A lot of financial advice gets repeated over and over. Do you have any unconventional financial advice?
One of the curious things about money is that any one dollar is interchangeable with another. The $102.07 in my bank account has the exact same value, the same buying power, as the $102.07 in your bank account. This might seem obvious to anyone who has used money all of their lives, but it’s an unusual characteristic. Most things in our world are unique, to some degree. One diamond is not the same as another and you can’t just swap out your dog for an identical dog. Your wedding ring isn’t interchangeable with every other person’s wedding ring.
I mention this because money is somewhat more abstract than most other things in our world. Managing money is, at its heart, basically math. It’s a fairly clear cut issue of adding, subtracting, multiplying, and dealing with probabilities.
If you asked someone for unconventional tips for growing houseplants, people might offer all sorts of tips about different mixtures of plant food, the pH of your water, singing to them, and pruning techniques. Each tip could be specific to a region, a type of plant, or differ depending on desired outcomes. With money, things tend to be more clear cut.
When you’re managing your finances you typically need to have more income than expenses. You should pay off high-interest debts first. You either have enough money to buy a thing or you don’t. When it comes to investing, people will generally recommend you take whichever approach is statistically most likely to get you the highest payout within your risk profile. Assuming you want a stable, relatively prosperous future, your best bet is to follow the same conventional steps to budgeting and financial management everyone else is using.
These steps, or close variations of them, are typically the same everywhere. Because they work. Money is abstract and interchangeable (the same everywhere) and the math checks out on what works the best for the largest number of people. In short, statistically speaking, if you follow these steps, you’re likely to do well.
I bring all of this up because usually when people seek (or give) unconventional financial advice they are doing one of two things. They’re usually recommending something which is statistically unlikely to work, but can pay off really well. Alternatively, they may be suggesting an idea which is socially unusual or taboo.
For example, buying cyptocoins (especially lesser known ones) seemed appealing to some people between 2012 and 2021 because the idea was new and exciting and the values of some cryptocurrencies (like Bitcoin) were shooting up. It seemed like a great opportunity to make fast money. For a few people, it was. For the majority of people, it was a way to lose money. More than half of the people who bought Bitcoin lost money when the price dropped before they sold. This statistic doesn’t include the many people who lost out when their exchange was hacked, they lost their Bitcoin wallet password, or their computer crashed. For most people, Bitcoin has been a money sink. However, for a minority, it was a great way to make large sums of money quickly – if they bought in early and sold after a few years.
Buying and selling cryptocurrency is a hot topic and somewhat unconventional wisdom because it can work really well, but it is statistically more likely to fail.
In this way, Bitcoin is similar to buying lottery tickets. Most people lose money playing the lottery, but a rare few strike it rich overnight. Statistically speaking you are almost certain to lose money playing the lottery, but it works out for a very few rare winners. This is by design. This makes buying lottery tickets to improve your finances very unconventional advice because it usually doesn’t work, but for a few people it changes their lives.
The above two examples are unconventional because they are statistically risky. They can work, but rarely do. The other type of unconventional wisdom I mentioned, the type which is socially unusual or taboo, suggests things which take people outside of our cultural norms. For example, some people choose not to have children which saves thousands of dollars. Its uncommon for this advice to be given because a majority of people have children or want to have kids, but it is statistically likely to help your finances to not have children – it’s just not a common path in our society.
Other socially uncommon advice might include things like growing your own food and raising your own livestock. Not many people do these days, outside of farms, but it’s an option. You could become a sperm/egg donor which is a rare, but profitable, way to make money.
Years ago I lived in a city where parking in the downtown area cost almost as much as an apartment. Rather than rent outside the downtown and drive into work, some of us rented apartments closer to work and skipped owning a car. It was unconventional in that most of our peers owned vehicles, but it made sense mathematically to pay slightly more in rent for a better location in order to avoid fuel and parking fees.
Another socially unusual tip is to buy things after they go out of fashion. Most goods are expensive when they are new and trendy, but drop off in price quickly after a few years. DVD players, flat screen TVs, smart phones, cars, and fashionable clothes are all a lot cheaper a few years after they come out. Buying these items later than your peers may result in some snide comments, but can save your thousands of dollars.
One bit of advice which is both statistically rare and a bit taboo is to marry someone who is financially well off or comes from a wealthy family. A variation which is statistically more solid, but still a bit atypical, is to seek out a spouse who has similar financial goals to your own.
I’m sure you get the idea. Unconventional financial advice will almost always be risky or make you a social outsider. If you’re okay with these ideas then you can explore options outside the box. However, your best bet to financial success is to follow the same steps other people do to get your savings in order.
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