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January 21, 2020

Financial Advice if You’re Struggling to Make Ends Meet

Helping the poor isn’t profitable.

I know what it’s like to live paycheck-to-paycheck, and I know what it’s like to give professional financial advice. 

You see, there are three ways anyone can receive financial advice:

  • A broker – Advice from someone who makes money regardless if you do. They sell you products like insurance, stocks, and mutual funds. 
  • A financial advisor – Advice from anyone (with or without credentials.) For instance, marketers getting kickbacks from prestigious brokers. 
  • A fiduciary advisor – Advice from the gold-standard of financial advisors. A fiduciary means I am required by law to give you advice that’s 100% in your best interest.

But here’s the dirty secret of being a fiduciary — they make a lot more money working with high-net-worth people. That’s why the people who need financial advice most, don’t have access to the best.

Know this: I have nothing to sell you. My advice is strictly to help you.

 

Typical Financial Advice Isn’t for the Poor

If you’re poor, where do you turn? 

More often than not, a Google search will lead you to articles written and designed for the middle class. When you’re deciding whether to put $20 in your gas tank or to buy groceries, 401K contributions and refinancing a mortgage isn’t possible.

If you find someone giving financial advice for the poor, high chances are its high-commission products with little value. You’re not going to get the help that’s legal or in your best interest. 

The ugly truth is sad — many financial advisors prey on the poor because it’s profitable. People avoid telling you the practical advice you need to hear because they want to make money. 

Like Dave Ramsey, who sells people 5% front-loaded funds instead of recommending no-load index funds. Or insurance companies that push expensive whole life policies when term policies are more cost-effective. 

When you’re poor, more financial advice is designed to hurt you rather than help you. You need the knowledge to cut through the bullshit and install real strategies that work. 

 

Rich People Don’t Tell You About Their Safety Nets

Much of the advice comes from people with intergenerational wealth. When I managed wealth for high-net-worth individuals, here are three things I saw all the time:

  • Parents paid school tuition, so their children had no school loans.
  • Kids bought their first house with small kickers from their families.
  • Parents started career paths by providing kids their first jobs. 

No hate for giving your kids a leg up. But when you don’t have these advantages, the advice you need shouldn’t include financial risks you can’t take. 

If you follow middle-class advice, the odds for success are against you. 

 

You Don’t Have a Worthiness Problem, You Have an Income Problem

My parents fought about money all the time when I was growing up. My dad always complained, “You spend too much,” and my mom always retorted, “We have to live.”

I told my mom something that changed her mindset. “You don’t have a spending problem, you have an income problem.”

A lightbulb went off. 

The moment taught her something you need to understand:

You don’t have a spending problem, a worthiness problem, or a work ethic problem. You have an income problem.

She realized she didn’t have a spending problem. In fact, she understood her budget better than most rich families since she had little money to go around. 

Yet, most people label poor people like my mom as careless spenders or slackers. Not working hard to “pull themselves up by their bootstraps,” or having what it takes to make it.

Related: What Thanksgiving is Like For People Living on Food Stamps

Unfortunately, poor people believe it too. Trust me, that mentality will keep you poor unless you change it to, “This isn’t a judgment on me. It’s a life situation I can get through without suffering.”

Get rid of your fictional stories and judgments that justify a paycheck-to-paycheck lifestyle. You’re not the victim of your life so ditch the drama and tell yourself this: 

“I have an income problem, not a spending problem. I have more than what it takes to break free of poverty because I am not a victim of my circumstances. I am the visionary and creator of my life. I am competent and worthy of achieving all the financial success I want.”

 

Your Financial Priorities in Order 

When you’ve decided you can make more money, I want to help you pay off debt and save to get out of poverty for good. In order of priority, here’s what you’re going to do:

  1. Pay off debt: Start with the highest interest or the smallest balance first. The highest interest is the best financial decision, while the victory from paying off the smallest balance motivates you to keep going. 
  2. Rainy day fund: Save in anticipation of a need for three to six months of your living expenses for emergencies like job loss or injury. 
  3. Save to spend: After you’ve saved for a rainy day, you can save money every month for things like vacations, presents, holidays, weddings, or a house. You’ll save this money rather than invest it because you plan on spending it within five years. 
  4. Invest: Start investing in retirement or college savings. If you have an extra dollar, you can invest and save it to spend, but never before you fill up your rainy day fund. If you need emergency cash, pulling it out of your investments is going to be more expensive.

 

Don’t Do Dumb Stuff

Now while you’re working on making more money, you’ve got to avoid doing dumb stuff too. I’m not worried about you splurging your money on a new car. Do that, and that’s your fault. I’m talking about things that seem harmless but will drain your cash. 

Don’t even think about doing any of these things until you’re making $75K+ a year: 

  • Bartering your services
  • Supporting your family
  • Loaning money to friends
  • Taking on over $10K in student debt
  • Majoring in a poor paying subject
  • Paying for your girlfriend or boyfriend’s life
  • Bouncing from dead-end jobs

Any one of those is going to set you back, so make it a policy to avoid them. If you’re caught in a sticky situation, blame the policy if you have to, “Sorry, it’s my policy not to lend money.” 

Notice that treating yo’ self every once in a while isn’t dumb. I remember when my mom would get paid on Fridays. We’d go out to eat and fill the gas tank. Yeah, the last few days before her next paycheck were rough, but at least we had something to look forward to.

 

You Don’t Have to Suffer Even if Your Circumstances are Tough

When you’re living the hard knock life, it’s hard to prevent your life’s circumstances from defining your happiness. 

A study by economists Angus Deaton and Daniel Kahneman found that making more than $75,000 per year doesn’t make you happier, but until then, less money is associated with emotional pain.

While breaking poverty is a long-term process, the emotional struggle is within your control every day. You can experience life with happiness, even while you’re fighting poverty. 

In my book Bling, I provide a step-by-step guide to help you find inner peace during your struggle. Inc Magazine said this about Bling:

Andy Seth’s book tells the story of A-Luv — a figure inspired by the author himself — who learns to adopt a lifestyle that leads him to happiness and success, even if it means stepping outside his comfort zone. By doing the same, you can learn to value the whole of your life, not just your business. 

I wrote this book for you, so let the ancient lessons I’ve distilled in this book translate into helping you in today’s world. Hit me up if you have questions about money or happiness. I’m here to help, and I promise you this, you’ll get 100% objective advice that you can trust.

Related: My First Book Unveiled: “Bling”

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You can get a copy of Bling on Amazon and I produced a hip-hop soundtrack to the book that is available everywhere music is found.

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