Friday, August 8, 2014

Financial Freedom

I want to take a moment here to defend the Millionaire Mindset that I've described before. The point of this approach is to be satisfied with having a few nice things that you can truly afford, guilt-free!

Some people assume that my point is to be as cheap as possible. Not true! I don't advocate getting a bunch of cheap junk, because your cheap stuff will break and you'll have to replace it with more cheap stuff. This ultimately does not save you any money.

The consumer culture that's prevalent in America (and elsewhere!) advocates buying lots of expensive stuff that's "cool." Thanks to a very effective advertising and marketing industry, we've come to accept this as the norm. Having lots of expensive stuff means you're rich and interesting and have good taste, according to this view.

And, indeed, wearing a $1000 Armani suit while driving around in a $60,000 BMW, working on your $2000 MacBook Pro and talking on the latest $600 iPhone might mean that you're rich and tasteful and interesting. But it also might mean that you're working 80-hour weeks and stressing out about how you're going to pay for your lavish lifestyle. If you minimize your needs, you can enjoy those luxuries even more, because you can afford them, as the picture above illustrates very nicely.

What does it mean to truly be able to afford something? I've made a post detailing that here.

To bring it around to the target audience of college students and 20-somethings, this means that your income is likely small. That means not buying a new car when you graduate, or even after you get your first job. That means not buying a new $2500 computer (Note: those computers are also more expensive to repair if something breaks! So most students, except those in music or video production fields, are better off getting a cheaper computer--even if you're not the one paying for it! I've listed some pretty good alternatives for around $400 here. My favorite nicer computers, like thin & light ultrabooks, are listed here). That means not replacing your wardrobe with new jeans, shoes, shirts, dresses, and so forth. That even means not going out with friends every weekend!

Why not? Because these things are all luxuries. The definition of a luxury is that it's something nice, something extra, something that is not necessary for you to get along in life. If you have a car that runs, then you can get to work. If you have a working computer, then you can complete schoolwork, apply for jobs, and so forth. If you've got clothes that fit and are in good shape, keep wearing them!

Adopting the Millionaire Mindset means, unfortunately, doing without some things that you'd probably like to have. BUT--and this is important to note--it's a temporary measure! Replacing an old junker with a nicer car, or a slow older computer with a speedy new one, is a reward for your financial discipline.

Once you've paid down your student loan debt (if applicable) and accumulated some savings, it's perfectly okay to reward your patience with something you've had your eye on for a while! After exerting discipline, you can better appreciate the nice thing you've been saving for. And, since you can afford it, you can enjoy your new purchase, completely guilt-free!

Isn't that a beautiful thing?!