Is the glass half empty or half full?
Depending on how well your 2019 went, or perhaps it didn't go well at all, in the end, there is a silver lining in everything and in every year.
Personally, 2019 was supposed to be “The Year” when it came to hitting some overly ambitious financial goals. In 2019 some of our goals (that we set in 2016) were to:
- Be student loan debt free (we still owe $62,000)
- Start paying off the mortgage
- Start having kids
- Make more money on the side than we did in 2018
However, whether we hit out goals, missed, or didn't even come close – the biggest takeaway from 2019 was simple:
You can learn a financial lesson in everything you do…
The Financial Lessons I Learned in 2019:
1. Life happens, but you can't always be ready for it.
Maybe you have heard the story, maybe you haven't but here it goes. On March 7th, 2019 just two days after my birthday my wife got home from work before me.
She called me and said the dog had thrown up and pooped all over the house… but it smelt like brownies. Five minutes later she called me back and said there was an empty bag of chocolate chips on the couch and then she found the mother load…
Next to the couch was an empty bag of cocoa powder. The poop smelled like brownies because our almost five-year-old chocolate lab had just eaten enough chocolate to kill an entire pound of puppies.
Needless to say, we love our dog and rushed her to the emergency vet hospital where she stayed for four days.
The cost of this financial lesson? $4,300.
And what lesson did we learn?
Besides the fact that you should always make sure your pantry door is closed and that you should gate off your kitchen, the biggest take away from the entire saga was this:
Life will happen… whether you're ready or not!
Whether it is a dryer going out, a tire falling off your car or the dog eating some chocolate, things are bound to come up. And it's best to not act like it won't ever happen to you.
We were not ready mentally for our dog to have to go the vet or come close to dying, but financially we had prepared by creating an emergency fund back in 2016.
Because we prepared in 2016, we had financial options when it came to making the tough call – do we pay the money or put our dog down? We were able to pay!
2. You only need to make yourself happy.
While we didn't hit our goal of paying off ALL of our student loans, we still came close to paying off $60,000. Which isn't bad.
However, 2019 was the year of us finally understanding what is most important – making ourselves happy and not living for others.
I would say from 2016-2018 we got really good at this, hence being able to pay off six figures in student loans… but in 2019, with kids around the corner – we got on another level.
I used to be the guy who drove a big truck and cared what others thought. However, the financial lesson from 2019 when it comes to envy is simple:
If you care what others think, you will never save and live a life true to yourself!
It's really simple to set financial goals and hit them, however, it's not simple to learn the magical words NO and separate yourself from others. But it's worth it long term!
3. Financial apps are great, but so is pen and paper.
I love using Personal Capital and looking at my net worth grow!
At the end of 2019 Trim helped me save about $50 a month or more in car insurance when I realized I was overpaying with Farmers. And while I have used apps like the following in the past:
In 2019 I learned one thing when it comes to budgeting and finances –
Pen and paper are still amazing for writing out your finances!
There are just so many financial lessons you learn about yourself, your spending habits, and where your money is going when you sit and write it all out.
Whether you decide to use mental checklists, handwrite your budget or just jot some notes down on a sticky note – don't underestimate the power of writing and the financial lessons you can learn.
Side Note: If you're the person who really likes spreadsheets though, you can see my updated budget sheet for this year here!
4. You will accomplish more when you feel better.
What the heck does your health have to do with your finances?
A lot more than you might thank actually!
Not only does living a healthy lifestyle cost less, in the long run, but healthy habits can also make you feel better, accomplish more, and stay motivated!
I learned this lesson through action in 2019 – when I decided to run a half marathon. The training plan I used got me out of my comfort zone and I went from saying, “I am not a runner” to “I love running.”
I also felt really good about myself every time I ran. And because I felt good I took more action in other areas of my life. Then to start 2020, I picked up a book…
Atomic Habits by James Clear.
By far the best habits book I have ever read, Clear confirmed exactly what I was thinking. And this is the financial lesson I took away from 2019 and Atomic Habits:
When you believe more, you will do more, and your habits will align!
For me personally this meant sticking to my fitness and eating regiments. When I did this I was not settling and I certainly was holding myself accountable.
