I hate clichés. I use them all the time. I think they make me sound dumb. Clichés are overused phrases which lack original thought (that’s from the dictionary). Have you ever wondered why they become overused? It’s because, at inception, they are genius. Think of some of the common clichés you know: ‘Actions speak louder than words’, ‘the apple doesn’t fall far from the tree’, or even ‘love is blind.’ These clichés are annoying to hear, but they are really great words of wisdom. Think about a promotion at work- wouldn’t you rather have action from your boss than just words? Sure, it’s annoying, but it’s accurate. Here are some of the most annoying clichés from the personal finance world, and HOW you can live by them.
Pay Yourself First
This phrase caught on because it’s cute and clever. The first time I heard it I thought “I don’t pay myself, my boss pays me. How can I pay myself first?” This is really about how to use your paycheck. I’ve heard another phrase that’s becoming cliché. ‘Don’t save what’s left after you spend; spend what’s left after you save.’ I think that sounds a little more intelligent, but ‘pay yourself first’ is easier to remember. The gist is that you need to save money and that should be the first priority.
HOW: Automate savings. I went to Chase Bank and asked them about automated savings. They have a program that will automatically take money out of my checking every other Friday (the days I get paid) and put it in my savings. It takes me no effort to pay myself first.
Money is the root of all evil
First of all, this isn’t an accurate statement. This phrase actually comes from a verse in the bible’s New Testament. The ACTUAL quote is “The Love of Money is the root of all evil.” Or, simply “Greed is the root of all evil.” People screw this one up a lot- mostly poor/angry people that are projecting their financial incompetence onto the rich and powerful of the world. So the actual cliché- Greed is the root of all evil, is a good cliché to live by. The idea behind this phrase is that greedy people will do anything for money. They will cheat, steal, and kill for money. Cheating, Stealing, and Killing are the basic sum of all evil. Disagree? Give me an example below in the comments.
HOW: Remind yourself that there are things more important than money- love, family, friendship, leisure, and laughter. Know that greed is evil, but everyone who has money isn’t greedy.
Manage your money or it will manage you
Doesn’t this sound like something your grandma told you when she was whooping your butt in Monopoly? Well, it is. She told you this when you were a little kid and it didn’t make sense. Then she told you again when you were in high school. Then again in college. Then again when you got your first job. But when you bought a car you couldn’t afford, leased an apartment you couldn’t pay for, and bought an engagement ring on credit… silence. Managing your money isn’t very fun. Managing your money isn’t very easy. It takes focus and desire. If you don’t manage your money then you’re going to end up managing debt…
HOW: Make a budget and stick to it. Check this out: Read #4 in this post to learn some budget basics.
A Fool and his money are soon parted
Foolish people make hasty decisions in all aspects of life. Every dumb mistake you’ve made was because you didn’t take your time deciding. A fool makes bad buying decisions. A fool makes bad investing decisions. Because he (or she- women can be foolish too) makes bad decisions, his money is gone. The fool makes those bad decisions quickly… or ‘soon.’
HOW: Think through your financial decisions. Make a budget and stick to it (http://www.daveramsey.com/blog/dave-ramseys-envelope-system/ ). Analyze investments or find a good advisor.
Don’t invest in anything you don’t understand
This is another cliché that is often misinterpreted. The common misconception is that you have to understand everything about a business to invest in it. I agree whole-heartedly if you’re investing in your older brother’s newest hair-brained scheme. But, if you’re investing in someone like Apple or Google, you don’t have to know how to build an iPhone or write HTML code. The thing to remember here is that you should invest into 401ks, IRAs, and other Mutual Funds or REITs. BUT you have to understand how they work. You have to know how they impact your taxable income. You have to know how they can be used in retirement. You have to know how they can be made more aggressive or more conservative.
(Learn more here)
HOW: Learn about investment methods. Research the companies you invest in. More importantly, research the company you use to do the investing (your stock broker firm).
There’s no such thing as a free lunch
My cousin and her husband went to Vegas. While they were there they were offered a free lunch. During this free lunch they heard a presentation about Time Shares. Now they own a Time Share in Mexico. Their ‘free lunch’ cost them about $5,000 so far in monthly maintenance fees. Moral of the story? There’s no such thing as a free lunch. If someone is offering you something for free, odds are that they are trying to get something from you. A free lunch is like buying a pretty girl a drink at a bar. Are you expecting her to take the vodka cranberry (they all drink vodka cranberry) and go back to her booth with her friends? Of course not. You’re buying her a free drink in hopes that she will AT LEAST sit and talk to you while she drinks it. Right? To her, it’s a free drink. To you it’s an opportunity to get to talk with a pretty girl.
HOW: Companies (and people) give away something small in hopes that they’ll get something bigger in return. Knowing this helps you analyze the presentation you hear with a little skepticism. Every time you hear about a ‘free lunch’ think to yourself “do I really want to go home with this guy tonight?”
Show me the Money
Ok, fine. This is a Jerry McGuire catch phrase, not a cliché. I wanted to incorporate this idea because I think it’s important. This phrase should come up in your life more than it does. When you’re getting a job offer you should think “Show me the Money” and start a negotiation. When you’re buying a new car you should think “show me the money” and negotiate some perks, add-ons, or a lower price. When you’re researching a new cable company you should think “show me the money” and ask them if you can get TBS for free since they play movies like Jerry McGuire all day long.
HOW: Money makes the world go round (oops, that’s another cliché). The guy with the money gets the most done (Donald Trump said that… probably). When it comes down to it, I think of Shark Tank. The wealthiest 1% think of everything in terms of money. They don’t care about your “Why.” They don’t care about your “Story” or your “Mission”. All they care about is how much money your company made last year and what your projections are for next year. You’ve got to have money to make money (ok Jeff, that’s enough). Show me the Money! Say it with me… Show Me the Money!