“Sounds confusing!”
This line is funny because, of course, the basics of money management aren’t confusing at all. They can be summarized in a few simple steps:
- Earn money.
- Use it to pay for the basics first, like housing and food, and then budget it out to other categories.
- Prepare for emergencies (and there are always emergencies) by setting aside some of the money you earn.
- Prepare for larger purchases, like cars and houses, by saving some of the money you earn.
- Prepare for your future, like college and retirement, by saving some more of the money you earn.
- And, of course, as the video explains so succinctly: “Don’t buy things you can’t afford.”
If money management is so simple, why do so many people struggle with it?
Partly because humans want more. If they live in a cottage, they want more. If they live in a mansion, they want more. If they see television commercials, they want more. If their friends describe their car/vacation/home/life, they want more. When a new credit card comes in the mail, a new generation of computers comes out, a new feature is added to your dream car . . . You get the idea. We want what we want when we want it. Mad Magazine put it this way: “The only reason a great many American families don’t own an elephant is that they have never been offered an elephant for a dollar down and easy weekly payments.”
You don’t need an elephant, but you might just want one. If you’re finances are out of control, you probably have a few too many elephants in your house. When you took yesterday’s quiz, did you spot some trouble areas in your finances? Are you scratching to meet your obligations from month to month? Are you vulnerable to the first major financial setback that occurs? Are you prepared for the future? When you go on vacation, is it with the sick awareness of your increased credit card debt? The stress and financial chaos that comes from mismanaging your money can dominate your life and halt your progress toward self actualization.
There are thousands of books and websites teaching you the practicalities of managing your money. CNN has a series of money management lessons on its website that will tell you everything you need to know, starting with setting your priorities and going on to making a budget, banking and saving, investing, and so on. The US government also offers many informational sites helping consumers to learn the basics of financial management, as well as their rights as credit card users, etc.
But this information won’t help you if you don’t align your behavior and life with your values. This is the key to finding self actualization in every category.
Roger K. Allen, Ph.D. is an expert in personal transformation, leadership, and teams. His tools and methods have helped hundreds of businesses and tens of thousands of people transform the ways they work and live. To learn more, visit www.rogerkallen.com.