I felt good about myself when I did this and it positively crept into other areas of my life like finances. I was more actionable making money and more disciplined spending it in 2019!
5. Focus on earning, not always cutting back spending.
If you make $5,000 per month – there is only so much “Cutting back” you can do!
Hypothetically, if you can manage to live off of 40%, or $2,000 per month (which is rare), you would then have 60% or $3,000 per month to use to pay off debt, invest, and save!
That equates to $36,000 per year – which is still really, freaking good!
But if you happen to be someone like myself who has basically had their budget to a point where cutting back on a few areas will only net you a few hundred dollars – the next step is earning more, not cutting more out!
2019 was the year I learned to take action when it came to making money, and coincidentally we made the most ever as a couple. 2020 only looks to get better.
Read about how we did this starting an internet company and blogging here.
So here is the financial lesson I learned from 2019 when it comes to making money:
Focus on making money, not always cutting back.
I once saw an amazing graphic that showed the linear progression of cutting back vs. the exponential potential of making more. In 2020, my focus will be to continue to manage my budget, but more importantly, the financial lessons I learned in 2019 is to build more towards creating!
See More: 50 Side Hustle Ideas
6. Surround yourself with people who like money.
Money is not a taboo subject if you surround yourself with those who have it!
For the better part of my life, I was surrounded (by choice and sometimes inevitably) by people who knew how to make money, but they also knew how to spend it.
The first faired well for me – I was driven, but the latter did not! Because of my association, I really don't have much to show for myself in terms of wealth from age 22-28!
In other words, I spent a lot of my money on silly things! Fast forward to 2016 and I really started focusing on making sure my association was with those who not only knew how to make money but those who didn't hate on others for wanting to make more.
Just recently my 21-year-old brother asked me this question, “Do you know anyone who owns rentals who will teach me?”
He probably isn't fully aware of what he did, but he put himself in a position to surround himself with knowledgable people, who can then teach him. In turn, he will be able to create more results for himself.
The financial lesson is simple –
Associate with like-minded people who take money seriously!
The whole saying birds of a feather flock together is true – if you hang out with a bunch of people in 2020 who don't really care about budgeting, saving, retirement and creating more – well chances are it will be harder for you.
It's not a terrible idea to go snippy poo to some people this year!
7. Eat out if you feel like it…
But only after you hit your goals!
I won't lie and say we were perfect and didn't eat out one time in 2019, because frankly we probably ate out more than usual. However, we made sure to only do it after we hit a goal.
Learning to enjoy life and still hit your goals can mean a variety of things for many. However, if you refer to the financial lesson from above, #5, you can make more money and therefore enjoy some more life.
Enjoy life within reason in 2020!
The great separator boils down to whether or not you are able to manage both. For some, they can't pay themselves first and eat out, they have to choose.
Know your limits and know thyself. But if you feel like eating out a few times more, do it – as contradicting as that might sound!
Related: 45 Places Where Kids Eat FREE!
8. Invest your money in something!
Whether it's your work-sponsored 401K, 403B, a Roth IRA or you're able to max out your HSA, make sure you're investing in something this year!
In 2019 we didn't hit our student loan payoff goals, but we did increase our investment portfolio quite a bit. At one point almost 100% of all extra money was going towards student loans because of the interest rate.
However, in 2019 were able to drop down below $120,000 early in the year which allowed us to do several things with regards to investing.
- My wife started contributing to her 401K to earn the max match her company offered
- I used my annual raise and rolled 100% of it into my 403B (for teachers, similar to 401K)
- Opened up an investment account with Vanguard
- Elected in an insurance plan that has an HSA account
None the less the message was simple when it came to one of the lessons we learned in 2019:
Start investing in something!
Investing can scare some people, so the best advice is to start investing in something, don't try to have it “All figured out.”
You can use M1 Finance to help you get started since it's a “Robo Advisor” or you can even use a simple spare change app like Acorns. Next, I would check with your work for an employer-sponsored retirement program.
9. Get rid of bad debt.
Other than student loan debt, we don't have any debt.
That being said, typically this not the case for everyone. In fact, in 9 instances out of 10, most have some form of debt. It was actually 2016 when we adopted the “Debt is bad mantra,” even if the math for investing sometimes says otherwise.
