Making A Break With The Past – Changing Habits And Thinking Long Term About Personal Finances
I enjoy “running the numbers” –
What will happen if I save “x” dollars for “y” years?
What will my balance be if the rate goes from “q” to “r”?
Can I retire in “z” years?
I’m fascinated by the mathematics of personal finance – but I am also keenly aware of the emotions behind our purchasing, borrowing, and spending habits. Bad habits are hard to break and good habits are difficult to establish – It’s hard to start living on a budget, it’s hard to focus on debt reduction, it’s hard to care about insurance, dividends, and investing. For years, I struggled to properly manage my finances.
I’ve struggled to figure out “why” I used to be such a poor money manager, and I think I’ve come up with a few answers.
1. I really didn’t have anyone to talk to about personal finance issues.
2. I felt like the “magic day” would come and I’d “make enough” and I wouldn’t have “worry about” money. (Sound familiar?)
3. I was so busy with life (getting married, have kids, working hard) that I never took the time to think “long term”.
4. I was lazy.
Combining all of these things, I had to make a “break” from the ways of my past. Now, before you get the wrong impression, let me clear up a few things. I have never bounced a check, I’ve never missed a payment, I’ve always worked hard, I’ve always had a good credit score, and my family has never gone hungry.
I’m not really talking about “failing” as a financial manager – I’m talking about “being average”. I was the prototypical “paycheck-to-paycheck” guy. I made a good living, my wife worked, and my kids had plenty of toys, food, and clothing. The problem was – I WAS STANDING STILL. I wasn’t really moving backwards or forwards. I was, as they say, treading water.
Three years ago, I decided to change my life and the way that I manage my finances.
1. I started to use a monthly budget.
2. I started to talk to my wife (and eventually my kids) about money and it’s role in our future.
3. I stared the blog that you are reading right now – so that I would have a place where I could openly and freely talk about this important topic.
4. I promised myself that I would get out of debt and that I would never borrow money again.
5. I started to open up to friends and family members – and I committed myself to “being different”.
6. I stopped waiting for “good things to happen to me” and I purposed in my soul to “make good things happen for my family and for those around me”.
7. I organized my financial documents and I established “how much money/debt/savings” I really had.
8. I committed myself, fully – emotionally, psychologically, and spiritually – to being the best money manager that I could be.
9. I learned to admit, to myself, that I knew very, very, very little about “one of the most important aspects of life” – personal finance management.
The takeaway? Getting started can be difficult – but I can PROMISE you – it’s worth it! Analyze the things that you are doing (or not doing) and make the decision to CHANGE.
(One more quick thing – Stop COMPARING yourself to other people. We all have variables – kids, illness, income level, where we live, where we work – that affect how much we can save, how quickly we can pay off debt, and how much we can contribute to our retirement plans. The key is – DO THE VERY BEST WITH WHAT YOU HAVE! The chairman of Coke doesn’t manage Pepsi. He manages Coke. You don’t manage your neighbor – you manage you.)