Thursday, May 15, 2014

Managing Money

If I could leave any single lesson with my children it would be that life is not about them. God comes first.

If I could leave them with a second lesson it would be about MANAGING MONEY.

Yahoo Finance has five good rules on handling finances. Even though the article is aimed at recent graduates, the lessons apply to everyone. Here's the summary.

1. Money doesn't grow on trees. Most people never learn to manage money. That's a critical skill.
2. Live within your means. If you can't afford it, skip it.
3. Pay off student loans. Debt is bad.
4. Stay away from retirement cash. At least put as much into retirement as your employer will match. If they don't do a matching funds, put some in an IRA and leave it alone.
5. Be wise with credit cards. Debt is bad.

I think that's a bit complicated.

Financial security can be summed up much simpler, as I did previously in my post Finances and You : Spend Less than you Make. The problem is that you think "Oh, I make $20,000 a year" and so feel free to spend $20,000. That will simply lead to trouble.

I prefer the less ambiguous post I called The One $ Rule: Only buy if you have cash. Yeah - on hand. Not coming in next month or in the next year. If you're wondering how many paychecks it will take to buy that flat-screen TV, well, that's how many paychecks you need to wait to buy it!

If you only buy when you have cash, the rest takes care of itself.

Shakespeare even said it in Hamlet, Act 1, Scene 3 where Polonius is giving his son advice.
Neither a borrower nor a lender be,
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.

1 comment:

  1. But father dear, sometimes Shakespeare didn't particularly like Polonius. He says things like "brevity is the soul of wit" after talking for about three pages. ;) Not saying the advice is bad, just saying that Polonius is a bit of an odd duck there.