This entry is in response to the Dumb Little Man Personal Finance Tip Challenge. I can’t turn down the chance for free money, as that would be poor financial planning.
Recent events (not including the hundred-dollar DLM proposal) got me thinking about how I ended up where I am financially. Pondering this, I came to a stunning realization; I had very little to do with any of it, at least at the outset.
Everything that has led to me GETTING money has been mostly luck, talent, or some combination thereof. My college education? Loving parents. My job? Nepotism started me down that path. This post? If it hadn’t come across my feedreader, I wouldn’t have a prayer for the hundred dollars, would I?
But personal finance isn’t about getting money. It’s about keeping money. And that’s where tips and tricks come into play, isn’t it?
There’s an essay in my wife’s head about how she manages our finances, I’m sure. From where I’m sitting, it seems to come down to a few key points.
- Know what’s coming in. I’m not sure that can be stressed enough. If you don’t know how much you’re bringing in — and I mean a actual, solid number here — there’s no way you can possibly work out your finances. Without it, expenses aren’t real, but overdue notices are.
- Direct deposit. Have your money from your paycheck put directly into your account AND at least one other account that you create and totally ignore. Yes, 401K’s are better and such, but if you’ve got a future plan that involves a large purchase — or maybe even more importantly, if you DON’T have future plans and don’t have a cushion to fall on if you lose your job — this tip is a must. With direct deposit, you save money, and you don’t miss it because you never saw it to begin with.
- Say no. I’m not certain how much saying no has saved us over the years, but I know it’s recently saved us figures with five digits. This tip isn’t even about denying yourself the things you want… people (especially salesmen) who hear no WANT you to say yes, and offers will be adjusted accordingly. And if they don’t adjust, you’ve saved yourself even MORE money by exercising great personal control.
- Pay with a credit card. Not a move for the weak, but if you can manage it, using a credit card for everyday purchases builds a massive credit rating. Thanks to this tip (along with speactacular parents who worked to put any debts in my name before their own), I was able to purchase a house at age 22.
- Last but not least: don’t panic. Money is a powerful force. It’s value distilled into physical form. No other abstract has a concrete equivalent like that. Mind-blowing, but not worth losing your lunch; problems WILL arise, and they CAN be solved. Sometimes the solutions aren’t the most popular options, but there is always a route to the other side. Worrying about it only exaggerates the issue; the only thing that offers a solution is… well, solving the problem. Are the problems more important than picking out today’s socks? Of course. But importance MUST NOT equate to despair or panic; importance means that you have to stride into every decision with confidence.
Remember, these precepts apply regardless of how much money you have. Heck, the last one applies whether we’re talking about money or not (thank you, Douglas Adams). Luck will get you into situations, but only you can make the most of them.
