Don’t you want to live your life to the fullest? I’m sure you do. Everybody does. But not everybody thinks that they could. However, the mind is the one that’s limiting you from living the life you’ve always wanted.
I know it may sound too good to be true, just like all the gurus out there who claim you could become whatever you want to be. I don’t agree to a certain extent. I believe you need to be realistic to yourself. If you’ve never trained yourself in splitting legs, it’s probably not worth it to strive to be a Taekwondo master. You still can, but it’d take much, much longer time – you’d be 30 years old and start running out of breath in no time!
There’s always exception of course, but do know that you’re at a disadvantage. So you should do something you’re good at. Today, I’ll talk about something everybody can be good at, even if you’re first starting out. It’s called: Money.
Not Enough Money!
Do you worry about not having enough money? Not the money to go for vacation in Hawaii or get the latest Porsche sports car. I’m talking about the money you need for retirement, for your kids, for yourself to live comfortably.
I bet the answer is a big YES! for most people. It’s difficult to not worry about money when the economic recession is still killing every single company, even the big ones. What can you do about it?
Read, read, read
Read personal finance blogs. Read personal finance magazines. Don’t do anything else, just read them. Don’t even bother saving money or cutting your expenses. But you do have to take the reading seriously. You don’t have to tell anyone what you’re reading either.
The main objective is to create awareness in yourself to treat money in the proper way. There’s no point saving money for the sake of saving money. You need to understand why and what could potentially stop you from doing that. To do that, you need to have a good knowledge about money. And personal finance blogs and magazines are the best places for you to go to for a few reasons:
1) You could do it privately. Who wants to tell the whole world that you’re struggling with money?
2) You could do it at your own pace. You’re not accountable because you did not tell anyone about your financial concern, so you can have time to really soak up the right money mindset.
3) They contain great content and values (at least for the ones I recommend below). I think that they probably deliver more values than those financial planning experts out there.
Here are the few personal finance blogs and magazines I find very useful:
Blogs
Magazines
These are the ones I’ve personally used or experienced, so I can attest to their values. Also, in case you don’t know, all of them are FREE. And if you’re starting out, I don’t think you need to get the magazines, although they’re really cheap to begin with. Browse through the first 2 blogs and see which one fits your style, since they’re rather different in their targeted niche market.
Having said that, it might be useful to consult a mentor with good knowledge in money but it might be better to learn more about it yourself first.
As you progress through the learning curve of personal finance, you might one day feel like you’re ready to do it. Great! Because the how-tos could be found easily on the blogs and magazines I’ve listed above, and since you’d already read them it’d be a piece of cake for you!
Or, is it?
Probably not. You’d most likely give up halfway (as most people do unless you’re very determined and disciplined) on managing your own money because it’s so tedious.
But don’t fret it! If you do give up, go back to reading the blogs and magazines to get some motivation back, or possibly some new ideas too. Just don’t go back to where you started with, which is doing nothing.
There’s a great quote that goes like this:
“He who takes actions fails many times, but he’s never committed the biggest failure of all: doing nothing.”
And I know reading is not exactly taking real actions, but at least it’s doing something that would eventually get you back on track to managing your money.
For sure, we need to eventually start taking actions other than just reading. Our mind is not programmed for change, so it’s difficult to break our old habits. Well, here are a few things that could help you to move from reading to taking real actions:
1) Keep it short
Nobody wants to spend time earning money and THEN managing the money if they could be taking a wonderful vacation in Hawaii. Keep your personal finance tasks as short as possible, and I suggest 1 hour per week the most.
If you can discipline yourself to spend hours upfront to automate your finance then that’s great, and it’s totally worth it. But if you can’t, then just spend 1 hour a week, beginning from now, and clean up your financial messes.
And this is important: 1 hour spent on this could just be the highest hourly wage you can get. If you pay off the credit card debt of $5000 with 15% APR, you just got yourself an hourly wage of about $60!
2) Keep it simple
Yeah, you could create your own fancy spreadsheet to keep track of all your weekly expenses, but wouldn’t you be rather watching your favorite TV show? Most people do. That’s why it’s important to limit yourself to manage your money when you really need to.
A great example:
“You would like your paycheck to be split into different parts, one for vacation, another for wedding, and yet another for your future house down payment.”
You can automate this by transferring a certain % of your paycheck to go into 3 different savings account named “Vacation”, “Wedding”, and “Down Payment” by using ING Direct or HSBC Direct.
Or, you can put all your paycheck into one single account, which would eventually earn more interest as you save more money. But then you’d have to keep track of 3 different portions in a big lump sum of money. It’s fine if you keep saving it, but once you start doing transfer and withdrawals, you’d better be very disciplined to know where your money goes!
I would surely go for automation, and I personally use HSBC Direct for it because its interest rate is among the highest for savings account. I talked more specifically about it in this post on Personal Finance Automation.
3) Keep it interesting
Interesting? Totally. If you’re only saving your money in traditional savings account and CDs, you wouldn’t want to bother about it at all, would you?
On the other hand, if you have 10 different online savings accounts, 3 online investment accounts (one for 401k, one for index funds, one for stock picking), 3 credit cards (for different rewards and credit score building), you’d go crazy over it if you don’t use software like Mint.com.
The system is complex, but it’s interesting and sexy especially when you show your girlfriend your Mint.com summary – that’s 16 different accounts for you to keep track of yet you don’t really spend more than an hour a month on that! Now that’s more like it.
Real Actions Speak Much, Much Louder than Words
What now? Get your butt off the couch, and stop getting broke and start getting rich! That’s all I have to say. Please share your thoughts :-)
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Hi Ken,
BusinessWeek and Inc.com are two sites I also use to keep up with things.
Ivan
I’ve rarely checked their personal finance sections, more on biz news and entrepreneurship. I’ll be sure to check them out. Thanks for sharing!
Hey Ken
We can also consider having a total makeover of funds management, an example is how I split my incomes into two large groups called 60/40, where 40% of my income goes to parents, investment funds, savings and tithing. The remainder 60% goes to living expenses. I cut down unnecessary purchases and use what I need.
Thanks for sharing Nigel. It’s a great idea to split your income into 2 large groups, and the percentage might be different for different people but the principle is invaluable.
When executing the fund management, I’d also go further to split the 2 large groups into even smaller groups, such as 25% for rent/mortgage, 10% for food, 10% for free spending etc.
That’s true, I do break them into smaller groups as well for micromanagement. I think one of the most important thing we can do is (1) tracking our expenditures and (2) tracking our income streams to macromanage, and breaking down into the knitty gritty details later.
Awesome man you rock!