Friday, March 29, 2013

The One $ Rule

This is The Only Financial Advice You'll Ever Need.
If you can follow one simple rule your financial life will be forever simplified. Ready? Here it is:
Don't buy something if you don't have the money.
If you prefer more positive statements:
Only buy if you have the cash.

Everything else is commentary, including the dozens of techniques which tell you how to manage your money so that you have the cash.
I don't use the common phrase "only spend what you make" because too many people get a nice job making, oh, say, $40 thousand a year and think that means they can go spend it all right now. Buy a new car. Buy a bigger house. That's incorrect logic. You don't have the money if it isn't in your bank and available to buy what you want. If you have debts, your money is earmarked to pay someone else; it isn't yours to spend. Don't spend the money you need for this month's rent or car payment or groceries or utilities or child care or gasoline - you get the idea. And if you don't get the idea, then I'm sure the One $ Rule just doesn't make sense to you.
I know there are exceptions, dire situations of unemployment and people making sacrifices for their family, perhaps with credit the only thing sustaining them in these tough economic times. Obviously, we do what we must for those we love, to keep them safe and secure. For those who have some extra money, it really is a good principle to be generous and help those who need help.
I firmly believe in tithing for my church, because the church does good things with money. I also look carefully at my church budget every year to ensure they are being wise in how they spend the hard-earned dollars of the church members.
Oh, and the money and the things? You can't take it with you. Just after your last breath it all belongs to someone else. We are only caretakers of the things of this life. The Bible calls us stewards, and emphasizes that all your wealth, your money, your possessions, your time, all belong to God. That's a good attitude, whether you believe in God or not, because it takes the focus off what you have and focuses on what good you can do with it. (I suppose, technically, if you are an evil mad scientist you could focus on all the bad you could do with what you have.)
We all like nice things. Most of us want nice things. Delay your gratification until you can pay for the things you want and you'll always be better off.
If I could leave my children with only one piece of financial advice, this would be it. Yes, I could have said spend less than you make and that's a good principle, but when you are reaching in your pocket to pull the cash out to pay for something, you really think a lot harder about your purchases. You will spend less than you make.
I wish you Good Fortune and may you be a blessing to all those who know you.

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