I was watching this video where former NBA star Shaquille O’Neal was describing how early in his career he blew money in a very uneducated and wreck less way do to his approach to financial management which I thought was an important point. Fundamentally, what it came down to was that he would always look at how much money he actually had in the bank to determine if spending money would be okay. As you can imagine, when you have one million dollars in the bank and someone says do you want to buy a $50,000 car that is nothing as you still have $950,000 correct?
That’s what eventually caused him to lose his massive wealth back then quickly as he kept purchasing luxuries items. Today he is a lot wiser of course and as evident he didn’t stay going down that path. People often ridicule me or question why I don’t like to spend money when I don’t have to. Or at the same time if I have X amount of dollars saved up then what is the big deal in terms of spending some money?
It’s important habit to develop regardless of how much money you have I think. Actually this was a real example way back where I cut ties with a person immediately because of what seemed like extreme carelessness when it comes to finance. Essentially the person encouraged me to potentially start a business with him selling things like electronics. Long story short I agreed to try it out a little and see how it goes.
So went opened up a bank as part of this venture. It’s a business bank and so there is a monthly fee involved. So his job was to simply pay that fee whenever I gave him my share of the bill. Now apparently he didn’t pay it in time and we got hit with interest which meant we had to pay more. The fee penalty was literally only about $3 or so but to me I was upset as this demonstrated such a lack of financial management skills. He tried to tell me to just laugh it off as it was only $3 where we can definitely afford that. But right there I decided to cut ties with him.
Similar to this topic it’s not the amount versus how much you have that matters so much but the person’s actions in regards to it. I could imagine there today it’s three dollars and tomorrow when you are running a millionaire dollar business then it’s say $30,000. You need to develop the right financial literacy mindset right away.