the day-to-day, and you can afford to fly somewhere, take a cruise or buy tickets to see your favorite musician or comedian in another city. That’s the kind of lifestyle I have. I’m not what you would consider to be rich. That is if your standard of rich means I have a million dollars, live in a mansion and drive a $100,000 car. But in my own eyes, I am rich because I’m financially secure enough to do what I want whenever I have an urge to eat somewhere, to go out of town somewhere or to be generous to strangers. To me, that is rich. It’s not how much you make, it’s how much you keep. You can make $20,000 a year and live an extraordinary life. Actors and professional athletes make millions of dollars and hit the lottery every time they get paid, but many of them end up bankrupt just like most lottery winners. The lesson you should learn from celebrities is that it doesn’t matter how much you make. It matters how much money you hold on to. Don’t get caught up in how much money you make. Learn how to make the most out of what you earn. I know that now, but I didn’t know it when I was struggling to survive off $28,000 a year in my first job out of college or when I continued to struggle while earning $40,000 a year in my mid-20s. Making that kind of money, I had no business being broke, borrowing money for car repairs and being threatened to have my car repossessed. And I used to think, “If only I made more money.” But the amount of money I made wouldn’t have mattered if I had a plan for how to budget and save my money rather than spending it all up and not having any money when the unexpected occurred. Regardless of the amount of money you earn, you worked hard for it and shouldn’t just blow it all on payday. You’re not playing with Monopoly money. This is real money with real value. You should plan how to be a responsible spender by making a budget that includes buying necessities, saving money for a rainy day, treating yourself and giving. Most importantly, you should plan to live within your means, meaning you spend less than you earn. By making a budget to live within your means, you will be able to afford all of your basic necessities. You won’t have to beg, borrow and plead to cover your rent for the month or to get out of a financial jam from an unexpected expense. You will be able to afford to treat yourself to a mini-shopping spree, and you may take a nice vacation or splurge on front-row seats to see your favorite musician in concert. All of this will be possible if you make a plan to spend your money responsibly.
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