7 Best Money Lessons From New Netflix Documentary ‘Get Smart With Money’
Creating sound financial habits and making informed choices are key components of becoming financially savvy. Continue reading to learn more.
The Netflix documentary, which was just published, focuses on the financial difficulties that four families faced, highlighting the typical issues that many individuals have with money management. These problems include living paycheck to paycheck, having insufficient savings, accruing debt, having financial difficulties prior to establishing a family, and not knowing how much money is needed to save for a comfortable and timely retirement. While the issues portrayed in the documentary are typical of young, middle-class American metropolitan households, young Indians living in large cities also experience similar issues.
It is critical to realize that a secure future depends on sound financial preparation. It’s never too early to begin making financial plans for your future. Having no idea what to do with your money is one of the most frequent problems people encounter. Setting and adhering to financial objectives requires careful planning.
The documentary also emphasizes the dearth of investment education and information. Understanding the fundamentals of investment and personal finance will take time and effort to master. A plethora of online and print materials, including books, blogs, and podcasts, are accessible to aid in the acquisition of financial information.
The documentary also shows people’s struggles with growing student loan debt. Due to the growing expense of education, a large number of students graduate with large debt that may prove to be an obstacle in the future. It’s crucial to understand the many scholarships and financial assistance programs offered to students pursuing higher education. Budgeting and loan payback plans can also lessen the financial load.
The following prudent financial lessons are suggested in the documentary:
1. Cultivate A Frugal Lifestyle
One of the movie’s characters makes the suggestion that the “big three”—housing, transportation, and food—account for a sizable amount of our income. If we even slightly cut our spending in these areas, we could save a significant sum of money. There is no limit to how much we can save and eventually create, even though there could be a limit to how much we can reduce.
2. Be Prepared For All Eventualities:
Any moment now, something unexpected could happen to your situation. Even though it’s unpleasant to think about, everyone should be prepared for the chance that they will have financial difficulties as a result of an unexpected job loss or health problem. Having disability insurance and setting up an emergency fund will help you maintain stability in your finances when faced with hardship. It’s crucial to keep in mind, though, that things can eventually become better even if they start off poorly.
3. Eliminating Debt Has The Power To Transform Your Future:
Debt might impede your growth since it requires you to make fixed monthly payments. But paying off debt might also have a good effect on your future. In the documentary, we meet Ariana, a sentimental spender with a money phobia.
Because of her parents’ conviction that they should be allowed to indulge in excess, Ariana ended up spending more money than she had. She thus has a significant credit card debt and student loan balance. In the documentary, we see Ariana’s feelings of remorse and shame as she works to support her two kids and pay off her debt. While her spouse pays the bills, Ariana puts in a lot of effort to manage her finances; each month, she pays $2,000 of her income toward debt.
Ariana reportedly took out a personal loan to pay off her credit card debt, but when the limits were paid off, she soon went back into debt. Ariana receives help from Tiffany Aliche, aka The Budgetnista, in formulating a plan for allocating her income and automating her budgeting.
Ariana is also given a set of guidelines from The Budgetnista to assist her in reining in her spending:
Is it necessary?
Do I love it?
Do I like it?
Do I want it?
Prioritizing “necessities” and “loved” products should be the main focus. We see throughout the documentary that Ariana is committed to getting her financial situation under control for the benefit of her family. She told Tiffany her goals for how she would like to spend her money, which included taking a vacation, cutting back on her work hours, and lowering her stress levels. It’s clear that getting rid of debt might change Ariana’s life.
4. Consider Starting A Side Hustle:
You could look into starting a side company to make extra money. A consistent stream of extra cash from side gigs can be used for debt repayment or investments toward long-term financial objectives. You can lessen your dependency on a single source of income and increase your financial resilience by diversifying your sources of income. Developing new abilities and experiences through a side gig can also help you become more marketable on the job market and open doors to higher-paying positions. In order to advertise her second job walking dogs, Lindsey was told in the movie to draw dogs and present them to their owners.
5. Invest In Index Funds:
For those just starting out with investing, index funds are a very advantageous choice. A wide variety of equities from a number of industries, including banking, retail, healthcare, technology, oil and gas, and airlines, are included in these funds. They are therefore a wise and trustworthy approach to progressively make money. For instance, Teez Tabor, an NFL cornerback in the film, experiences an unexpected drop in pay as a result of an injury. Index funds, which have historically demonstrated an average yearly rise of about 10%, are what his financial advisor advises him to invest in.
6. Earning more can mean spending more
This installment of “Get Smart with Money” centers on John and Kim, a married couple with two kids. John became a stay-at-home parent during the pandemic after losing his job, and he and Kim are getting used to their new responsibilities and financial realities.
We witness Kim making a healthy living from her business while John tends to the kids and household chores—a novel viewpoint that is rarely seen on TV. A few years ago, she made $70,000, and she was on track to make $300,000.
By many accounts, this pair is a traditional high earner, yet the documentary reveals that they acknowledge that they are making more money than they are actually spending. The pair acknowledges that they use their purchasing as a form of stress relief or reward, and they have a sizable food budget and frequent Amazon shopping.
Although some degree of lifestyle inflation is normal, too much of it can lead to misalignment. The pair is informed by Mr. Money Mustaches that each of us has a “Purchase Justification Machine” that allows our minds to perform mental acrobatics in order to rationalize any purchase we choose.
With the assistance of Mr. Money Mustache, the couple reduced their monthly spending by $3,000 and set their sights on an early retirement.
7. Pursuing FIRE can mean making moves, literally
John and Kim made the initial move by drastically reducing their spending. However, they came to the realization that they needed to take more action given their lifestyle and desire to pursue FIRE. as in genuinely shifting.
We watch as the couple reduces the size of their house in an effort to save expenses and increase their investments.
Relocating is costly and not something that everyone can afford. However, if feasible, reducing residences or relocating to a more economical area can drastically reduce expenses. That was the perfect move for this couple to do in order to come closer to FIRE and, consequently, have more flexibility in their lives and career.