Money Management and De-Stressing

I don't post on this blog as often as I'd like to. I get caught up with parenting, work, household chores, and sometimes with feeling like I haven't got anything new to say. I am going to keep the blog up and continue to post as I'm able though. I'm good at budgeting; and the couple of times I had to take on debt, I was good at getting quickly back out of debt.

So I'll keep writing because my stress level is much lower than other's because of the way I manage my finances. If I can help just one other person to get control of their financial situation and decrease their stress, it will be worth the effort.

Where We Do Need To Spend Money

I realize that I'm a bit behind the times, but I recently watched An Inconvenient Truth and was pleasantly surprised by the movie. Although the information about global warming was depressing; Al Gore did a good job of leaving you with hope that if we make some changes we can reverse the effects of global warming. I live in Colorado and every time we go into the mountains we see the effects of global warming first hand. The pine trees are all turning brown and dying because our winters no longer get cold enough to kill off the larvae. This is a problem that all of North America is experiencing according to a recent article by the BBC.

As much as I preach money management, there are things that we must spend money on. I firmly believe that spending money on alternative energy, more fuel-efficient cars, recycling, and other items that will help stop and perhaps reverse global warming is very necessary. We don't all have the money to make the changes immediately, but if we start making small changes now, eventually they'll all add up. This is just another reason why it's important to manage our money; so that we have money to spend on the important things.

Responsible Spending Habits Slow Economic Recovery

Sarah Lockyer recently penned an article in Nations Restaurant News about decreased spending by consumers due to fears of unemployment. The article is based on research by Technomic Inc. which indicates that an economic turnaround will take longer because consumer spending is slower. From the article:

"The current broad unemployment rate, which includes not only those who have lost their jobs, but also workers who are underemployed or discouraged, has reached 15.8 percent and is rising, according to a July Technomic report from the firm’s consulting economist, Arjun Chakravarti. The prolonged climb of unemployment in the United States has not only affected the spending habits of those without jobs, but also has changed the spending habits of those who remain employed “by spreading psychological uncertainty across all workers in the economy,” Chakravarti said".

Although it would be nice if the economy would recover quicker, it will come back stronger and more stable if everyone increases their savings rate. I know that economists would be happy with a quick turnaround, but I for one am pleased to hear that people are developing more responsible spending habits.

Money Mistakes from Women's Health Magazine

The June issue of Women's Health magazine offered a good article about 4 mistakes you shouldn't make with your money. Here is author Katie Arnold's list of mistakes to avoid:
1. Being financially apathetic. I've posted about this one before here. You have to know how much money you have and where it's going in order to "manage" it.
2. Waiting to save. We've all seen the charts. If you start saving when you first start working, you'll build up a much bigger nest egg than if you wait 10 years.
3. Paying off debts in the wrong order. Get rid of the credit cards debt first, then you can worry about the bigger items that I like to term "good debt."
4. Failing to negotiate. This is one that isn't a strength of mine. It's a hassle and I'm a busy woman; but it's good to keep in mind that I might be leaving money on the table.

I looked on the website but couldn't find this article there, so if you have the opportunity take a look at the magazine. It's a good article with some good, common-sense recommendations.

How Hipsters Manage Their Money

Do you want to get a handle on your money, but you think an Excel spreadsheet is far too antiquated? Check out the NPR All Tech Considered blog where you can find a number of websites to help you manage your money, many that have a social networking aspect to them.

And if you need help with the psychology of your spending and not just tracking your spending, here's a helpful website: Your Money or Your Life

Expectations

Contentment with your financial situation (as well as life in general) can come from managing your expectations. Instead of thinking of everything you can’t afford or how little you have; try thinking of how much you really do have. Imagine what life was like for people a few centuries ago, or look at some of the poorer countries today. The average American has more than royalty did a few centuries ago.

Even if you can’t afford a fancy TV or video game set, chances are you’ve got a computer and a TV. You have indoor plumbing and heat. Focusing on what we do have and what our money does buy for us helps us to understand that we don’t need to strain our budget to the breaking point to find happiness.

Priorities, Choices, and Willpower

Money management can be boiled down to three words: priorities, choices, and willpower. How you choose to spend your money determines how well you manage it. Your choices are driven by your priorities, and willpower is required to stick with those choices sometimes.

My husband and I were trying to figure out how we could contribute more money to charity when we weren't getting raises this year and none of our expenses were decreasing. We decided that giving more money was a priority. So we chose to give up some of our weekly allowance or fun money to put more in the charity pot. I'm currently trying to save my allowance for eye surgery since I don't do well with glasses or contacts, so this means that it's going to take longer to save up. I am also a book junkie and frequently want to buy new books.

I'm confident that this new choice is the right one, so I'm willing to extend my eye surgery, and refrain from purchasing every book that I want to read. (I guess I'll be spending more time than usual at my local library!) By setting our priorities, making different choices and exerting willpower, we're able to keep our budget balanced and give more money to charity.

These are the same principles that can nearly always be applied to any budget in order to succesfully manage your money.

The Secrets of Successful Money Mangement

There are really only two things that you need to know to successfully manage your money:

1. Know how much money you earn and how many bills you have to pay (a.k.a. "budgeting"). Most of us have heard the old adage that you shouldn’t live beyond your means, spending more money that you earn. Easy to say, not always so easy to do. Knowledge and planning are what allow you to heed this oft-given advice.

2. Delayed gratification. If your water heater goes out, it's probably a good idea to accept some debt so you can get it repaired and not go to work with hypothermia or unkempt. But if your old television set works perfectly fine but you really, really want that large-screen LCD crystal flat-panel set, you should probably wait until you’ve saved up enough money to buy it rather than purchase it on credit.

If you can make a realistic budget and stick to it by controlling your spending and saving up for new purchases, vacations, etc. in advance, you'll be well on your way to successfully managing your money.

My Inaugural Post

This being my first post, I thought it appropriate to explain a bit about my background and what qualifies me to give money management advice. -- When I was a little girl my parents gave me a weekly allowance, and I would immediately pull out my ledger book. (This was back in the days before the fancy ATM piggy banks!) I had 3 categories that I placed my allowance into: 1/2 of the money went into long-term savings (for that oh-so-distant idea of college), 1/4 of the money was placed in short-term savings (for the more expensive toys), and the remaining 1/4 was mine to spend at the toy store or 7-11 whenever I wanted. I didn't manage to put myself all the way through college with 1/2 of the allowance I received as a child, but I always had plenty of money for anything that I wanted (unlike my brother!)

My method is more sophisticated these days, but I still use the same basic principles and I still always have enough money for everything that I need. I have also managed to remain free of credit card debt for the majority of my adult life, and start saving for retirement and college funds for my kids. I still place my money in 3 categories to be able to better manage how I spend it. The 1st category is investments like 401k, Roth IRA, savings account, etc. The 2nd category is allocated money which is how I save for Christmas, home repairs, license plates and the like. The 3rd category is my regular checking account that contains my spending money, although I spend it on vastly different things than I used to!

I have plenty to write about in this blog, but I'm well aware that I can't think of everything so I'd love to get your questions. I am not a financial planner or advisor, and I won’t pretend that I can give you advice on what stocks or bonds to invest in to get rich. If you send me a question that I can't answer, I'll be honest, but if you have questions about things like how to budget or how to make sure you have enough money leftover before every paycheck, I can probably give you an answer that could help you out. So email me those questions at themoneymaiden@yahoo.com.