How to make smarter financial decisions as an adult

Unfortunately, this is a skill we have to learn on the job rather than be taught. It depends on what skills and motivations you have, that determine whether you drop the bags into someone else’s pocket or keep them in yours. Adulting is knowing when a skill is worth learning and when it’s worth paying someone else to do.

A girl can dream

1.      Keep an eye on where your money is

Most people think having a budget is limiting and is a telling sign that you are bad with money. That’s not always the reason to have a budget. My only reason to keep a reasonably detailed spreadsheet, is so then I know how much ‘spare money’ I have in that month. I don’t have to spend that spare money, if I don’t, I just add it to my savings and investments. But knowing how much ‘spare’ I have from my monthly salary, is helpful with an unexpected bill. This reduces the likelihood of relying on debt to deal with an emergency and then having to handle that debt after.

2.      Understand yourself and what you value/prioritise

This is key for making smarter financial decisions. Have you ever noticed that skilled jobs are quite cheap when you don’t pay for the labour? That’s because parts, products and services don’t cost too much. But where the cost increases is the labour. They can charge however much they think their skill is worth, and you have to pay that, because normally their skill is valuable.

Now I know plenty of people who DIY (Do It Yourself). DIY is a way to save money. If you don’t DIY then when issues arise, you will always have to pay someone. And yes, even if you have a friend that you don’t pay financially, you still give them something in return as a sign of appreciation. And if you don’t do that, that’s wild (in my opinion).

Got to think deeply about this, because time is just as much a valuable currency and money

So, you have to understand yourself:

-          Are you willing to learn new skills to save money?

-          Are you capable of dedicating the time (>10hrs) to learn the skill and then apply the new skill?

-          Do you have the ability to accept when you need help?

If you answered ‘No’ to any of those questions, it means you have to be prepared to spend the money to fix the problem. I used to think I would be happy to save the money and do it myself, and then I realised how much time goes into doing the work. I was a beginner at most things, so it would always be slower. I’m not normally tiling floors and bathrooms, and building furniture. So, it’s not a skill I naturally have. And I don’t want to dedicate time to those skills. So, this means, I normally opt to pay someone to do something for me.

3.      Be realistic

I have just said I would normally opt to pay someone to do something, rather than dedicate multiple hours to try and do something myself. But I don’t outsource all my work. I clean my house, my car, change my own bulbs, do my laundry etc. There are basics that I have been taught and self-taught, that are easy quick wins (ugh I sound so corporate).

There is a sense of realism that comes with being smarter financially. Are you going to pay someone to change your light bulb? Is your life too busy to clean your home and do your laundry? You might answer ‘Yes’ to these, and then I’ll say are you willing to dedicate the time to wait for the person to come fix your bulb? Do you have the means and time to dedicate taking your laundry to a laundrette and are you comfortable letting a cleaner in your house whilst your away? The convenience of someone else completing those tasks, is questioned by what the reality of it is. If you say ‘Yes’ to these questions, then by all means, it’s your money, go for it.

The key is that, asking these questions of yourself or of others, probably takes about 5 minutes. And that 5 minutes, to just stop, think, question and maybe doing a little google search, can be the difference between, you suffering trying to do a DIY task that has become too big for you and paying someone 5 times the price it could have cost you, to do it yourself in 2 hours or less.

 TL;DR

-          Adulting is knowing when a skill is worth learning and when it’s worth paying someone else to do

-          Use a budget to know where your money is, not to limit your spending

-          Take the time to know yourself and what you are willing to sacrifice, and thus learn what you are willing to pay for.

-          It takes 5 mins to Stop, Think, Question (and do a quick google search)