I was poor, by design.
I enrolled in a university in Singapore, one of the most expensive cities in the world. I was smart enough to get in but not wealthy enough to attend comfortably. We didn't have enough money to cover everything.
Looking back from hindsight, the good money habits I have today stem from the resourcefulness when I had little to no money.
All good money habits have one root: spending effectively (Yes, it is not about not spending or being frugal). When you know when and why to spend, you win.
Invest in yourself first.
Society went crazy about investing recently. Everyone encourages you to save and invest every penny. Everyone tells you to stop buying a cup of coffee and instead save and invest the money. Everyone tells you that you are missing out if you don’t invest today.
It is true; you are missing out if you don’t invest today. But without a good amount of capital, you can’t win that much.
Investing needs capital.
If you only have $200 now, if it goes up 100%, it will only yield you another $200. For people without a large amount of capital, investing in the money market is not necessary.
Instead of putting that $200 on the stock market, you better invest in yourself first. Start increasing your value by learning higher paying skills.
Thanks to the internet, you can purchase online courses from platforms such as Udemy to learn how to code.
This is the best investment I have ever made because it landed me a part-time job with a good hourly rate and eventually helped me land an internship at a multinational company.
Make yourself more valuable by learning high-paying skills. Get certification. Go for Bootcamp. Buy an online course. It is worth the time, money, and effort.
It is not sexy and not quick, but it is the safest and surest option to earn more.
Buy secondhand items.
NOTE: not applicable for everything.
My phone broke during my study. Being a student with little money, I didn’t want to spend too much on a new phone.
Hence, I decided to buy a secondhand phone. After 2 years, I still use the Samsung S8+ that I bought for $150, and I am not thinking about changing soon.
I am not interested in new technologies. As long as my gadgets can serve me well, I will use them.
My point is not to buy a secondhand phone. My point is to buy secondhand items on things that don't really matter to you.
It will save you money, and you might get a pretty good deal.
WARNING. Be careful of broken or counterfeit items.
You need to deal in person for such transactions. If it is too good to be true, it is. Double-check everything, and if you can, get the receipt. However, most people are kind and trustworthy, so don’t be afraid to try.
Don’t buy cheap items.
Because they don't last long.
Cheap items are usually low-quality, and low-quality items don't last long. Because they have a shorter lifespan, you buy them more frequently.
The cheap t-shirt I bought for $5 was gone within a few wash cycles.
The cheap earbuds I bought for $30 were not usable because they were uncomfortable.
The shoes I bought for $50 wore out within a month.
They are not worth your time and money.
Because they feel cheap.
How can you feel confident if the clothes are terribly designed, don’t fit, and look tacky?
You don’t need to go for the high-class designer brands but always go for at least a standard brand. If you can’t afford it, either postpone or buy secondhand items. Cheap items are rarely a bargain.
Convert your money to time currency.
I flipped burgers in my early university life. I always looked at the clock.
One hour has passed, another $7. Eventually, I associate my 1 hour with $7. It proves to be an incredible technique to curb spending.
When I wanted to buy $140 shoes, I needed to work 20 hours. I knew how long those 20 hours in the kitchen. It forced me to rethink whether I was willing to trade 20 hours of my life with shoes.
Unless you are an entrepreneur, you probably are exchanging your time with money.
You often forget how long those hours are to earn money, and you mindlessly spend on silly things you bought on a whim, or what we now call impulsive purchase.
If you still work for money, associate your money with your time. It forces you to view a price tag from a different perspective.
Allocate your money.
Every time I received my paycheck, the first thing I did was to distribute my money to the food budget and hostel fee. If I had more, I sent it for saving because the fear of losing my job haunted me.
The habit sticks. Until now, I have just enough money to cover food and short-term expenses. The rest has gone to its own station.
When you see you have less than $800 in your bank account, it makes you feel poor, even though you aren’t. You will think twice before buying anything. It restricts your spending. It prevents you from reckless spending.
You must follow this approach to manage your money well. Partition your money first and foremost right after you receive it, then spend the rest. You should read Ramith Sethi’s “I Will Teach You to be Rich” to automate this process. Such a good read!
The habits lead to one main point: spend wisely. Managing money is not about not spending; it is about spending consciously. The reason you earn money is to be able to spend it. It is just a tool, and a tool is useless if you don’t use it.