The financial website “Marketwatch” released a study of the American people’s money situations. It was disturbing at best.
The report found about half of our households live paycheck to paycheck. 19% have zero in savings, while 31% have less than $500.
It’s no surprise that nearly half described themselves as “concerned, anxious or fearful” about their current financial well being. Keep in mind the survey was taken in the midst of a booming economy.
If you see yourself in there somewhere, take heart. There is good news; it doesn’t need to be this way. Impossible financial situations can be turned around, and the disappointing ones can be improved.
The first step is a mental one. Decide to take the less traveled path with your money. The crowd is lost and wandering, and you don’t want to follow them. Become an intentional oddball with money. You’ll have surplus cash and sleep better. Financial guru Dave Ramsey says that personal finance is 80% behavior and 20% numbers. Most people think they just need more money. The truth is that more money with the same habits will produce the same situation with more zeros. A change in habit is necessary.
Probably the fastest way out of a bad scenario is to begin saving money. Distance yourself from the 19% who have nothing saved. Something unexpected is headed your way. Whether it’s a dead transmission or a sudden job loss, it will take you by surprise and cost money.
With a well funded savings account, a catastrophe becomes an inconvenience. Saving money will boost your confidence and prevent the need to rely on predatory loans or credit cards. Those only serve to keep you on the treadmill longer. A savings account is a great backup plan. It’s interesting that Europeans are better savers than we are, even though their economies are much smaller.
Another reason we Americans find ourselves behind the eight ball is that we don’t have a plan for our money. Deciding where the funds should go before they’re received requires intentionality. A vague, nebulous spending plan in your head will cause a shortage every time.
Most people hate the word “budget” but in reality it’s only a blueprint for your money, an itinerary to see visually how far the paycheck needs to travel to cover all needs and wants until the next check arrives.
There are some great apps to help track expenses and stay within a limit, but a pad and pencil works fine too. Use whatever suits you. But unless you can print money in a pinch, a budget is essential to have success with money.
A word of encouragement: this will take some time to get right. Be patient with yourself. It is not an overnight change. You’ll be shocked at how many unexpected things will blindside you. It could take three months to perfect, but start now. An imperfect budget is far better than winging it.
The last leg of the stool for stability will fly in the face of today’s cultural norms. To have financial success (and more importantly, peace of mind) you must avoid debt.
I understand how the world operates; we used borrowed money to get what we want. It’s a broken system and doesn’t work in the long term.
Depending on your age, your future income can produce incredible wealth if invested well. However if you commit your income to a broad range of payments, you’ll build the empires of others and not your own.
Here is something else to consider: what if you wanted to start a business or finish a degree? You wouldn’t be able to pursue it because you have too many bills to pay. Debt kills your ability to take a risk. The car payment or a vacation on the credit card begins to look like a ball and chain that prevents a dream or a better situation.
It’s possible to live debt free but requires the paradigm shift mentioned earlier. None of these goals are easy to accomplish, but they’re worth it. If you will take the steps to rise above average you will have something many people lack … options.
The other good news is that help is available. You don’t need to brave the unknown alone. Resources abound. Books, radio, internet and social media can be great encouragement.
As a financial coach, I work one on one with individuals in tough spots; with perspective and objectivity I help de-fang the beasts haunting their lives. There is hope.
These tips and encouragement are from David Beckwith, a well respected and incredibly knowledgeable financial coach, with The Money House. I met David when working on a mutual client’s situation to reduce a significant amount of student loan and other debt. I wish I could take the time he can with his clients; however, our services are best used in the legal arena — but I agree wholeheartedly with David’s thoughts above. A change in habits can last a lifetime.