Walking The Money Management Talk
By Patricia Davis
The Money Game is tough! Many people find themselves on the losing end far too often. Let’s take the time to step back, survey the landscape, and master the rules of the game.
Today’s money environment is complex and dynamic. In the past, many elements of our economy remained essentially unchanged for years at a time. Bank practices, credit procedures, interest rates, mortgage programs, and other financial elements operated consistently, changing very little over time.
Today, those elements and many others are in a constant state of flux. Why do you suppose that is?
New financial products are introduced almost daily.
There are thousands of different credit cards available in this country.
Laws and regulations are frequently changed or updated.
New resources, such as the internet, have come forward and now play a central role in many aspects of our financial lives.
Online banking, electronic tax filing, and internet shopping are just the tip of the internet iceberg.
The internet makes huge amounts of information available to manage our financial lives, but it also makes collection and availability of our financial information available to others. And, it enables scores of scam artists to develop new schemes to trick you out of your hard-earned money. (Who hasn’t received the email from the Nigerian prince asking you to help him get millions of dollars out of his country, a portion of which he will share with you, if you will only give him access to your checking account?)
So how does one learn to effectively manage their money on a day-to day-basis? One information source could be our parents from whom we learn so many other things about life as we are growing up. Indeed, some of us were fortunate enough to have a parent or other adult in our lives who taught us the money management ropes. However, many others were not so fortunate including those who saw their parents struggle with financial issues and demonstrate many of the wrong steps to take to manage their funds.
A second obvious place one might expect to learn such important life skills is in our schools where we gain so many other life skills. Unfortunately, problems exist there, too. Until just a few years ago, hardly any states education curriculums included any financial literacy information. Even today, only 21 states mandate financial literacy as a component of their core curriculum. Even at the college level, money management courses are only now being introduced at selected colleges. As a result, millions of young people enter the economy and achieve the age when they can negotiate contracts but with limited financial knowledge.
My spouse and I were fortunate to have parents who gave us a strong foundation in money management, not in environments where money was abundant, but from poor households where parents lived from paycheck to paycheck and struggled to make ends meet. Even in that environment, we observed and absorbed concepts that later formed the foundation of how we have managed our money from the beginning where we had very little up to today, where we have substantially more.
It hasn’t all been easy. There have been setbacks — job loss, illness, injuries — but through the application of our guiding principles and some luck, we came through each one financially stronger. Those principles did not come to us is a neat, spiral bound notebook, or framed plaque to hang on a wall. Beginning with our first year of marriage, we read everything we could (there wasn’t much) to help us understand how finances worked. Through those efforts, we developed a set of financial principles that have guided us through our married life. Listed below are some of the money principle that we have found to be useful:
Set both short and long-term goals with clear measures.
Stay focused. Keep “the main thing” “the main thing.”
Develop and work within a strong budget/spending plan.
Communicate clearly, openly, honestly and regularly.
Work hard.
Find ways to maximize your income.
Live beneath your means.
Always save a large portion of your income.
Assume there will be a tomorrow and prepare for it.
Wait for it; work for it; and pay for it.
Commit that both parties must approve expenditures above a certain level. Each person has veto power.
Sweat the small stuff and the big stuff.
Assume responsibility; take the initiative; and be proactive.
Study and learn.
A big problem in the money game is there has been no organized way to learn the rules. Neither the currency you get from an ATM nor the paycheck deposited in your bank account comes with a user’s manual or operating instructions.
So, what does it take to win the Money Game? As my Mother, Mimi, used to say, “Get something in your head so you can have something in your pocket.” In other words, learn the rules of the money game and apply them vigorously in your day-to-day life.
For more than 30 years, I have been immersed in matters of financial management, first as a corporate financial manager where I managed major accounting and financial functions, oversaw budgeting and accounts payable, and invested billions of corporate dollars and learned that goal-setting and planning are at the heart of achieving financial success. Later, I began teaching and counseling people of all income levels, helping them to understand how money works in our economy and how they can master the skills involved to do it right. I want you to benefit from many of the insights I have learned from studying, working, teaching, counseling and mastering the money game.
I am confident you can reach your financial goals if you will internalize and master the rules of the money game and adopt most of the principles above. It just takes commitment, perseverance and determination. You can do it. I know you can!
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