Penny Wise, Pound Foolish!

It's that time of year!  Many of us are just getting over the Christmas credit card bills, when the New Year Sales start and graciously help to get us into even more debt.  

I have come to appreciate that realistically, the only way sales are a bargain and we are genuinely saving,  is if we are paying cash that we can afford to spend on those 'sale' items.  If they have to go on credit and take years to pay, then there is no saving at all.

Funny how even if we have a trailer load of clothes, shoes and pretty things, we cannot resist a bargain in the New Year Sales.  After all we are saving right?  Well no, not really.

You see what we tend to suffer from is PWPFS (Penny Wise, Pound Foolish Syndrome).  Worse still we tend to buy in excess to keep up with other people's expectations.  As Benjamin Franklin said 'If all the world were blind except myself, I should not care for fine clothes or furniture.'  If we were not so concerned with keeping up with the Jones', we would actually be OK re-working our wardrobe, and last seasons shoes and bags, instead of having to get the latest Prada accessory and paying the high street bank twice over for the pleasure.

I am a recovering PWPFS sufferer.  I still have relapses, but I have given myself this year - 2012 to kick that bad habit.  You see when I reflect upon how much better off I could have been if I applied some basic fundamental money managing strategies, I pinch myself.  In fact I drop-kick myself!  I know for sure that if I had been sensible with my money during the past 14 years that I have worked full-time in well paid jobs, I would have had a nice nest egg to support me today - I know this!  Perhaps I might have even been financially free.  They say hindsight is 20/20 vision right?

Women in particular lack common financial sense. OK, that is a sweeping statement, but I have many friends that are earning good money.  Some are earning several hundred thousands of dollars.   They have nothing to show for it.  Not their own home, not a college fund for their kids.  They have a fine wardrobe, all the latest gadgets, but no assets whatsoever.  How is that so?  Why is that so?

Unfortunately we are taught things in school that do not prepare us for surviving in the real world.  We need to be taught social interaction, saving for a future, provided with information on taking care of our finances.  Instead we are taught algebraic equations.  

In actual fact, money matters should be taught in the home. Let's make a difference if we are not already.  Maybe if more of us had that training at home we would not be getting mortgages beyond our means and giving the banks leverage to ruin the economy as is speculated. Give your children, nieces & nephews, little cousins hints and tips on saving.  Open an account that they cannot touch until 21 and encourage them to save regularly instead of buying them a Nintendo DS.

There is no reason to remain financially ignorant, it is time to teach yourself and everyone you care about.  There are 1000s of books and online tools. Some books date back hundreds of years.  Themes are common.  The main ones being spend less, save more.  Spend less than you earn.  Save a minimum of 10% of your earnings.  All achievable things if we are mindful of them.

So sit down, write a list of what you spend every day for the next month.  Look at that list and see what is essential.  What you can do without, then try and do without those items for the following month.  See how it feels to have saved, even if it is a minimum amount.  It can be something as simple as not going to your coffee shop and buying a skinny latte every day right?

 

I am on a mission to tell all my friends to get their financial stability groove back.  Be in a position to help yourself and others to keep your heads well above water.  Shoot! You should position yourself to walk on water and float financially.

In essence, no matter what you earn, spend less always!

Blessings...

No Romance Without Finance!

How good are you at managing your money?

I have my moments, however overall my inconsistencies lead to sentiments of frustration. Whether it be the occasional impulse buying or the mere fact that I am just not saving enough, my inability to effectively manage my finances led me to asking a friend (that is a good FA) for help!

He did so with reluctance, not wanting to 'mix business with pleasure' so to speak. However he eventually agreed. He assessed my situation, broke it down and said there is hope! However I needed to prepare myself to work for another 17 years for an employer and save $10000 a month to be able to have the amount of money I want to have when I retire. Shock horror (ok maybe I can compromise on my retirement sum but why should I)?

I have no intention of being an employee for that long, so suffice to say that was a kick up the backside and a trigger for me to apply the adage 'Do what you have to do, to do want you want to do.' ~ Denzil Washington.

In my friend's bid to assist me on my journey to financial freedom he introduced me to a little pot of gold:

I am absolutely loving this book! I would recommend it to everyone but particularly those of you that need practical tips on improving your financial situation. Even Warren Buffett recommends this book. He is also well known for applying the basic principles in his life..

The five key principles once applied will make such a drastic difference if they are strictly adhered to, it makes me wish I had been given this book 20 years ago.

It is funny how different people regard money. An acquaintance made a comment last week. She said she was glad that she was poor. Glad to be alive, healthy, have a wonderful family, book smarts, gleaming white teeth, yes I can comprehend that, but glad to be poor I just had to shake my head. For one thing, she probably doesn't know what poverty is, and two, only someone who has a poor person's mentality would make such a statement.

Do not get me wrong, I do not look down on people that are earning less than I, and one man's definition of rich vs another's is relative anyway. However a comment like that shows a lack of wanting to be better than you are financially. Who in their right mind wants to be struggling to make ends meet, to pay bills, to eat a good meal? Need I say more....

For me personally, on this journey to seek a better life for myself, yes money does play a significant role. Not just for superficial reasons, but also to enable you to benefit from the opportunities that having a decent financial standing can bring.

A lot of what I am trying to achieve is also for my son. I want to leave him a legacy. While teaching him to earn and maintain his own financial standing I also want to give him a foothold on the ladder of financial success. I don't ever want him to struggle financially, I expect him to do better than I have, much like I have done better than my parents.

If I can leave this world and leave him and his family and his family's family well off, I will feel like I have achieved my goal. It took me far too long to value money which meant that I also had a poor man's mentality. I may never have Warren Buffett's billions, but I will be in a position where my debts are paid, and I am financially free!

We all have differing levels of what we deem as being the right amount of money for us. However we should all aim to not have to 'struggle' and subject ourselves to a self inflicted circle of financial doom. As we do have choices.

For sure there are some that are in a bad situation that is circumstantial. However if more of us applied the Basic Principles provided within the Richest Man In Babylon, we would have a safety net in hard times.

I am really interested to know how others find this book. I will also keep you posted on my progress as I start on my express journey to financial freedom. You know, life is tough when you don't have enough! Your focus is on paying the next bill as opposed enjoying the next day. All in all, there is no romance without finance!

Blessings