Can You Afford Not To Look After Your Personal Finances?
Investing is a subject a lot of people don’t want to think about. And there is good reason for that. Investing seems scary. It either sounds like something only the rich do or something that only a skilled professional can do. But the truth is that investing is something that everyone can and should do—as soon as possible.
Why should you start now?
Think about this. There are two ways to make money. You can exchange your time for money or you can make your money work for you. Most of us work 40 hours a week. In this case, you are trading your time for money. But wouldn’t you rather earn more than you are making? If you are making $1,000, wouldn’t you rather be earning $5,000? Most people think the only way to earn more is to work more. Work overtime is their motto! But there is more to life than working. Investing gives you the chance to let your money work for you—saving you time and earning you money.
But is the purpose of investing to get rich?
Some people don’t invest because they think that investing is something you do to get rich. They figure they’ll never earn enough to get rich, so why bother. But that’s not what investing is for. Investing is a way for you to be able to maintain your current lifestyle.
Think about this: what if the company you worked for suddenly closed down? What are you going to do when you get to retirement? Sometimes working more is not a viable option. Investing gives you another source of savings and earning income. You don’t invest to become a multi-millionaire (of course no one would stop you if that happens); you invest so that you can provide for yourself in the way you are accustomed to both before and after retirement.
Many people are convinced that investing is the right thing to do at this point, but, there are some misconceptions people have about investing that prevents them from actually doing it. These misconceptions are that:
Investing is too hard
Investing is too risky
You need a lot of money to invest
Let’s look at each one of these misconceptions.
Investing is too hard.
You may think that investing is just too hard. But a lot of that has to do with the terminology of the investment industry. I mean who knows what Fed Fund rates, mutual funds, indexes, or blue chip stocks are? But you don’t need to be scared off by a bunch of words—in the end they are just words. Just like you probably didn’t know what PMI was before you bought your first house or what APR was before you got your first credit card, you can learn what these things are. And you will find that they aren’t so hard to learn. And if you seek the advice of a professional, they can explain it to you.
Investing is too risky.
Some people have the idea that investing is risky. Movies such as “Wall Street”, no doubt, lead people to think that. But the fact is that investing is only as risky as you want it to be. Do you want to take huge risks? You can invest in international stocks. Want to play it safe? Go with bonds. The risk level is up to you and only you.
I can’t afford to invest.
Many people think they can’t afford to invest. But when you look at the alternatives (social security may not be there, job security is not 100%), you really have to ask yourself how can you afford not to invest. And the earlier you start, the more money you will earn. Even if it’s only a small amount, the money you invest today will earn you big in the future.
I’m Broke, How Can I Afford…
I’m still amazed every time someone comes to me complaining that they don’t have any money to put into their business and that they’re broke.
I mean what have you been doing with your money man?!?
Plain Truth: If you don’t have any money you won’t make it my friend… it’s that simple. You have to at least have some money. Say $200-$500. I don’t care what the self-styled slick gurus tell you. If you’re flat out of cash your dead in the water before you can even start.
Now let me tell you another thing…. I DO NOT BELIEVE THAT YOU ARE BROKE! You’re a liar and a self deluded one at that if you think you are.
I mean how many Starbucks or soda do you drink a day?
How many beers a week do you drink?
How many cigarettes do you smoke?
How much meat do you eat?
How many new clothes have you bought in the last month?
How many “gifts” have you just had to buy?
How many magazines or newspapers have you bought this month?
How many CD’s?
How many snacks?
How much candy do you eat a week?
How many TV dinners?
How much fast food have you been eating?
How much did you spend on the lottery?
How much did your TV cost you?
How much money do you give to your church?
How much are your monthly car payments?
So these are really essential to living are they?…. No they’re not, they’re self-indulgent habits! Nothing wrong with that if you can AFFORD them. But you tell me you’re broke! Wake up! Ding-dong!
I used to walk the streets with no-more than $3 bucks in my pocket to last me the day. Yes I did that for months on end until something happened. I got mad, real mad. Not at the world but with myself.
You see I have always had a dream of being personally free, being self-reliant, totally in charge of my time and cash flow, beholden to no-one… not government, not masters, not gurus.
Now walking around with $3 bucks aient much fun. It hurts in the pit of your stomach. And when I only had $7 a day to feed my family (yup there were others my pathetic state was impacting) I can tell you, I felt at times of doing something pretty dumb to my body and mind… and occasionally did.
