This is the time of year when we reflect on possible seasonal excesses and think sober thoughts of cutting back, diets, etc. In the past I have mentioned variations of the dreaded ‘B’ word , and have provided a tool for keeping track of your spending.
Before you yawn and say ‘Not again Cindy Scrooge.’, let’s look at finances from a fresh angle.
What does this saying mean to you? “A part of all you earn is yours to keep.”(1)
Some of you may have seen the commercial of the young guy on the street where different strangers are helping themselves to money from his wallet. Eventually he is left with nothing except an old
woman warning him she will be looking out for him, or more likely, his wallet.
‘A part of all you earn is yours to keep.’ Yet we willingly enable others to become richer and what does that do to our bottom line? It’s red and thin and theirs is thick and black.
How does this enriching of others at your expense happen in real life? Consider a typical month: buy a coffee or 2 or three go for lunch a few times a week, buy gas, clothes, gifts, pay your cable cel phone etc etc.
At the end of the month have you paid yourself? ‘A part of all you earn is yours to keep.
Yet most people have only a few dollars or, even worse, courtesy of some bank LESS than zero in their wallet. The saddest part of all this is that too many people think that is NORMAL! They do not see paying themselves as important as helping other companies become more profitable. When they are ready to achieve their long term financial goals they will see that the little decisions they made daily, weekly or monthly, will certainly add or subtract from the distance they have to reach that goal. Some of my clients have learned that wisdom well, others still have a way to go.
So all it takes is to turn the idea on its head. Instead of ‘I hate to budget. I deserve to spend as I please.’, think of it this way: Am I going to allow that fancy coffee company, bank, designer. clothing, or cel phone company to take major bucks out of my wallet?’ Will they be there for me when I want to retire, pay for my child’s education, or taxes?
‘A part of all you earn is yours to keep’. No one is holding you hostage. Your spending is solely your choice. That young man could have put his wallet away and ignored those strangers in his pocket.
You may think ‘yeah sure Cindy good theory where’s the reality?’ Want a real prime time example of our discussion? Look no further than our neighbor to the south, the Excited States. Their citizens were the best example of people spending money they did not have. Look where that got them.
Good for them that many have learned their lesson and the US savings rate is now in a healthy POSITIVE range. Contrast the US with China’s where the government has little debt and a lot of reserves, and their citizens have understood that ‘a part of all they earn is theirs to keep.’
The key question is: Do you want to be a spender, lender or owner of your business, that business being YOUR financial life?
Get it down to a science. Learn to pay the least amount for the goods and services that you need.
In my financial planning practice I have observed that those clients who put the time into determining if they are financially healthy are the ones that are prepared for an unexpected event and are the most rewarded. If you only think about your financial situation as a hurried afterthought, or it is number 100 on your to do list then your life will reflect that same disarray.
We would never leave the house to go to work without brushing our teeth, combing our hair, or with half our buttons undone. The same can be said of our financial planning or lack thereof.
I conclude this newsletter with an observation because of a remark a client made to me recently. When I mentioned that an update meeting was due she said to me: ‘Oh we don’t have any money to invest.’ In the ensuing discussion I was able to clarify the reasoning behind the meeting and to emphasize that meeting does not equal new money to invest. It did make me wonder how many other clients have to same thoughts. I know many of you understand the importance of keeping me up to date let’s hope that many turns into most.
(1) Richest man in Babylon – GS Clason