July 5: BEST FROM THE BLOGOSPHEREJuly 5, 2021
Does being broke have an upside – better money management skills?
An interesting column by Terri Huggins, published on Yahoo! Finance, provides a unique take on being broke.
Huggins (who freely admits to having lived through many broke years) takes the position that so-called broke people may actually be better with money than those who are, for want of a better phrase, unbroke.
When you have less money overall, she writes, “financial awareness becomes more of a survival tactic than a money habit.”
People without money don’t have the “luxury” of “putting off dealing with… financial fears and stresses.” She says that while living on a shoestring is certainly not much fun, “there is a silver lining… being forced to think about money constantly means you naturally become very good at thinking about money!”
This includes, she adds, “managing money problems and coming up with financial solutions that fit your immediate needs.”
The downside, Huggins, says, is that those low on income are naturally forced to focus on “immediate needs – with little thought for the long term.” If you are having trouble making this month’s rent, saving up money in an emergency fund is “pointless.”
She recalls her own broke years, where “every day was a financial emergency. How can you contemplate saving for retirement when you’re unsure if you’ll have enough to pay for food this month?”
The fact that those living on very tight money can’t realistically save for retirement or emergency funds sometimes gets them painted as being “bad with money,” Huggins writes. But the money management skills of those on low incomes may be quite the opposite, she says. “Broke or poor or otherwise financially struggling people everywhere are forced to make tough decisions every day, gamble with those decisions, and make sacrifices to somehow fund the things that truly matter.”
She summarizes the chief money insights that “broke” people have, and that others may wish to adopt:
- Mastering money tracking – they know exactly how much money they have, and exactly what their bills are going to be
- Every expense is a mindful decision – broke people don’t have the privilege of making “poorly thought out purchases on a whim.”
Huggins argues that so-called “financially sound” people probably don’t know what they make and what all their expenses are. She suggests they are far more prone to make impulse purchases or poorly thought-out decisions. Now that she herself is no longer on the broke side of the equation, she concludes by saying “I’m still able to take those broke-learned money management lessons with me as I strive to grow my savings, expand my investment portfolio, and create wealth for years to come.”
There’s a lot of very good advice here. We all live through periods of tight money – some of us for a while, others for many long years. If you know exactly what there is to spend on bills each month, and how much you’re earning, you are in command.
And when you get to that period where your income is more than the sum total of your monthly bills, be sure to think of your future. Once your personal finances are running in the black, put away a little of your personal “surplus” to help make life easier for your future self. A great place to stash that extra cash can be the Saskatchewan Pension Plan, where you can start small and build up your savings as your income grows. Check them out today!
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Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.