If you live in the Western world, you live in the richest part of the planet with the most opportunities the world has ever seen at any point in the history of the human race.
If you want to see poverty take a trip to India or any other developing country. I have, and what I saw made me realize my $3 a day “poverty-trap” was simply an ego-trip. Kids working from 5am to 10pm every day for crumbs of bread. Rags and bones. So please don’t tell me you’re broke and poor, you don’t know the meaning of the word.
But now I’m not broke, now I’m not looking like a tramp feeling sorry for myself.
How did I change it, and get the money to start my information publishing business. I’ll tell you. It’s real simple… and I want you to do it too:
Every single time you buy something, I don’t care how many cents or pennies or bucks it might have cost… you MUST ASK FOR AND KEEP THE RECEIPT!
At the end of the day in a small note book or on a scrap of paper, total up what you spent your money on. Now ask yourself: “Was what I bought today absolutely essential?” If not, take it back for a refund, you have the receipt after all.
Now put that refunded money in a pot or a jar and label the jar “My Business Building Fund”. Better still, don’t buy the goodie, treat or trinket in the first place and save the cash.
If you really want to get in control of your finances you absolutely, positively must raise some working capital, and the only way to do that is to stop buying crap and investing the money in yourself.
I mean do you really need that coffee or will water do? Do you really need that steak or will beans or rice suffice along with some healthy cheap vegetables thrown in?
“But I want to have a coffee, beer, steak” I hear you say. Well don’t tell me that you’re broke then. All you’ve done is exchange what little cash you have for something else other than investing in your business building fund.
No-one forced you. No-one but yourself is to blame for where you are right now.
You are in the situation you find yourself because of the choices and decisions you have made during the course of your life …. Stop pointing your fingers outside yourself…. You are the problem, and as such YOU ARE THE SOLUTION!
So stop spending money on useless trinkets, and superfluous goodies and snacks.
Bread, water, vegetables… you don’t need anything else to eat. Chances are you have a wardrobe full of clothes already so you don’t need anymore of those… correct? Sell your TV it spews lies anyway. Use TV time to learn, surf the web looking for opportunities etc. Sell your car? Either take public transport, which in the long term is cheaper than a car or get a bicycle. And yes it’s gonna pop your skull with frustration.
But use that frustration to get your act together and absolutely commit to get with the program and learn how to become a self-reliant cash generating human being. And when that day comes, you’ll be able to walk into your bosses office, smack a cream pie in his/her face and walk off to the beach knowing you are, at the end of the day, an immensely and supremely powerful individual…. You simply forgot!
What’s The Truth Behind Your Finances?
Between 15 – 20% of people in our country (UK) own there own businesses. This statistic is on the rise thanks to the incredible invention of the Internet. The staggering truth is that of these only 5% are genuinely financially free! You may well see lots of expensive cars driving on our roads and big houses inhabited by the seemingly wealthy, but these houses and cars are not yet paid for.
Never in our history has it been so easy to lend money. Banks and building societies are falling over backwards to lend us money. You can sign your life away to a 50-year mortgage these days if you choose! Banks and building societies are offering 125% mortgages to first time buyers and business is looking outwardly great.
The credit card companies also love today’s economy. You can borrow enough money on a credit card nowadays to buy a brand-new car! The loan companies are also cashing in on ignorant and naive individuals and this really concerns me. The advertisement marketplace is going wild on media adverts for consolidation loans. You know the type? “We will help you to consolidate all of your existing loans into one affordable monthly payment” They call this type of loan a HOME OWNERS loan. Yes you can consolidate all of your existing debts into one affordable monthly loan, but what do you call affordable? People are consolidating their present debts into one huge debt and loaning the money to repay this new debt. To actually repay this debt in full will take these people years. What’s more they’ve secured this loan on their one and only ASSET – their HOME!
These unfortunate people aren’t thinking about the future and their long-term future plans, they’re thinking about the immediate and present situation. In the meantime what happens when the interest rates begin to rise? The interest rates on a consolidation loan will take years to pay off and whilst you owe money to your lender you’re not secure at all because your consolidation loan is secured on your home.
What does this mean?
If you cannot pay your loan the Loan Company will TAKE YOUR HOME as payment!
