The Paper Chase

Here's a fun exercise for those of you playing along at home. Raise your hand if you've achieved financial freedom in your life and you never feel any stress or pressure related to money. (Hmmm. That's not a lot of hands.) Well, even if you weren't a Walton, a Gates, or a Winfrey and you didn't raise your hand high, never fear. You're certainly not alone. I meet a lot of people in my travels - people from all walks of life and tax brackets - and there's one thing they all seem to have in common: exactly nobody is exactly where they want to be financially.

It turns out that personal finance goals are some of the most popular goals going. If you ask around, you'll find that a lot of people want to be debt-free. Some may be saving up for a down payment on a new home. Others may be staring into the abyss of retirement without a net hoping to make up for lost time. There are a heck of a lot of people who think that being independently wealthy is the key to happiness. (I'm sure it would be miserable, but I'd be willing to take a crack at it.)

In an effort to get this New Fiscal Year started off right, I thought I'd share everything I've ever learned about managing money. (Don't worry, this won't take long.) Admittedly, I'm a bit more Jimmy Buffett than Warren Buffett, but I have found a few tips that may help you bring in the benjamins:

Pay yourself first. It's all too easy to spend until there's nothing left. Between home payments, auto payments, insurance, utilities, food, and clothing, life gets expensive. And those things just scratch the surface. After you've tackled the essentials, there's still a need for entertainment and things that make life enjoyable. (Like Netflix or a nice Pinot Noir.) You need to consider your financial goal to be the equivalent of a payee such as your mortgage lender or the phone company. In fact, you need to pick a target and pay yourself before you pay any of those other people. That way you can spend the remainder (which you were going to do anyway) of your paycheck with some comfort that you've done your part.

Put it on auto pilot. To really make this work, you may find it easiest to schedule payments directly to your financial goal fund. If you have a savings account, brokerage account, or a similar vehicle, schedule regular contributions and you may not even miss those funds after awhile. In today's fast-paced life, I'm a huge fan of anything that makes my life a little easier. That includes Quicken money management software, bill pay from Bank of America, and Amazon 1-click ordering. (Oh wait - that last one gets me in trouble.)

Think 24x7 for success. There's nothing more frustrating than being very disciplined about your saving and spending habits for a long period of time, only to blow it in an instant. (Stupid Civil War chess set from the Franklin Mint.) Being financially savvy is a full-time job. If you bring your lunch to work every day during the week in order to save a few bucks but then go on a mini-spending spree on the weekend, we'll just call that a wash. Victory requires diligence.

Ask where it's coming from. No, not that weird smell. (What is that, anyway?) Before you click that "purchase" button in the iTunes store, ask yourself "Where is this money coming from?" Is Kajagoogoo's Greatest Hit a budgeted expense or an impulse buy? If I'm carrying too much debt and this time I pay with cash, it's like I'm still using my credit card, right? Or is this money that's not going to fund my dream vacation to Kajagoogoo's hometown? (That would be Leighton Buzzard, Bedfordshire, England, of course.) It all has to come from somewhere, so are you making conscious or unconscious choices about your spending?

Learners are earners. If you're intimidated by financial management or you just need a few strategies to increase your returns, start by making an investment in yourself. There are a number of great personal finance books out there, as well as magazines and websites. You may not be able to save $20,000 this year, but you can probably swing $20 on a book that could change your financial life forever. Do your own homework, but I've enjoyed the books from David Bach and SmartMoney magazine. Just watch out for the hard sell and some of the "get rich quick" titles that are all too tempting.

Will 2008 be the year you become independently wealthy? Probably not. But, you can achieve your reasonable personal finance goals and build a foundation for the future. Whether we like to admit it or not, money is a big part of life. You can put yourself on the right track and stay there if you make conscious decisions and follow-through on your well-laid financial plans.

Now if you'll excuse me, I'm off to search for loose change in my couch cushions.

Related Links

Franklin Mint Civil War chess set
SmartMoney Magazine
Book recommendatons from Get Rich Slowly

Quote of the Week

"Money is a singular thing. It ranks with love as man’s greatest source of joy. And with death as his greatest source of anxiety. Over all history it has oppressed nearly all people in one of two ways: either it has been abundant and very unreliable, or reliable and very scarce."
- John Kenneth Galbraith

Coaching Quickie: The Paper Chase

Check back next week for results!

Last Week's Results

Coaching Quickie: Listamaphobe
Are you a glazomaniac?

(13%) Yes – I start every day with a to-do list.
(88%) Sort of – I make lists, but don’t always refer to them.
(00%) No – It’s all in my head. Just like the voices.

If you missed it, you can read last week's newsletter online here.