Financial Education
Most of us were never properly financially educated. If lucky we got told to stay out of debt and only spend what we could really afford. Also, society teaches us to show off our successes. Drive that fancy car, get that beautiful house!
The imposed mindset
Ever watched those TV shows where, mostly young, couples are helped in buying or renovating a house? First there is the budget, how much can we borrow? Next step is how can we spend that full budget. 10k left? Nobody will suggest getting a bit of a lesser mortgage, since that will “only save you a small amount of interest a month“. No! It is better to enjoy the benefits of that extra money now. Just get a fancier kitchen, do a full renovation of the bathroom though that was done only 5 years earlier, but not fully for your taste. 10k too little? Try everything to get that “small” extra amount, talk to the bank, ask your family. After all, now is the time to get it all perfect! You want to impress your family and friends, right?
What people seem to miss is that those TV shows are incentivized to show you this perfect world, to push you to spend every cent you have or can get your hands on. Advertisers are lining up to spend their ad dollars to appear in those shows. Why? Because it works for them!
That likeable presenter, those advisors, interior decorators — their job is not to help you, but to make you feel better about spending.
And it doesn’t stop at TV. Open Instagram, TikTok, YouTube or any other social media and you’ll find the same pattern. Influencers showing off their new fancy cars, their dream holidays, their perfect kitchens. What you don’t see is the lease agreement on that car, the credit card debt from that holiday, or the loan that paid for that kitchen. In many cases that shiny car is just a rental used to trick you in what they are selling.
Social media is the most effective advertising machine ever built, and most of us are scrolling through it several hours a day. It makes us compare our lives against that of others. And guess what? There is always people that do it better in live. Or people that act like they do.
The Financial healthy mindset
The wealthy people (the ones that are not just acting to be wealthy) tend to live within their means. That shiny car will only be bought if it makes sense or can be afforded easily. No need to show off to the neighbors. Instead, they are buying back their time, making their money work for them. Steadily cutting back the hours they need to trade for money.
Let’s say you have a regular job with fixed pay and there is that 50k car you want to buy. Even if you pay that from money saved consider how many hours you have worked for that. If you need to borrow the money – and please… never borrow money for a fancier car than you truly need – the monthly loan and interest payments will translate to many hours working in your job. Would a 10k used car not get you from A to B with almost the same comfort? If so, why overspend on it. Just to catch that jealous look on your neighbor’s face? What if next week they show up with an even nicer car?
This is the trap. It has no finish line, now winners, only losers. There will always be a bigger house, a newer car, a more exotic holiday. The moment you stop chasing the approval of others, you win — because you are finally playing your own game.
A Financial Healthy mindset is not about being cheap, living like you are poor and stacking coins like Scrooge McDuck. It is about being intentional. Time is money — that much is widely understood. But the reverse is equally also true: with money, you can buy back your time. And every time you put even a small amount of money to work for you, you are not just growing a number in a bank account — you are buying a piece of your freedom.
Think not what that dollar in your pocket can do for you today. Think about what it can do for you in 5 years, in 10 years. If you just let it work its magic for you.