The reason it is so easy to lend money at present is because the interest rates are so low. At the time of writing this web page our present government has set the base rate of lending so low that people are dangerously getting themselves into debt through their own ignorance towards the economy. What is really happening will become all too apparent in the next few years when the tide turns and the interest rates begins to rise sharply. If you’re not financially free or in control of your assets when the tide turns you will lose everything. History always repeats itself and sooner or later a recession will hit the world trading markets and all of those people who borrowed huge amounts of money to buy their big house and their BMW or Mercedes will be in big financial trouble.
Wait, it gets worse!
SHOCK – HORROR!
Once the tide turns the interest rates will saw and if you’re not secure your financial world will come crashing down. The mistake that people have made is to foolishly believe that their loan rates will remain the same, they won’t. Let me explain in simple terms to you my theory by giving to you a simple example:
If you have a current ‘interest only’ mortgage of say £100k and the interest rate applied is £5% your monthly payment will increase with the interest rate. What happens if the interest rate climbs to 10%? Your mortgage could double. In 1989 the interest rate sawed to 15%. If this happens (and it could) your present mortgage payments could treble! How will you survive financially?
Your mortgage payments could increase by 300% inside 12 months and any other loans you may have will also require payment. If your wage doesn’t allow sufficient funds to meet these demands than you will lose everything slowly and painfully. When the interest rates do begin to rise (and they will) the debt consolidation companies will cash in on you. Before you know it you could owe money for the rest of your life and if you can’t pay what you owe than your lender will take your car your home and the clothes off your back to meet their demands.
SO WHAT’S THE ANSWER?
My advice to you is to pay off your existing debts as quickly as possible. If you are driving around in a car that is financed by a finance company pay this loan off as quickly as possible. Contact the finance company and ask them for a final settlement figure. This way you’ll know exactly how much debt you’re in. If you can afford to settle your finance early than take advantage of this and settle immediately. This way you’ll own your car outright, you’ll have paid less in interest and you’ll have some equity if you need it. If you can’t afford to settle the finance at the present than check what interest rate you are currently paying and search around on the Internet or in the high street for a lower rate of interest. Whatever you do, don’t delay in taking control of your finances today.
Another mistake people make is to fall into the trap of ‘false economy’. They begin with the right intentions by searching for a lower rate of interest for their mortgage. What this means is that their monthly payments become lower. The mistake they make is to think they’ve got more money in their pocket. In affect this is a false economy. Instead of settling for more money in your pocket and still enduring a 10 year (or whatever) term loan ,why not use this extra money to increase payment on the capital of your loan?
This simple technique is called ‘Mortgage Acceleration’ The Banks and Building Societies know all about Mortgage Acceleration they just don’t mention it because it loses them lots of money in interest payments!
If you increase the capital payments of your mortgage every month you’re paying off the entire loan quicker. If you can shave 2 years off your loan you’ve not only shortened your mortgage by 2 years you’ll have saved yourself a packet in interest charges. A 25-year £50k mortgage repaid 16 years early could save you over £60k in interest! (dependant on the interest rate) Ask your Bank or Building Society about ‘Mortgage Acceleration’ and see the look of loss on their face!
Don’t settle for a lower rate of interest and extend your loan payments thinking that you’re saving money, you’re not. You are only extending your debt! You need to pay off this loan as quickly as possible whilst the interest rates are low. The longer you take to pay off your mortgage the more interest rate the Bank or Building Society will take from you. Whilst the interest rate is currently around 5% accelerate payment NOW and save even more money! Take advantage of the fact that if the interest rates are currently low than the amount of interest that you pay on top of your loan will be also low. If you can afford to increase payment whilst the rates of interest are low than I urge you take advantage of this immediately. If there is any way that you can accelerate your loan and pay it off early than I would strongly advise you to begin your financial organisation here and organise this today. A simple increase of £50 per month in mortgage payments will save you money in interest payments in the long run. Your first step to taking control of your financial world is to pay off all of your existing debts as quickly as possible. When you have no debts, you’ll be financially free and you’ll feel as if a huge weight has been lifted from your shoulders.
