It’s easy to think everything will always be okay, until it’s not. In a YouTube video, personal finance educator Austin Williams shared six brutal truths people often learn after going broke. The below lessons, hard-earned and painfully honest, are reminders of why we all need to prepare for life’s unexpected financial curveballs.
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Savings Are Life-Saving
When disaster strikes whether it’s job loss, economic downturn or an unexpected expense, your savings become your lifeline.
Austin illustrated this with the story of a friend who lost his job in international development. Because he’d saved aggressively in the years prior, he could take his time finding the right next move. Another friend in the same situation, but without savings, had to wait tables within a month just to stay afloat.
“One person gets time, space and options, while the other has to scramble just to survive,” Williams said.
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It’s Easier To Do Something Than Undo It
“It’s very easy to make bad financial decisions in the present and not worry about them,” Williams said. Whether it’s putting lunch on a credit card or using buy-now-pay-later services for concerts, these decisions are easy now, but costly later.
In his video he warned that the concert ticket that took 10 minutes to pay with Affirm will take six months to pay off and the exciting new car will be a five-year financial burden. He urged viewers to ask themselves, “Will this be harder to undo than it is to avoid?” More often than not, the answer is yes.
Small Decisions Are Much Easier Than One Big One
According to Williams, people in financial distress often find themselves forced into making very big decisions, like trying to escape massive debt or turn around their financial situation in a hurry. But those big problems? They’re usually the result of small choices stacked on top of each other.
“Small decisions often don’t feel significant in the moment,” Williams said. “But the truth is a big problem is just hundreds of small decisions that compounded over time.”
If your decisions haven’t yet compounded into a crisis, this is your moment. Williams recommended that you keep your small decisions in check. That way, you don’t have to clean up any mess by making one very big decision.
There’s No replacement for Time
Being broke isn’t a life sentence, but trying to recover when time is no longer on your side is a different story.
Williams compares two people: one who is 40 and one who is 60, both starting with zero in retirement savings. The younger person still has time to invest and grow wealth. But the 60-year-old? “Even setting aside $1,000 a month will not give them much to retire with,” he explained. “They’re not just unprepared, they’re out of time.”
This lesson hits hard here as Williams said they live their lives telling themselves, “I’ll start saving next year.” Only to eventually realize the hill is much steeper than it would’ve been if they took action earlier.
Peace Is More Valuable Than Possessions
When times are good, upgrading your lifestyle feels like the next logical step. But when life takes a turn, you quickly come to the realization that none of the stuff you possess matters.
“The things that we often chase are the things that often rob us of peace in the long term like the car payment that keeps you up at night, the credit card bill that lingers in the back of your mind,” Williams said.
People who’ve gone broke often reflect on how they would give up everything they bought just to have peace again. So ask yourself whether you’re trading possessions for your peace of mind.
Being Ahead Is Not as Hard as It Seems
The biggest misconception people have about personal finance is that it’s only for the wealthy or the financial experts. But Williams insists the truth is far simpler.
“They think that in order to be in a good financial situation, you have to be making a high income, have a complicated investment plan and master complex financial concepts,” he said.
But what actually works? Tracking your expenses, creating a budget, living below your means and avoiding debt. These aren’t glamorous strategies, but they’re effective after making small and intentional choices each day.
“Start making good choices today while it’s still easy because once reality hits, it becomes a lot harder to clean up that mess,” Williams added.
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This article originally appeared on GOBankingRates.com: 6 Brutal Truths You Learn After Going Broke, According to Austin Williams
