It pays to be organized about money

(photo: www.freepixels.com)

“He is tripping over dollars while picking up nickels.” That phrase caught my ear several years ago. We’ve all heard stories about people who will spend a lot of time and energy to save just a few cents. Have they lost sight of the big picture?  Finance is an all-encompassing subject. We each have a financial past, present, and future, and it does range from nickels to dollars.

Money is a touchy subject. It is a sore spot in many families and it is often a taboo subject among friends and acquaintances. I recently heard a respected pastor say “you would be able to tell an awful lot about a person by spending a little time in their checkbook.” What does my checkbook say about me? Maybe it is easier to live in denial than to look at this issue, or even harder, to share it with anyone else. Money is a reflection of our life choices.

Am I a miser or simply frugal? I’d like to argue that whether someone makes $10,000 per year or $100,000 per year, frugality is simply about making conscious and informed financial choices that match a person’s life priorities. Do I work longer hours or spend more time at home? Do I buy a new car or put that money away for retirement? Do we take a family vacation or put the money toward our children’s education? These are tough decisions. There is no single right answer. Here is my two cents worth (pun intended) of helpful ideas to practice simple frugality.

Budget. If you don’t care much for the “b” word, think of it as a monetary log instead of a budget. I can’t make good financial planning decisions until I at least see where I’ve been. Try keeping a spending log for thirty consecutive days. Each day, write down every purchase you have made. Start at any time during any month—otherwise procrastinators, like me, will stall until they remember to begin this process on the first of the month. Any thirty consecutive days will do. Your log is actually your existing budget for that month.

This money tracking process works. When I tried it, I discovered the mere process of keeping a monetary log immediately affected my purchasing decisions. Did I buy the mocha if I knew I would have to write it down later? Not always…Finally, at the end of thirty days, this log helped show where the nickels and the dollars were going. What changes did I want to make to my budget?

Plan and Prioritize. Spend a little time thinking about and writing down your financial goals. It never ceases to amaze me that people, including me, often will spend more time and effort to research a digital camera or vacuum cleaner purchase than they will to plan their financial future. Take thirty minutes to plan and prioritize your financial goals such as retirement, education, travel, home buying, or debt reduction. Now ask yourself the tough question: Do your spending and saving habits fit your priorities? Do I put my money where my mouth is? Ouch.

Resources. Here are some resources that may help personal finances and personal priorities fit together. “Nine Steps to Financial Freedom: Practical and Spiritual Steps So You Can Stop Worrying” by Suze Orman (New York: Three Rivers Press, 2000) does a great job covering the basics. It is a good starting point. “Your Money or Your Life” by Joe Dominguez and Vicki Robin (USA: Penguin, 1999) has long been a favorite of people who pursue voluntary simplicity. Whether or not you choose to follow the steps they offer, simply reading the book may transform your views and relationship toward money. “The Complete Tightwad Gazette: Promoting Thrift As a Viable Alternative Lifestyle” by Amy Dacyczyn a.k.a. The Frugal Zealot (New York: Random house, 1998) is loaded with practical tips to save money in many different spots where it could otherwise trickle quietly away.

Finally, there was my ninety-nine-year-old grandfather who is fond of sharing two pieces of financial advice. Since he survived the Depression and beat the longevity odds, I figure it is worth sharing. He said that when he was a little boy his mother taught him that, “Money is round. One day you have it. One day he has it. The next day, someone else has it. But, a good reputation—now that cannot be taken away from you.”  My grandfather also said, “Hope for the best but prepare for the worst.” In good times and in uncertain times, that is simply good advice.