POSITIVE PLAN OF ACTION:
Contact the bank or building society that you have your mortgage with. Ask for a final settlement figure on your mortgage and also enquire into the current interest rate that you are paying. Chances are that if you’ve not checked the interest rate you are currently paying in the past 12 months than you could save yourself money immediately by choosing a better deal. There are currently plenty of lenders all willing to offer you competitive deals on your mortgage and I would advise you to check them all out before you commit yourself to one. A simple saving of 1% in interest can save you pounds every month. With this saving in interest payments, use this extra money to increase your capital payments. If you only manage to shave a year off the length of your mortgage it will be one less year that you are in debt and one year sooner to becoming financially independent.
Talking of your mortgage, if you currently have an Endowment policy running alongside your mortgage than investigate this policy thoroughly. Most endowment policies are useless in today’s interest market. What this means is that when your mortgage term ends there may be insufficient funds in your endowment policy to pay off what you owe to the lender. If this is true than your lender will be knocking on your door for this short fall. If you can’t afford to pay than you could lose your home after 25 years or more of payments! Recently I read that some Endowment policies were running a short fall of up to £13000! If this happens to you you’ll owe your lender £13k plus interest!
The smartest mortgage you can take is a straight ‘repayment’ mortgage. As well as paying the interest back to your lender you are also paying the capital off from the offset, therefore reducing the total amount you owe quicker. My advice is to accelerate your mortgage and pay it off as quickly as possible before the interest rates sky rocket and your payment doubles or even trebles. When the tide turns (and it will) you’ll be smiling in the content that you own your home and you own your car and nothing can take these away from you.
The Wright Place – Finances
Women have a love/hate relationship with money. Most of us do not enjoy dealing with it, yet we know not having finances under control will cause our entire family to suffer.
A recent guest on the show Karen Franks, explained how important your credit is and how you should check on it often. ‘At least twice a year”, says Karen Franks. Checking our credit is one important proactive way we can make sure we are in good financial shape. She also mentioned that many married women have better credit score than their husbands, even if they do not make as much. When another show guest, Dan Contreras talked about financial planning, he stressed using a professional. ‘Don’t rely on hearsay, get some real understanding about your situation.” And Linda Hollander the author or Bags to Riches says “Mentors are the fast track to success”. Find someone who has reached the same financial goals you want to reach and then do what they did. This simple technique works even if your goals are modest. While everyone’s situation is different, I really just want to motivate you to do something to have a positive effect on your finances. Here are a few simple things you can do that will start the ball rolling.
1. Get a copy of your credit report and check it for errors( free if you have been turned down for credit)
2. Look at your savings plan, are you on track, do you need to increase or decrease the amounts you are trying to save?
3. Look for your insurance policies, be able to get them immediately, know exactly where they are.
4. Start some financial education with your children. Start a student saving account.
5. Start planning next year’s financial goals. What do you want to change, what goals do you want to accomplish, what new accounts do you need to open and which accounts should be closed.
If you handle your finances you’ll be in The Wright Place!
Know Thy Finances
The first step to financial success lies in knowing your financial situation at any given time. There is an anecdote attributed to John D. Rockefeller–that as a child he was given a monthly allowance from his parents, but upon stipulation that he had to save 10% of it, give away 10% to charity, and account for the rest of it. While his parents required that he record down to the penny where he spent it–you can be a bit more lenient on yourself!
Track your spending for 1-2 full months
Use a program like Quicken to keep track of all your personal finances. I recommend the latest version of Quicken or a similar financial program if you already own one. You should start out by entering in your present-day personal checking account, savings, investments, and cash situation.
To complete this step, you will also need a cheap plastic filing container or something similar. You can purchase these for about $15 at Office Depot, etc. As you make payments, keep track of all the receipts you receive, the checks you write, and any other monetary transactions you make. Like I mentioned earlier, you don’t need to be exact when it comes to cash–just try to be, as much as you can tolerate.
At some later time, at your leisure, enter all this transaction data into Quicken. As you do so, put the purchasing receipts into the file folder under the appropriate Category. Make separate labels for each of the file folders– I suggest some of the following:
Personal
Household
Charitable
Books & Education
Dining Out
Business Expenses
Taxes
Misc.
You can also add your own categories or remove some as appropriate. At this point, you may be wondering why you have to do all this. For the moment, just trust me that it will be beneficial to you (I will explain it later on). Also, it takes a grand total of about 10-15 minutes per week to do what I just described. The next section, Budgeting, will take a little longer. But budgeting also requires that you need to at least perform the first step mentioned above, that is, keeping track of what you currently spend.
