I Love Finance Books
I love books and I have been fascinated by personal finance since I picked up a copy of David Bach’s, “Smart Women Finish Rich,” in the airport when I was in my mid-twenties. This book opened up a whole new world to me and started my obsession with personal finance books.
It encouraged me to start saving consistently for my retirement even though I was young, and explained the value of having a balanced approach to money. David Bach also explained how to automate all of it so I wouldn’t have to rely on my self-control to keep me going…which has been the single smartest money move I’ve ever made!
I have read Dave Ramsey, David Bach and Suze Orman. I’ve read investment books, retirement books and general personal finance books. In fact one of my favorite sections in the book store is the personal finance section. I am always trying to find a new financial book that will give me some small insight into why I spend the way I do or that will give me a new way to look at my money.
My nephew once asked me, “why do always buy finance books, don’t they pretty much all say the same thing? Save more, spend less, don’t go into debt?” I looked at him, paused and then muttered something like, “Um, well, yeah that’s sorta what they all say.” Then he said, “so why do you still read them?” I sat there for a minute and said, “I guess I’m hoping it sinks in at some point!” We both laughed, but it made me think.
Here is what I realized. My fascination with personal finance is partly because I need a lot of reinforcement! I like learning new things and money is an interesting topic to me, not necessarily because it is overly important to me, but rather because it something tangible that I can track and it influences my day to day life.
I make progress on my financial journey for a while and then I fall behind where I want to be. I do a great job of retirement saving and a horrible job of managing my credit card debt. I get gazelle intense like Dave Ramsey suggests, and then just when I think I’m making progress, I make a silly money decision.
However, my decision to downsize helped move me in the right direction. More importantly it gave me a renewed interest in my finances. So for all of you out there like me, who want to get your financial life in order, I recommend starting with these 5 steps.
1. Track your money
Notice I said track and not budget. I don’t truly budget since I am convinced budgets are like diets and don’t really work. It is hard work trying to figure out where every dollar goes and it works against human nature (Thank you David Bach for that explanation of why I always failed…and sorry Dave Ramsey!). However, just because I don’t budget doesn’t mean I don’t track my money.
I keep a spreadsheet of my monthly recurring expenses, to include my tithing and retirement savings. I add up all of the required bills so I know how much “extra” I have to spend in any given month on food, gas, and fun.
I don’t track every penny as I spend it, but I do know where my money is going every month, which in my mind is the point of a budget. SO decide if you want to budget every penny or track your spending in general. Either way find what works for you and stick with it. This task alone will help you keep your spending in check and will give you wiggle room to accomplish your financial goals.
2. Keep the “why” in mind
By focusing on “why” you want to achieve a certain financial goal you dramatically simplify your financial life. You also create a sense of excitement about your finances. I found that when I am truly focused on the “why” of a particular money goal I am able to follow through much more successfully. Money becomes a tool to reach my goal rather than a barrier to freedom.
For instance, I consistently save for my retirement because I want to have flexibility when I am no longer working, and I want to save as much as possible towards that future. Knowing why I want to save that money makes the monthly transfer to my retirement plan seem less like a chore and more like a success story. In fact, every time I get to increase the amount I am saving I get excited.
Spend time deciding what you want to achieve and why, it will make tracking your money a lot more fun.
3. Automate it!
As I mentioned earlier, the single best money move I ever made was to automate my money decisions. David Bach recommends automating as many financial transactions as possible. This one tip has allowed me to save quite a bit in my retirement account, consistently tithe and avoid late fees and charges on my accounts.
I encourage you to automate as many things as possible to include all of your bill paying, your retirement savings, your giving, your emergency fund and your “fun fund” savings. Automating your money helps you track it more easily, it allows you to save and invest without having to rely on will power or memory and it makes it easier to stay on top of all of your monthly bills. This one step will dramatically simplify your financial life.
4. Adopt a frugal mindset (or force it!)
A lot of financial books will encourage you to adopt a frugal mindset to help limit spending. For me, this never worked. I would start focusing on what I couldn’t have or what I didn’t want to spend instead of on what I could. It turns out that for me a frugal mindset is a lot like a budget…it doesn’t work.
I always found this incredibly frustrating because I knew being frugal, or I should say spending within my means, was essential to achieving my financial goals. So rather than try to commit to frugality, I set up my money in a way that I only have easy access to the amount of cash I want to spend each month. By using automation, I pay my bills, move money to my retirement accounts and my savings account before I start “spending.” That way I can spend the money I have left any way I want, which makes frugality a lot more fun!
5. Don’t beat yourself up
One of the most challenging aspects of changing your financial behavior is not beating yourself up for past mistakes or minor set-backs. When I first started my financial journey I was mad that I hadn’t made better choices earlier. But I realized beating myself up didn’t improve my financial position and instead just made me feel negative about my money.
I still struggle to make the right choices all of the time and there are days where I want to kick myself for choices I have made. But when I start feeling like that, I look at what I have achieved so far, I recommit to my goals and I start focusing on the “whys” of my financial journey.
I would love to hear how you stay on track financially. Share your success stories and good ideas with me!