MONEY matters

Growing up, my Mom made sure to teach the lessons of delayed gratification. No dessert until you finish dinner. Who doesn’t remember hearing that growing up? Lucky for me, my dog Bochie was more than happy to act as my willing accomplice so I could get to the ice cream sooner rather than later.

As adults managing our personal finances, the lessons of delayed gratification are more important than ever. Spending money is all about choices. Many of us have a hard time resisting the instant pleasure a purchase can bring us. It’s the impulsive side of us that wants everything now. Who wants to delay consumption when you can buy it now and pay for it later?

I just received a link to an inspiring article by Liz Pulliam Weston of MSN Money that describes 3 people, ages, 25, 44 and 60, all college educated and following their dreams, who have taken frugality to a whole new level. These three are masters of budgeting, saving money and investing for their futures all while keeping their eyes on the ball and enjoying the life they choose to live - in all cases one of simplicity and freedom. They are all happy with their choices and excited about their futures.

Although from all different walks of life, the one thing these three had in common was cheap housing, cheap transportation and cheap thrills.

As a fee-only financial planner, lately some new clients have asked if I could use a different word besides budget when discussing their cash flow plan. Words do matter and for many reasons, the word budget congers up all sorts of negative thoughts and feelings. So for that reason and many others, lose the word budget and replace it with two words - spending plan.

Before you decide on a spending plan, keep one major goal in mind - your savings plan. Paying yourself first, meaning, putting your savings and investments to work by automatically funding these accounts first before paying your bills is the key to long-term financial success.

As often happens, I learn great lessons about money listening to my clients share their money stories with me. Here’s a story I had to share.

There’s a new money management website that has a free program called Pocketsmith. On it's web-based calendar, you schedule in your bills, salary, rent, etc. PocketSmith takes the information and generates forecasts which plans your upcoming annual budget. If budgeting and cash flow have been a challenge or you wish there was a calendar program that could help make sure you know when your bills need to be paid, check out Pocketsmith. They also have a decent blog.

Along with Money Magazine, PC Magazine Editor's and Kiplinger's - I too rate Mint.com as my top choice for a personal financial management tool. Mint's blog is excellent and worth following.  The Mint on-line community offers support, Q&A videos and more. Mint.com is a good looking website, easy to follow and simple to use - and it's free. Now there's no reason not to get your personal finances in order.

When it comes to managing your personal finances, spending, particularly overspending is one of the most challenging aspects of living within your means. It’s not that you don’t have good intentions, because most people really do want to stay on a spending plan, it’s more complex than that. Spending money causes an emotional rush in our bodies. It’s a natural high. It’s short term pleasure for what could turn out to be long term debt. It’s the nexus between money and your emotional intelligence (EQ) that often creates the problem of overspending. 

Create a speed bump on the road to spending

The IRS has produced a really good virtual small business tax workshop for small business owners. I’m somewhat surprised, as the IRS productions are usually pretty bland, to put it mildly. They seem to really be sharpening their game and this latest attempt is easy to follow and very informative.

Questions about how to file small business taxes; working from home; retirement plans, you name it- it’s all here in 9 different modules. If you’ve been hoping to feel more empowered around the business side of your small business-now’s your chance.

Fleetwood Mac, in their 1976 song “Don’t  Stop”, urged listeners not to stop “thinking about tomorrow” because it would soon be here. How does this relate to you? If you’re like most people, you can probably spend money without thinking about it, but you can’t save money without thinking about it. The truth is; saving isn’t a natural event. It must be planned.

Planning and budgeting require control. Financial planning involves looking into the future, facing financial reality and the sacrifices that it brings, and taking action. Financial restraint isn’t as much fun as spending with reckless abandon, but it’s a lot more fun than winding up broke.

Now that the dust has settled from the Great Recession and people are finding the courage to look at their investment statements once again, a new reality is setting in for many people as well as many new questions.  How do I retire with enough financial security so I don’t have to worry about money and how long will it take to rebuild my nest egg?

It’s hard to know how long it will take for the stock market to fully recover and the same holds true for the real estate market. Even jobs that once felt very secure no longer feel that way in this post crash economy. With so much out of your control, what can you control? The answer is and always will be your spending.