Planning your Budget
I can already hear what you are going to say–oh no, not a budget! I don’t like them either, because they tend to reign in my emotional spending or “I gotta have it” mentality. The truth is, you are the master of your financial destiny (not to sound corny, but its true for the most part). If you want to buy that fancy knickknack with the wireless PDA attachment downloader, then by all means, get it. But if it doesn’t serve your needs in the long run, then you will have wasted $X dollars to serve your fleeting emotional desires. Besides, you will notice after tracking your budget for several months where the real money is flowing. You might buy a fancy computer toy only occasionally, at $200+ dollars, but eating out at lunch everyday + dinner with the girlfriend at fancy restaurants all the time is leaving you broke. How about going to bars? I like to drink, but a beer at a bar or nightclub can range from $4-$10. It’s probably even more if you live in areas like San Francisco or New York.
Anyway, the point of planning your budget is just to get a better grasp on directing the flow of your money. I’m not saying that you should totally change your lifestyle or even change it at all–but if you are complaining about not having enough then there are certain things you should do, mainly spend less. It will be described later the benefits of saving & investing your money (which you probably already know anecdotally, but perhaps do not have extensive experience personally).
Good Luck!
Kundalini Lessons – Money
I’ve been going through and interesting growth period lately that I thought I’d share, as some of the lessons were pretty profound (at least for me).
I’ve written before about my awakening and the joys and tribulations since, and I’ve also mentioned that it’s an ongoing process which, as far as I can tell, doesn’t really end til you shuffle off this mortal coil. Then you get to come back and start over. 
The last couple of years or so have been a really interesting period, partly through the guidance and help from both Dr. Glenn Morris and Susan Carlson, and it’s interesting how much progress I’ve made and how far I still have to go.
I’ve recently come to an interesting new period in my life, thanks mostly to my other half, Anya. Living with her (and my step-son Jake) has opened up new areas and forced me to deal with things that I was always able to avoid before. When you’re a modern day gypsy and bouncing around in an old RV it’s really easy to have a casual attitude about living in our society, but settling down really brings on the new challenges. Most of what I’m learning now is probably old hat to those of you who’ve led stable, settled down lives, but it’s a hell of an adventure for me, even at my age.
The primary things that I’m dealing with lately are financial. I’ve always been able to make money, but in the last few months I’ve come to realize that I’ve always had bad attitudes about it, and I see the same attitudes reflected over and over from the people around me. It was a big shock for me to realize that much of my attitudes were actually limiting me. It was shocking because most of what I do is about rising above limitations and creating my own realities, then realizing how badly I was doing in this other area.
Susan Carlson mentioned to me several times last year that I could learn a lot from Stuart Wilde’s books, and I finally got around to reading “The Secret to Money is Having Some” and I have to admit that she was exactly right! Thanks Susan!
I followed that up with “Rich Dad, Poor Dad” (actually I’m deep into the series and spending a lot of time on his website) and what I learned there was just as shocking, so in the hopes that some of you learn easier than I do I’ll pass on some new revelations (apparently only new to me, but what the hell).
I grew up in the mountains of North Carolina as a poor country boy and most of the time money was a tool that we just didn’t have. Our “reality” was that we had to struggle just to have ‘enough to survive’. While the concept of abundance was nothing new to us, we saw our abundance in what we could grow and make rather than what we could buy, and while those skills are definitely valuable, it’s a very limiting attitude to have.
So within my ‘reality’ money wasn’t really a tool that was very prominent in my toolbox, even though it was consistently one of the factors that prevented me from doing the things I needed to do.
Many of my attitudes came from the fact that I’m just not interested in money for it’s own sake. I’m pretty unimpressed by the people I’ve met whose primary characteristic seems to be that they have lots of money.
Also it’s easy to develop bad attitudes when we see the evils done in the name of money, so for a long time my ‘reality’ remained that I was working to have ‘enough to survive’.
Another interesting factor is that many of us in western society are taught to believe that we DON’T deserve a lot of money. We’re taught to WANT it, but not to BELIEVE that we deserve it, which only seems like a paradox til you think about how our consumer culture is driven by desire and want, rather than need.
