Milan is one of my financial heroes. A few years ago, while going through a period of feeling completely broke, she asked herself: what do I need to know to get beyond this? The answer that came to her: spend on experiences, let go of the rest.
In the book The Happiness Advantage, author Shawn Achor puts forth the notion that spending on experiences - catching up with a friend over ice cream for example - yields more positive, long term effects than purchasing a material item. Since Milan’s resolution to focus less on things and more on experiences, she’s paid off her student loans, bought two properties and travels overseas at least three times a year. Here’s how she realigned her priorities:
1) Determine what’s most important and what can be tossed. For Milan, traveling is a necessity. Not as important: cable and internet. She uses her cell phone as an internet hotspot, subscribes to Netflix, and visits family and friends when she wants to catch up on a show. She saves up to $200 each month and somehow still seems to know what’s going on on Empire…
2) Live uncomfortably and get it in. Milan owns a relatively small house but still has two roommates who pay her mortgage and utilities. She uses the $1,700 saved per month to travel, go out, and save for a third rental property. For her, the opportunity to say yes to experiences is worth relinquishing some personal space.
3) Look cute but don’t spend alot. It’s really important for Milan to look good, but she never pays full price for clothes or shoes. She also scours vintage clothing stores, very rarely buys designer brands, is conscientious about not purchasing trendy items, and will accept a hand-me-down in a flash. She’s learned what looks good on her, so when she shops it’s to very deliberately choose pieces that fit her shape and taste.
4) Cars, shmars. When Milan’s last car died she seriously contemplated relying on public transportation until she could get the convertible that she really wanted. Ultimately, she determined that it wasn’t financially feasible to go without a car so she bought a Honda. It isn’t a convertible but she paid cash and it’ll hold its value for a long time. Smart move.
Milan has done a fantastic job of being conscientious with her coins, and as a result she’s living life on her own terms. I encourage you to take stock of your own financial life and embrace the abundance that awaits.
And so it is.