10 Financial Commandments As Told By The Notorious B.I.G.
Class is in session.
January 11, 2017 at 9:18 pm
We all know the phrase “new year, new me!” and although quite cliché, we can still use it to our advantage to actually making major changes. One of the biggest changes millennials would love to make would be growth (or at least stability) when it comes to personal finances. We’re stuck between a rock and a hard place by feeling like we need to treat ourselves while still preparing for our future. Rarely does anyone want to work 30+ years at a mundane desk job. As millennials who have graduated college in the aftermath of a recession, we find ourselves straddling the dreadful line between passion and paycheck.
Here are 10 financial commandments by one of the biggest ballers of all time, The Notorious B.I.G.
His song, "Ten Crack Commandments," gave some sound advice that still holds true some 20 years later.
1. “Never let anyone know how much dough you hold.”
Keep your account balances, such as your savings account, your business. Don't flaunt, don't brag. Build your empire silently.
2. “Never let them know your next check.”
Even if every day is payday for you, keep your pay cadence a secret. People should never know when or how much hits your account.
3. “Never trust nobody.”
Especially Uncle Sam! You always want your tax refund to be as close as possible to $0. This is money owed to you that the government has been holding all year. The government does not pay you interest on this money, therefore it’s yours and you should want it now (in your paychecks). Speak with your employer/tax professional on what your tax allowance should be.
“Never get high on your own supply.”
This is the percentage of your tax refund you should save. Try to aim for 70 percent, (but can be adjusted) it allows for more play money for the month but still makes a drastic addition to your savings.
5. “Never sell crack where you rest at!”
This is pretty difficult to transition into a personal finance tip since I assume most of you aren't selling crack. So let's focus on the "where you rest at" portion. Your rent should not be greater than 25-30 percent of your income, something to think about when time to renew your lease. When buying a home, your mortgage loan should not exceed two years of your salary (if you make $70k/yr your mortgage loan should not exceed $140k). If you live rent free, the amount that you would be paying for rent should be added to savings!!
“That God damn credit, dead it!”
Time to shake off the new ball-and-chain — credit card debt! On your credit card with the smallest balance, you should be making the minimum monthly payment plus $10-50. Be sure to stick with the monthly amount chosen each month. If you decide to add $30 to your monthly payments, continue with paying $30 extra each month until the card is paid off. Basically, don’t fluctuate the extra you add each month. Don't try to pay off all of your cards at once. For all cards except the first make the minimum monthly payment each month. When credit card number one is paid off, use the payments you were making on card number one to add to card number two (e.g. You were paying $70 towards card number one, once paid off, take that $70 you were paying and now add it to the monthly payment towards card number two).
“Keep your family and business completely separated.”
This is a bit contradictory because in many cultures it's commonly seen to have a family-owned business such as a restaurant or nail salon. However, if you decide not to heed Biggie's advice please be sure to get all agreements in writing and signed by all parties. Just keep in mind that regardless, it's none of their business how much you're saving, spending, or what you decide to invest in with your portion of pay.
8. "Never keep no (too much) weight on you!”
Here we'll just refer to weight as play money. This is money for leisure and entertainment each month. You now have money set aside to pay yourself (savings) and to pay your bills. If you want to save for particular events, like traveling, it should come out of your play money balance. In order to not overspend, withdraw your play money on a weekly basis and only use cash for purchases. You can also have three bank accounts: one with play money, bills and savings.
9. “If you ain't getting bags stay the f#ck from police!!”
Basically, align yourself with people with similar interests. You can't soar like an eagle if you're hanging with chickens. Watch your savings grow, keep a track record of your savings account. This money is not for you to lend, it’s not for friends/family in need, it’s not even for you! This money is for investments once you’ve learned enough about them and for a possible home purchase (more posts to come on each in the future).
10. "If you ain't got the clientele say hell no.”
Only spend what you can afford or have the means to. Keep track of other mandatory expenses, also known as needs that you may have such as medical or child care. All of your impulsive buys like a new outfit for an event come from play money.Your I-can't-live-without expenses like getting your nails did or a fresh cut comes from your play money budget.
"Follow these rules and you’ll have mad bread to break up!”
Stay focused and don’t allow doubts into your mind. Catch yourself when making excuses or when trying to justify/rationalize bad decisions or thinking.
I have created a simple spreadsheet to track necessary expenses and savings in response to friends and relatives who are on a quest for financial freedom. Yours truly, @richard__anthony