What I finally realized is that I have to expand my reality and shake off the bad attitudes. Money is a fact of life in our modern world. It’s a tool that too many of us are taught to ignore and misuse, and just because many of the world’s ills and evils are concieved to get it doesn’t mean that we should ignore the fact that many of the modern worlds GOOD things are caused by it also. The fact that I can write this article and instantly send it out to people all over the world is just one example.
I expect the next few months to be a very interesting and rewarding period as I learn more about this ‘new’ tool and how to effectively use it. Many of the healers and ‘new agers’ that I know also have similar attitudes to those that I always had, so I thought I’d bring this up here.
I’m sure that many of you may have some interesting feedback.
Organizing Your Finances – Thinking Outside the (Shoe) Box
If you’re like most people, your personal financial records are most probably kept in less than “Good Accounting Practices” standards. For example, stashing old ATM receipts and hanging on to a stub showing what you paid for a pack of mints two years ago (cash, of course), might be filed with your paycheck stubs, credit card statements – paid and unpaid alike – as well as a few tax forms, a stray paper clip and a penny. Anything from an old shoebox to a toolbox would do you for this method of personal financial tracking but you can do better than that.
Not to worry. Here’s how:
1) Plan for a few hours of “alone time” with your financial records. This is a dandy time to pack the kids off to the mall, put up a pot of excellent coffee and a little snack (preferably chocolate), as a treat when you’re done.
2) Supply yourself with ample space, such as a large dining room table. Make sure you have enough organizing supplies close at hand: sticky notes, file folders, a tub to hold them with hanging file folders, large envelopes, a check file, ring binder/s and a three-hole punch if you like, an open stacking file, and an organizer/sorter. A trash can by your side is a must.
3) Get everything from everyplace – shoe boxes, check files, file folders, etc.
4) While enjoying your cup of coffee, make a game plan. Decide what you’re going to put where: e.g., checks and statements go in a specific file for checks and statements, credit card statements can be unfolded and placed in a file folder, etc.
5) Start sorting on the table. Checks go here, ATM receipts go there, paycheck stubs go over there, paid bills go on the other side, etc. until all the “stuff” is divided into neatly organized piles. Use sticky notes to mark what-goes-where on the table to avoid confusion.
6) Put all the “paid” items away first. Be ruthless – it’s perfectly okay to toss the receipt for those mints from two years ago.
7) Put the rest of the inactive items in the envelopes, file folders, check files or other storage devices as are interesting, functional, and readily available from your local office supply store.
Have another cup of coffee and tackle the active, or open, items. Decide what you’re going to pay and when. If you have an open stacking file, you will find one with four compartments (one for each week of the month), very handy for this purpose.
9) Balance your checkbook. Now.
10) Enjoy your chocolate after putting everything away where it belongs and, oh, by the way, check the calendar for when you’ll be doing this again next month.
Of course, next month this will all be done much faster.
I highly recommend using technology to make this much easier and faster. Programs like Quicken and Microsoft Money will help. Really any spreadsheet program will do.
Have a category for each life area you spend money. Once a week or month take your receipts, checkbook records and scribbled notes and record where you spent ALL your money….every penny. One of my students was shocked to find out he was spending $75 per month on orange juice! Legend has it that the Rockefeller boys did this and they turned out alright.
This time next year you’ll wish you started today.
Money Matters: Strengthen Your Marriage by Putting Finances in Order
Did you know that 43% of all married couples argue over money issues, making it the major reason couples fight? If you and your spouse handle money differently, now is the time to talk, establish expectations, and draw up a financial plan.
Money is a very big part of a marriage. Having enough to spend, and to do the things each wants to do, is important to both parties. When couples are not able to do that, then other issues pop up in the relationship. When husband and wife are not on the same page as far as family finances go, other difficulties inevitably arise.
Effective communication often emerges as the most difficult obstacle to establishing goals and expectations, and developing a financial plan. Many of us have been taught during childhood that discussing money is somehow inappropriate. Couples must understand that it is not only appropriate but absolutely necessary to managing finances in a marriage. Just as finances must be planned in a business, they must also be planned in a marriage. You must communicate in spite of any difficulty.
For example, how do you get your spouse to understand that he or she will need to curb their spending habits so that you both can begin putting money away?