However, in 2019, we continued learning the financial lesson to avoid debt, something we will do forever! So for you in 2020, be sure to:
Get out of debt and do it in a hurry!
There is math that sometimes says keep the car payment, instead use the money you were thinking about paying it off with and instead investing/saving.
However, more than the math of being debt free is the mental clarity debt freedom provides. The issue with debt really starts with financial lesson #1:
- Debt is manageable when everything is good
- Debt is not so manageable when life hits us and knocks us down.
One example of why debt freedom is important is kids.
Countless millennial couples have their first kid and realize they wish they had the option to have one parent stay at home or work parttime, but sometimes debt prevents that.
Debt free = options and more cash flow. Set a goal to get debt free in the next 2-3 years depending on your situation!
Looking to get out of debt this year (but need to take action?) Get your 5-Day Debt Free Boot Camp mini-course here for free.
10. Don't think you have to be perfect.
Perfectionism, in a sense, is a form of procrastination.
Filling up our lives with tedious tasks and making sure the shirts in our closet are color-coded might make us feel good at the moment, but these habits can also lead to some issues.
Issues like being afraid to take action until “Timing is good,” or “Everything is all ready to go.”
I have alluded to this before, I started Money Life Wax on a whim with zero planning, research, or background knowledge. Perhaps a bit overconfident, within three months I had a good grasp on how it worked.
But had I waited for everything to “Be Perfect,” this blog wouldn't exist. (It helped that I could start my first blog for less than $100 here.)
Paralysis by analysis.
Depending on your needs, it could be any of the following that is holding you back:
- Money issues
- Marriage commitments
- Time issues
- Job changes
- Or maybe nothing
But whether you feel like you're being held back or you feel great, make sure perfection isn't the reason you're not reaching for more. If you wait for perfect timing, you'll never get out the door.
11. It's ok to miss your financial goals!
I had some huge goals for myself back in 2016 when I wrote down my “10 Year Plan.”
I wrote goals down for:
- Work & Business
- Home Life
All this to say that most of them I did not and have not hit… but that is OK. Because when you set goals in the first place you set yourself apart. When you set your goals super high – you'll accomplish more.
At the start of the new year each year for the last three years, I write down that I want to pay off $100,000 in debt. The closest we have ever been was $70,000.
However, the reason for setting my (our) goals so high is to stretch ourselves! In fact, we set our goals so high that they're almost out of reach, but there is a reason.
Here is what I mean:
My goal is to have a $10,000,000 net worth by age 40. That is a super outrageous goal and a few years back it was just a $1,000,000.
However, I really think that in 8 years that a million dollars is not only possible, but it's actually looking like it is going to happen with our current rate of paying down debt and investing.
So I did the Grant Cardone thing and 10x'd my goal! The way I figured, if $1,000,000 is realistic and $10,000,000 is far fetched – why not set it, and if we come up short $6,000,000 we still blew past our initial goal of one million!
Don't be afraid to set goals that scare you and miss them, it means you're doing something right! So last but not least:
Set high goals and don't stress if you miss them!
Final take on financial lessons.
Sometimes the word lesson has a negative connotation. But when it comes to learning financial lessons, in my mind it's always a good thing.
Learning can be from our own experiences or others!
Either way, when you learn you get better, and when you get better, good things are more apt to happen. It's not that people get luck in life, they just learn to put themselves in better situations where good things will happen more often.
The same goes for finances. Every time you make a mistake, don't hit a goal, or do something really good with your money – you learn for the future!
And that is what taking financial lessons is all about – using it to make your future self (and bank account) all-around better!
Question: What is the best financial lesson you have learned?
Josh writes about ways to make money, pay off debt, and improve yourself. After paying off $300,000 in student loans with his wife in less than five years, Josh started Money Life Wax and has been featured on Forbes, Business Insider, Huffington Post, and many more! In addition to being a life-long entrepreneur, Josh and his wife enjoy spending time with their newborn son, their chocolate lab named Morgan, working out, being outside, traveling, and helping others with their finances! In case you were wondering, Josh uses Personal Capital to track his net worth and his first investment account ever was an Acorns account 😎