Paula Pant is the founder of the “Afford Anything” blog and podcast, where she teaches others how to achieve financial independence. A former newspaper reporter, Pant achieved her own financial independence through disciplined saving and smart investing, and shares her tips for how anyone else can follow in her footsteps to “afford anything, but not everything.”
Recognized by GOBankingRates as one of Money’s Most Influential, here she shares why women should buck traditional financial wisdom, why you shouldn’t give into lifestyle creep and the importance of setting money goals.
What advice would you give your younger self about money and budgeting?
First and foremost, think big. The biggest mistake that my younger self made was thinking small, not feeling confident in my ability to earn and invest, and buying into the myth that financial stability comes from a relentless focus on frugality and curbed consumer spending, rather than a focus on income and investments. I think this is a reflection of how girls and women are educated about money; most of the articles teach us to rein in our spending, rather than to accelerate our path to entrepreneurship or trade stocks or look into the options market.
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What is the best thing you did to improve your own financial wellness?
The best thing I did was quit my 9-to-5 job, at which I was making a full-time salary of $31,000 annually, and dive full-time into launching my own business. That single decision allowed me to make a six-figure income within a few years after leaving my job; I never would have received raises or promotions that would have brought me to that income level.
The second best thing that I did was continue living the same lifestyle that I had when I was making $31,000, and shovel my increased earnings into investments. I invested aggressively into a wide variety of asset classes, and I focused on the “earn more” side of the equation to grow the gap between what I earned and what I spent.
Grow the gap. Invest the gap. Repeat.
What are some easy/simple strategies or tools to make sure people are allocating their money smartly?
Start with the end in mind. Name your goal and timeline, such as “I want these investments to grow for retirement,” or “I want these investments to grow for 15 years, when my kids start college,” or “I want these investments to grow for five years, at which point I’ll use them to make a down payment on a home.” Once you have a specific goal and timeframe, you’ll know how much risk is appropriate to take on. And once you’ve defined your risk parameters, you’ll know what types of assets (equities, bonds, real estate, etc.) to allocate into.
What is the biggest mistake people make when it comes to budgeting and debt management?
Not paying attention. When times are tough, it’s easy to bury your head in the sand and ignore the problem, but that ultimately only makes it worse.
The second biggest mistake is learning from the wrong people. Everyone is playing a different game in the world of finance, and if long-term investors start taking their cues from short-term thinkers, they’re in for a world of hurt.
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Jaime Catmull contributed to the reporting for this article.
Last updated: April 20, 2021
This article originally appeared on GOBankingRates.com: Paula Pant Achieved Financial Independence — Here’s What’s Holding Other Women Back