There s got to be a viable agreement, because most couples discover that a lack of money, a lack of spending control, or a lack of fall-back savings eventually causes other problems in a marriage. Little things grow into much bigger things. However, as emphasized by Daniel Smith a noted financial expert cited in The Marriage Medics, future arguments over finances can be avoided by simply communicating, creating an understanding of expectations, setting objectives and agreeing on a financial roadmap.
The Marriage Medics outlines the following financial plan of attack for couples of any age:
1. Stop living beyond your means.
2. Treat the household like a business.
3. Create an income-and-expense statement.
4. Create a balance sheet.
5. Create a budget.
6. Figure out how to pay down your debt. Agree on a plan of action in which you both share equally in cutbacks.
7. Find ways to cut expenses.
8. Go on a debt diet starting with the little stuff.
9. Have only one credit card for your entire family.
10. Celebrate when you pay off a debt.
There are many resources for help in creating family budgets and living within them. For instance, Jim Miller, a Registered Investment Advisor, author of Retire Dollar Smart, and the host of a financial advice radio show is an excellent source. Visit his web site at: www.retiredollarsmart.com. In sum, married couples have an important opportunity to plant the seeds for a healthy marriage by simply talking with each other, being realistic about expectations, and making that financial plan. Money matters!
How to Grow Your Very Own Money Tree
Okay. So money doesn’t really grow on trees. Unless you plant your own Mighty Money Tree, that is!
Imagine that only a few moments ago you planted a young sapling in your back yard. You gave it just enough water to ensure a good start. Not too much, not too little. You even propped it up with a stake. You’ll continue to nurture it, feed it, water it.
And with each passing year, your tender young sapling will grow stronger. Taller. Healthy. As it ages, your tree can better defend itself from natural predators. Even harsh weather.
Growing your savings account is similar to growing your new tree. Given lots of tender care, your savings account will become your Mighty Money Tree. Use the following tips to ensure a great start. So, grab your shovel and let’s get planting!
Prop Up Your New Savings Account
To build an account you can enjoy for a lifetime, prop it up with nutrients to help it grow.
a) Feed your account with bonuses. Deposit money saved through cancelled subscriptions. Don’t forget those unexpected windfalls, either.
How about money owed and paid back to you? Be sure to include these amounts, even if they’re small. Small is great — and very do-able.
b) Nurture your savings weekly with money saved from using coupons.
Do you buy items on sale? Take that money you saved and use it to grow your account. Tuck small amounts into an envelope. Deposit weekly.
c) Shower your fund with birthday, anniversary or holiday gifts of money. Refunds, too! This is money you normally wouldn’t have had (or already spent.)
Remember, out of sight, out of mind!
Fiercely Protect From Natural Enemies
Just as you might spray your tree to ward off insects or disease, you must protect your fledgling savings account. It’s precious — and a result of your patience.
a) Avoid spending too much time with others who make it seem ‘natural’ to go through money. They may not give it much thought because spending is a comfortable habit for them.
But you actually have a plan. And you have the big picture of how and when you’ll spend. You will decide the where and why of spending your money. Make your spending thoughtful.
b) Pace yourself as you spend your weekly allotment of money. If you run on $35 per week (for example), that gives you five dollars per day.
Stay just under that five, and you’ll always be a few dollars ahead. You’ll also be less tempted to tap your savings.
c) Practice ‘tough love’ with chronic spenders who repeatedly borrow your money. Give yourself permission to state firmly that borrowing your money is ‘not’ an option. Remove the stakes that prop up others’ spending.
Say yes to protecting and taking care of your money. It will be there to support you, your family, and your true needs.
Promote and Maintain Healthy Growth
Small amounts add up big time, so keep money coming into your account on a regular basis. Keep it growing!
a) Remember ‘why’ you set up your account. Know your balance at all times. Keep your eye on the bigger picture.
Will it help you pay for a gently used car, eliminating future car payments year after year? Is it your ‘freedom from working for others’ fund?
b) Begin with one great strategy, and use it to create a steady stream of money to feed your account. Will it be a direct deposit through payroll?
Will you fund it by using only dollar bills, and setting aside all change at the end of each day? If so, scoop up your change and deposit weekly.
c) Each month, find a new, creative way to put more money in your account. Then find another method and repeat for a month. Keep the top three or four methods which seem to work best for you. Toss the rest, because you want methods that work for you consistently.
Need a starting point? Why not begin with spending ten dollars less at the store each week? Tuck your ten bucks into your savings account. It’s simple, and it won’t leave you feeling deprived.
Lastly, feel the wonder of knowing that your money tree will continue to grow. Like a faithful friend, it will remain at your side. Your champion in good times, a comfort in the rough patches of life.
It has the power to draw your dream out of the darkness and into the light. How long have you had that private, special dream? Only you can know.
Now, what would ‘you’ do with your own Mighty Money Tree? Plant one today! Prop it up. Protect it. Watch it grow.
A Fresh Start for Family Finances in 2005
While 40% to 50% of us make New Year’s resolutions on January 1—a ritual that has existed since ancient times—approximately 60% to 80% of us have already broken them by the end of February, according to researchers.
It’s still not too late, however, to reset the trajectory on your family’s finances, experts note.
1. Build a Budget
If you haven’t already done so, create a realistic budget.
Approximately 85% of your income should be set aside for necessities like housing, food, health care and clothing, according to the professionals at VISA USA.
This leaves 15% for entertainment—and something many consumers completely neglect: savings.
2. Distinguish “Needs” from “Wants”
Make sure you have a clear understanding of what you need in life versus what you want in life.
You need to pay for the antibiotics when the doctor diagnoses a respiratory infection. You don’t need to buy the latest movie released on DVD to aid in your recovery.
You need to pay the rent or mortgage. You don’t need to buy the lovely accent pillows that beckon to you from the interior design boutique.
Always separate the needs from the wants—particularly if money is tight.
3. Monitor Your Spending
To see what you really spend each month, keep a running log of all purchases—no matter how small—for a full month. This will give you a visual display of where your money goes after you deposit your paycheck.
You may find that the $3 cup of coffee that starts each day adds up to $90 a month—a pocketbook pincher that may prompt you to buy a pound of coffee beans at the local market and grind them yourself. That $90 blossoms into $1,080 in savings at the end of a year.
4. Create an Emergency Fund
Life is full of surprises—both positive and negative. If you happen to lose your job or suffer an illness that temporarily sidelines you, you will need cash reserves to support you during the rough months.
“In most cases, consumers who find themselves dealing with a financial hardship are unprepared and have not saved for unexpected situations,” says Diane Giarratano, director of education for Novadebt, a U.S. financial management service agency, with multiple locations, that provides credit counseling, budgeting and financial education.
5. Educate Yourself
When you attended high school or college, you studied history, mathematics, language and science, but there was probably no course in basic money management.
If you need help in meeting a financial goal—whether it’s buying a home or reducing your debt—take advantage of community resources.
“Consumers should feel free to contact a good credit-counseling agency to obtain free advice with regard to establishing a budget or to learn how to handle unexpected hardships,” Giarratano says.
6. Don’t Become a Victim
Identity theft has become an international epidemic, so be extremely cautious when giving out your credit card or personal identifying information. Monitor your credit card bills carefully for unauthorized charges, and immediately report suspicious activity to the issuing company.
“Identity theft is often an inside job,” warns Robert L. Siciliano, a personal security expert with Boston, Massachusetts-based SafetyMinute Seminars and author of “The Safety Minute.”
“Lower-level help desk workers and frontline call center employees often have access to all our personal information in their databases,” he says. “What are you doing to protect yourself? If you’re not paying attention, you could be a victim, too.”
And when a disaster strikes, such as the recent killer tsunamis in South Asia and East Africa, be wary of scammers from fake charities before reaching for your checkbook. Unfortunately, there will always be unscrupulous individuals who seize such opportunities to profit from others’ misfortune.
“Avoid using your credit card to make contributions,” advises James Walsh, author of “You Can’t Cheat An Honest Man: How Ponzi Schemes and Pyramid Frauds Work…and Why They’re More Common Than Ever.”
“Even though this can be a convenient way to proceed, many crooks are looking for credit card numbers,” Walsh says. “They will press strongly for ‘immediate support.’ Don’t rush.”
Instead, initiate the call yourself, and select a reputable charity.
“Go with recognized names,” Walsh says. “No organization is perfect; even the best-meaning groups occasionally misallocate money or fall victim to abusive employees. But larger charitable groups—like the Red Cross, the United Way and Catholic Charities—have the mechanisms in place to audit their people and performance.”
Charitable contributions are tax-deductible, so keep good records of all donations—including small cash gifts.
