Financial Wisdom in Six Steps
As promised in my last article, this article will focus on practical advice and guidelines on how one might go about achieving financial success, reaching our financial goals. Financial mismanagement is one of the greatest strains on our lives. The American Bar Association has indicated that 89 percent of all divorces can be traced to quarrels and accusations over money. I personally see the stress financial problems place on marriages regularly.
Financial stress is very dangerous to health as well. It interferes with sleep, digestion, mental focus and every aspect of one’s health and well being, especially the heart. It can kill a marriage and an individual. I would like to suggest some simple (not always easy) steps to financial management. In 1975 a wise gentleman, Marvin J. Ashton, gave a talk on becoming financially independent and I would like to refer heavily on his words.
First, pay an honest tithing. Now some of you reading this may not be religious or you may be religious but never paid tithes or offerings. From my personal experience, you cannot go broke giving to the Lord or to others (charity), even if you are not religious. The old saying what goes around comes around is true in giving as well. Churchill stated, “We make a living by what we get, but we make a life by what we give.” He understood that giving of our time, talents and yes, our money, is part of what makes life not good but better.
Second, learn to manage your money before it manages you. Financial peace of mind is not determined by how much we make, but is dependent upon how much we spend. Dave Ramsey states that, “you must tell your money where to go on the first day of each month or you will wonder where it went on the last day of the month.” Managing money takes time, practice and probably some failure, but it is achievable.
Third, learn self-discipline and self-restraint in money matters. Learn to control spending impulses. Never make a large purchase on a whim. Think it over, sleep on it, go back a few times, better yet, save for it. Learn to determine the difference between needs and wants. Most of what we think we need is really only a want. Ashton stated that, “We live in a self-indulgent, me-oriented, materialistic society,” – now keep in mind that was in 1975, it has only become more so today. Good financial decisions start by being able to distinguish between what is necessary to have and what is nice to have.
US News states that, “Every purchase has an opportunity cost. Money is finite, even for wealthy families. That means money used to purchase one item won't be available to purchase other items.” Always make sure the item you purchase does not prevent you from purchasing another more essential item or paying the light bill. Learn how to wait to make a purchase. Practicing delayed gratification creates the self-discipline needed to save money for retirement, college and other expenses.
Fourth, use a budget. Making and keeping an honest budget is vital to accomplishing any financial goal. A budget helps you to plan and evaluate your expenditures. Create a budget for a specific period such as weekly or monthly or according to your pay schedule. Your goal with budgeting should be to balance income with expenditures and spend less than you make. Making and keeping (especially the keeping) a monthly budget is not easy. Just remember, when you fail it is only a temporary failure and you can work harder next month. Do not beat yourself up over it. Just keep moving forward. You know, baby steps.
