Financial instability is the best teacher.
Right after I graduated, I got an internship in Paris. I packed my bags and moved from Portugal to France, with a head full of dreams and a wallet full of nothing. Finding a place to live in Paris is not an easy job. When I finally managed to get a tiny studio apartment, I rejoiced! The only problem: the rent cost 595€, while my internship was paying 625€ per month. That left me with 30€ for living costs in one of the most expensive cities in the world.
I lived like that for 3 months. I had the incredible support of my loving parents, who sent me money every month. But this is not a story of shameless white, middle-upper class privilege. This is the story of how that experience shaped the way I see money forever. And how it can change yours too.
My internship finished in June, and the company sent me back to Portugal with a verbal promise of giving me a work contract in September. I moved back in with my parents and waited. September arrived and brought with it the promised contract. And the contract brought a great salary for Portuguese standards. In three months, I could have paid back my parents. They never accepted the money, though.
I kept working for this company and making good money. But this good money was also very unstable. I never got my salary at the end of the month; I was paid whenever the company had cash. Sometimes, twice per month, in smaller chunks. Sometimes, the month after.
One day, my boss asked me to have a serious conversation. “You know…” he started, “I haven’t paid the taxes I am supposed to for your work.” I was confused. “So, legally, it’s like I am not working?” I asked. He nodded and proceeded: “I want to revoke your contract and ask you to work for us as a freelancer.”
And so I did, for the next three years. Until I had enough, interestingly, that was around the same time when they gave me a job contract again. I never signed it. Years of working conditions like these leave scars on you. Those scars were one of the best things that ever happened to me.
Instability is a Blessing in Disguise
Because of this experience right at the beginning of my career, I never felt safe professionally, nor did I ever take anything for granted. I always knew that a job contract and an agreed salary mean nothing.
While living like this would terrify most people, I learned to make the best out of it. The constant instability turned out to shape my life for the better by teaching me two very important lessons.
The first is that you always need a safety net. If you read about personal finance, you have seen this advice over and over. You need to save for the rainy days; everyone knows that. What most people don’t know is that your life drastically changes when you have this safety net. It doesn’t change only on the rainy days; it changes every day.
Because you feel the safety of this cushion, you allow yourself to take more risks, to be bolder, to dive right into the opportunities that life throws at you. You don’t need to rethink your every move, calculating how you will afford to pay rent the next month. Sometimes, the best decisions in life don’t make any sense from a financial point of view. Having a safety net means you get to make the right decision, even when it makes you broke. It’s freeing and empowering.
The second lesson is related to timelines. I never lived paycheck to paycheck because I never knew when those would arrive. My months always ended at different random times. So, I started seeing my financial life as a succession of phases, rather than a succession of months. In some periods, I was making four times what I needed to live comfortably. At other times, I was making close to zero. It never mattered, as long as the overall balance stayed positive.
The combination of these two lessons allowed me to live amazing experiences in my 20s! During some periods, I worked every waking hour of the day. Other times, I could travel for months without worrying about money. I quit jobs that I didn’t like without having others lined up. I took chances, I created my own projects, and I failed tremendously. But I always had fun, and I always knew I would have a home to return to when everything would come crumbling down.
Matt D’Avella, Youtuber, shared the story of how he went from having $97,000 in student debt to being financially free. In this video, he speaks about how his freelance years shaped his approach to money.
“The most valuable thing I took from my years of freelance was that I never had a stable income. I never had that consistent biweekly paycheck that I could rely on. That might not sound like a good thing to you, but it taught me to be really conservative and really thoughtful about the money that I was saving, and to prepare for the absolute worst-case scenario”.
How You Can Change Your Financial Life
You don’t need to go through life-shaping experiences to start seeing money this way. Hopefully, your boss has always paid you on time and has dutifully paid his taxes too. But you can still work on adopting this mindset.
In the world we live in, job security doesn’t exist anymore. You never know when you will be made redundant or when the next paycheck will fail to arrive. If you adopt this mindset, you can prepare for the worst. And, while doing so, build the foundation for the best possible version of your life.
Start by putting these four tips into practice.
1. Build a strong skillset
Whichever your area of expertise, make sure you have a valuable, updated skill set that companies need. If your current company lets you go, you can find a job somewhere else. Maybe start freelancing, or even build your own company.
But always make sure you are employable. To do this, you need to work on yourself continuously. Learn, learn, learn! And build some basic skills that will open doors for you everywhere, like writing, public speaking, or foreign languages.
For example, I know that, if everything else fails in my life, I could still get a job in a call center using one of the languages I speak. Is it my dream job? No. But it’s a safety net, and that is priceless.
2. Get better at managing your finances
“What can’t be measured, can’t be managed”
— Peter Drucker
Get an app to manage your expenses and enter every penny you spend. Once you start building some data, analyze it. What is essential, and what is a waste of money? How much could you save but, instead, waste on new shoes every year? You only have two feet; you don’t really need more than 2 shoes.
If you wouldn’t have a paycheck at the end of this month, would you buy that overpriced vegan cheese? The ticket to that concert? That new sweater? No. Then don’t.
Be rigorous on how you spend your money. Be a minimalist; be mindful—all the damn time.
3. Build a safety net
How can you do this? There are 2 ways: the first one is by repeating the point above to the exhaustion. But there is only so much that you can save on your current salary. The other way to have more money is to earn more money.
I have seen very few people achieving financial success by sticking exclusively to their day jobs. Get a part-time job, create a side hustle, write a book, and sell it online. Whatever you want, but do something.
I told you my parents paid for my expenses in Paris for three months. That didn’t hurt their budget, and you know why? Because my dad has had two jobs for his entire life, and my mom put up a company from the ground up.
This is how you build the cushion that will be there for you when you fall. It’s hard, but once you have it, it’s life-changing.
Often, what holds you back is not money; it’s not your job; it’s not the state of the economy. It’s your fear.
So, get over it. Do so by experimenting. Would you like to quit your job to go travel? Ask for a sabbatical period instead. You’ll have your job there once you are back, but you will experiment with what it’s like to not have a salary for a few months. It seems like a small step, but it’s not. It’s about practicing to confront your fears. Once you master that, you’re free.
The initial, unstable years of my career are behind me. Now, I work in IT, in a stable, decent company that pays my salary every month, religiously. But a decade of poor working conditions leaves its mark. So, I keep following the same approach to my personal finances.
This is how I am applying it these days. I live alone in the center of Budapest. The apartment is nice, but I would like to move to a place slightly newer and with more natural light. That would mean around $150 more per month. I could afford it with my salary, but that would cut my monthly savings. I don’t want to do that. Instead, I have a plan.
Until the end of this year, I want to make the money that would cover the extra $150 for a whole year. I want this money to come from my side gigs, not my day job. And I want to make the whole amount before I move. This is how I prepare for the worse by constantly staying ahead of it.
This is beautiful because it means I am free. I don’t need to wait for a raise at work to do what I want with my life. And being free is the ultimate way to give color and meaning to your days. You can do it too. Start today.
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions.