Money and finance doesn't have to be "all or nothing". But the trouble is, you hear it all the time - pay off your debt OR save. Invest OR spend. Too many people (and some financial pundits) push you towards OR, not AND.
While it's great to plow money into paying off debt, you shouldn't do it at the expense of everything else in your life. Instead, you need to strive for balance - financial balance.
For example, you can pay down your student loans AND invest for your future. You can earn more money AND spend less. Your finances don'y have to be a series of mutually exclusive choices.
Financial Balance = More Money Momentum
When you have financial balance, you also gain more money momentum. We've talked about the importance of building money momentum before - once you get a little momentum your finances will start to become unstoppable.
For example, let's say you've graduated college and you have a good job. However, you still have student loan debt you're trying to pay off. You could focus all of your efforts on paying down your student loan debt, or you could make the minimum payments on your debt each month and buy a house.
If you just focus on paying down your debt at the expense of the rest of your financial life, when you're done, you have made it to zero. Congrats. That may seem nice to be debt free, but you also have nothing else to show for it.
However, if you buy a house while paying down your debts, you'll be building equity over time. When you're finally debt free, you have a positive net worth that includes home equity. That's momentum that you can keep building off of.
A Famous Example Of Financial Balance
Let's look at a more famous example of financial balance. President Barack Obama is a great example of financial balance. Before he was President or in politics, he went to law school and accumulated about $120,000 worth of student loan debt.
But he didn't let that stop him from living life. He married his wife in 1992, and he had his children in 1998 and 2001. He also bought a house and was working during this time.
At a speech in 2012, he said he and Michelle only paid off their student loans in 2004. That made him 43 at the time he paid them off. He said during the first 8 years of his marriage they paid more on their student loan debt than the mortgage on their condo.
However, Barack Obama was also a big side hustler, which allowed him to pay back his debt faster. The moment that allowed him to pay off his remaining student loan debt was the publishing of his book "Audacity of Hope" in 2004. He wrote it while working full time, and made almost $2 million on it. That's a nice side hustle.
If Barack Obama had waited until all his loans were paid off, he might not be where he is today. The point is to not let student loans hang over your head to the point you don't do anything else. Find a way to pay the monthly amount, and then move on with life (however you want that life to be).
Steps You Can Take Today To Achieve Financial Balance
Don't think financial balance is out of reach for you. There are steps that you can take right now to start working towards financial balance.
Look At Either/Or Spending Choices
First, you need to look at any either/or spending choices you're making in your life. Are you spending money on your student loan debt at the expense of saving? Do you feel you just can't save because of your debt payments? Or are you spending money on "stuff" instead of saving and investing? Whatever your either/or choices are, you need to identify them so that you can start finding balance in your money life.
Optimize Your Payments
A key to this is to optimize your payments on your debts. There are various student loan repayment plans that you can opt into and lower your payments (find a list of repayment plans here). This small change can start giving you flexibility to find balance in your finances. Beyond student loan debt, see what you can do to lower your other payments as well. You can call your utility company and ask for a discount - the same applies to your cable and phone company. You can negotiate payments with your credit cards. All of these tricks will help you optimize your outgoing payments to find better balance.
Make More Money
The next step is to make more money. People ignore the fact that there are always two sides to the money equation: the income side and the expense side. You can optimize the expense side, but you can also increase the earnings side. One of the easiest ways to do this is to side hustle and work hard to make more money. Check out our list of 50+ Side Hustles You Can Do To Earn More Cash. When you start earning more, you can also build more financial balance.
Build Wealth With Balance
Finally, you can start building true financial wealth with balance - earn more, spend less, and focus on what is important to you in your own life. Your personal finances don't have to be an either/or choice. You have the potential for AND choices, but it could take a few steps to get there.
How would you rate the financial balance in your life? Is balance something you're striving for, or do you focus on just one goal until it's done?
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page, or on his personal site RobertFarrington.com.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.
Editor: John Frainee