We have all heard the rhetoric from a whole host of financial advisors, best-selling authors and TV show hosts all saying the same things: Get out of debt, build a savings account, invest for the long run. Over time, we can become tone deaf to the same old advice.
What are the counter-intuitive strategies most people miss? A renaissance of new thinking is taking place as people look for contrarian truths that go against commonly held beliefs. The New York Times best-selling book Freakonomics was a hit because it was written by “a rogue economist exploring the hidden side of everything” and Peter Thiel, in his best-selling book Zero to One, says “successful people find value in unexpected places.”
Personal finance is no different, and these counter-intuitive strategies can have a tremendous impact on your finances.
Spend More (for Quality)
We all have that friend who likes to humble-brag about how cheap they get everything while putting everyone on a guilt trip about having anything nice.
But are they really that far ahead? The cheap clothes they brag about fall apart and the old used car is always in the shop.
Saving is critical, and we should never buy things we can’t afford, but in most cases, we get what we pay for. The reality of life is sometimes paying a little more for quality items that last is the best decision. I have learned in life that buying quality saves me time and money in the long run.
Thinking about taking a job in one place and then working your way up the corporate ladder? Research shows you are probably better off switching jobs to get that pay raise or promotion.
Pew Research shows that since 2000, wages have been stagnant in most industries and even falling in others. Other research shows that most wage growth over a career comes from quitting jobs and taking new positions with a different company.
Look and see how your peers are progressing at your company. If there isn’t much progress being made by anyone, be on the lookout. If you want to get a pay raise, you may have to venture out and get it someplace else.
Do great work, take on the toughest projects and get results—that is the best way to get noticed and get more opportunities. Over time, if you are not given those opportunities at your company, be on the look out for ways to leverage your success for a promotion some place else in the industry. Everyone wants a winner on their team.
God’s principles change everything, and generosity is a biblical principle that is rewarded. The thing to remember is that we cannot out-give God, and He honors those who follow His commands to take care of the poor, care for the widows, help the orphans. “Truly I tell you, whatever you did for one of the least of these brothers and sisters of mine you did for me” (Matthew 25:40).
The contemporary wisdom is to get out of debt first, create an emergency savings fund, and then once we are secure and stable, we can start helping others in need. The reality is God wants us to act in faith and help those in need today. Sacrificial giving is a reminder that no matter how much money we have, none of it truly belongs to us, and that God will provide for us.
Remember the widow who gave her all in Luke. When Jesus saw her, He said to His disciples, “This poor widow has put in more than all the others. All these people gave their gifts out of their wealth, but she out of her poverty put in all she had to live on” (Luke 21:1-4).
Don’t Intentionally Put Off Marriage
Now, I would never tell people to get married for financial reasons. Obviously, I believe you should marry for love. However, across the globe, many young people are deliberately putting off marriage until later in life. They’re putting their careers first and assuming that marriage is too costly.
This isn’t true. Getting married actually saves you money. The Wall Street Journal recently reported that people who are married experience a “financial windfall” as they have tax benefits, can pool risks and reduce their costs.
One of the biggest mistakes young people make is to put off investing for a later date. For many, that date does not come until it is too late. Albert Einstein is credited with saying, “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t, pays it.”
Those who invest late in life miss out on this. Time is everything, and starting early allows you to take more risk and learn along the way. Financial illiteracy is at an epidemic level in our country. Investing in the stock market will make you acutely aware of the markets, and over time, by reading and learning, you will gain basic knowledge that many Americans do not have.
I recommend investing early in life. First, start a ROTH IRA with a Registered Investment Advisor (RIA). This is someone who has a fiduciary duty to their clients (you) and not a company they work for. Start immediately in your career even if the investment is very small. Think of this as a real-world finance degree and learn as much as possible. You want to have as much experience and knowledge when you start making more money and investing larger sums.
Second, invest in yourself. The shelf-life of a college education is three years, according to one Harvard professor. Things are changing rapidly, and we need to be continual learners throughout our careers. Continue your education with free Massive Open Online Courses (MOOCs) and by attending seminars, workshops and industry events. This will help you fast-track your career and stay up to date.
Finally, the most important investment of all is relationships. 75 percent of all jobs are not advertised and are being filled by word of mouth and through networks. Your network and connections are a valuable currency in this economy. Networking is a skill that can be learned and the relationships you develop in your career are more important than most people realize.