Thank heavens for enlightenment! When I think about how ignorant I once was about money, I cringe. My face scrunches up like something stinks.
Here are 6 things I’m so glad I unlearned about money. Can you relate?
1. Budgets are the devil.
Dang! I can’t believe I was really in these streets without a budget.
Budgets are liberating! Budgets are bae!
They’ve been the foundation for everything good in my life—saving thousands of dollars, paying off over $25,000 in debt, funding my $6,000 teaching certification and paying cash for international trips.
Once I got a budget, I stopped living just to pay bills and started achieving my goals. My “anti-budget” helps me reach short- and long-term goals while still having some fun. Get a free printable to start planning your next paycheck and your life.
2. YOU Must be rich to save, invest or crush debt.
After reading how regular folks with regular jobs became wealthy in The Millionaire Next Door, I understood that saving, investing and debt elimination stems from the habit of managing money you earn, not just the amount of money you earn.
An annual salary of $100,000 is “rich” to me. Someone banking $100,000 a year could be spending $150,000 a year. Little ol’ me, making less than half of that could have 10 times the net worth of the other girl because of careful planning, taking action, persistence and discipline.
I’m just starting to really learn about investing. I didn’t look at my first stock price until last month. Turns out that I could buy a stock in Verizon for the same price of dinner and drinks with friends—$60. Yep!
In this case, investing isn’t a matter of what I can afford, it’s a matter of what I prioritize.
What’s important is to start with what you have and continuously seek knowledge.
If you’re young, gifted and black like me, I encourage you to invest $5 into Brass Knuckle Finance’s ebook, Investing School. It’ll pay dividends. It’s an easy read because it’s culturally relevant and to the point. He talks about investing in your employer plans (401ks), in individual retirement accounts (e.g. Roth IRA) and with robo-advisors with minimal fees (e.g. Betterment, Wealthfront)
Another option: join Empify’s Wealth Builders group for less than $10 a month to get access to webinars, a book club, step-by-step directions on investing and more. (These are not ads! I really rock with these folks and heed their advice.)
3. Ignorance is bliss.
When bills used to come in the mail, I’d toss those things on the dining room table like Frisbees. The white envelopes formed mountains of paper recounting my crappy purchases. If I didn’t open the bill, I didn’t owe any money.
Ha haaa! So delusional!
Not knowing my numbers is the worst thing I could have done. What saved me was the Credit Card Accountability Responsibility and Disclosure Act of 2009 (a.k.a. Credit CARD Act). It requires lenders to show how long it will take and how much money it’ll cost if you keep paying the minimum every month. Without this notice, I would’ve kept on paying minimums on debts forever. The pure shock of the truth in black and white ink moved me to action.
Finally listing my debts and making a debt-free plan empowered me. Becoming financial literate is opening my eyes to a better life that includes huge savings, debt freedom, big-time investments in the near future and, most importantly, a prosperous foundation on which to build a family legacy.
Being financially illiterate ain’t cute. Applied knowledge is power. You don’t become financially literate when you become wealthy. You become wealthy by being financially literate.
YOU MAY ALSO LIKE: Which Debt Do I Pay Off First? Here Are 4 Methods (Free Printable)
4. YOU Must work hard for money.
By “work hard,” I mean working tirelessly all the time or working in a field you hate because you think the salary is good. We probably know a lot of people who do hard labor but have nothing to show for it.
Of course, we must work to get what we want. However, we can work smarter.
We can do what we love to earn money. We can work hard for a month on a digital product and set up funnels to make money while we sleep for months after.
We can spend less than what we earn and strategically invest the difference so our money makes babies (hat tip to Financial Lituation).
We can raise prices so we work less and with the best clients instead of keeping prices low to get any client.
I’m always trying to shift my money mindset to vibrate on a higher level and attract more money or opportunities to make money.
5. Credit scores indicate overall financial health.
I once thought attaining an 850 credit score would unlock the highest level of adulting.
Upon reaching it, a waterfall of balloons would cascade from the sky as ring announcer Michael Buffer yelled, “Congrats, Miss Wise! You’re reached Adulting Nirvana! Let’s get ready to rumbleeeeeeeeee!”
Guess what! I reached “The 800 Club” and nothing really happened. Turns out, a score of 740 can help you get the best interest rates. Shooting for 850 is not the “End All, Be All.”
Also, there are several different credit scores calculated in slightly different ways. The credit score formula for FICO is payment history (35%), amounts owed (30%), length of credit history (15%), new credit (10%) and credit mix (10%).
It doesn’t account for having a 3- to 6-month emergency fund, having an updated will, having insurance and spending less than I earn. To me, those are some indicators of overall financial health.
I only need a high credit score if I want to get into more debt via a loan, mortgage or credit card. A high credit score helps you borrow money at a low interest. My credit score isn’t a top priority right now because I don’t want to acquire more debt anytime soon. Saving and paying cash for big expenses like a new car or trip is what I aim to do. Not get a car note or charge it on my credit card.
I still want to maintain a clean credit report, however. After all, a clean report is helpful when looking for a job or an apartment, or even turning on utilities. Whenever I need to do those activities back in the States, I want to be ready.
6. Everybody has debt.
Nope! Sorry, Dad! You’re wrong.
There are a ton of people screaming, “I’M DEBT-FREE!” Sometimes that includes the mortgage!
Thank goodness I started looking for positive, money influences and found #debtfreecommunity online. My life has a totally different trajectory now.