Some of the best financial lessons we learn are courtesy of our friends. GOBankingRates spoke with several people from all walks of life about the best financial lessons their friends taught them and how these lessons changed the way they view money.
Is It a Want or a Need?
When Brogan Renshaw, founder and director of Modelers Central, was in college a friend taught him how to curb his shopping habits. Before making a purchase, this friend encouraged Renshaw to ask the following questions:
Is this a need or a want? If it’s a need, do I need it urgently?
Do I have something at home I can use instead?
How many times will I use this in the future?
Do I have the spare budget for it?
If it’s a want, will I still want to buy this in a couple of weeks?
Since then, Renshaw has developed a habit of asking himself these questions before buying something. Asking these questions has allowed him to save money and avoid making impulse purchases that he might regret.
“I wait about two to three weeks before to see if I still want to buy something. This was a good way to find out that there were some things I no longer wanted to buy as bad as I thought I did a few weeks back,” said Renshaw.
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Tip Service Workers
Mike Falahee, president of Marygrove Awnings Co., said until a friend stepped in he had been completely oblivious to the realities of service worker wages and their reliance on tips.
“When a friend told me that it’s expected for them to receive tips as a way to reinforce their low salaries, I was flabbergasted. I realized how cruel and unforgiving employers can be, shamelessly expecting the guests to pay their employees’ wages instead of them,” said Falahee.
The experience taught Falahee to be kind and give the next person who serves you a cup of coffee or your favorite dish a tip that you can afford.
Buying More Expensive Items Can Actually Save You Money
Alexandra Fennell, co-founder and CEO of Attn: Grace, learned from close friends how to calculate the value she received from every dollar spent.
While buying cheap items may seem harmless to your bank account and saving goals, Fennell said sometimes purchasing more expensive, higher-quality items saves you money in the long run.
“It’s easy to justify buying products that you think will make life a little easier, but convenience only pays when it saves you substantial time,” said Fennell. “I now spend more money on rewarding experiences and items that will improve my health and happiness.”
Build an Emergency Fund
Jake Irving, owner of Willamette Life, has a close friend that had an excellent job and financially secure life for himself and his family. In March 2020 amid the COVID-19 pandemic, this friend was laid off from his job. When Irving met him for coffee a week later, Irving discovered the spirits of this friend were high when it came to discussing his wife, three children and overall financial situation.
“He told me he has been putting $1,000 away every month for the past five years as an emergency fund,” said Irving. “He was financially secure due to his foresight and discipline.”
Having an emergency fund allowed Irving’s friend to take the rest of 2020 off from work and spend time with his family. It also taught Irving the value of savings and that an emergency fund can help get you through difficult times.
Know Your Worth at Work
Tana Williams, personal finance blogger at Debt Free Forties, said the best financial tip she received from a close friend was to know your worth at work and regularly ask for a raise.
“When working in a smaller company, raises and reviews aren’t always yearly, and sometimes you have to ask for them,” said Williams.
The same friend taught Williams to keep a list of accomplishments and any great feedback she received in an email folder. Because of this advice, Williams has increased her income by a substantial amount over the past four years. She also has a reminder set for about a month or two before the one-year mark from the previous raise.
“This method helps me prepare my documentation and figure out how much to ask for based on my workload,” said Williams. “Her advice on navigating the waters of asking for a raise at a small business has been key to my financial health.”
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