How to Manage your money
What Money Cannot Buy
Money cannot buy security, because security is a psychological state. To some, it means having enough food to eat, clothing on your back, a shelter over your head, or someone who loves you. To others, security requires millions of dollars in tax-free accounts around the world.
Money can’t buy love and happiness either. In one telephone survey, 275 people in the San Francisco Bay area were asked if they believed that they would be significantly happier and more loving if they had a million dollars. Seventy-six percent of the respondents replied, “Yes. Absolutely.” Then the research company contacted ten millionaires, and asked them, “Did making your first million dollars make you a happier or more loving person?” The response was unanimous: “No.”
The best things in life—the sun in the morning and the moon at night—are free. And money doesn’t guarantee happiness. But financial abundance does offer a number of practical benefits. Sleep, for one thing—very few affluent people stay up late worrying about having too much money. Money also buys privacy, space, and silence.
Three things help me
get through life successfully:
an understanding husband,
an extremely good analyst,
and millions and millions of dollars.
—Mary Tyler Moore
Wealthy people do have problems, but they have less to do with survival. There may be some forlorn rich people and some delighted poor people, but on the whole, managing your money certainly gives you a leg up.
Simple Principles for Sufficiency
In Walden Henry David Thoreau described how by living frugally, growing his own food, building a hut with scrap lumber he’d found on some land near Walden Pond, he would only have to work for six weeks a year to earn enough to live a quiet, contemplative life. There is much to admire about his experiment (which lasted a season or two), but such a life is not for everyone. You may not want to follow Thoreau to Walden Pond, but here are some simple principles that you can follow:
Live Below Your Means
Many of us believe our main money problem is how to make more of it, but how we spend it is in fact more important. Because as our income increases, so do desires and expenses. It’s all a matter of scale. Many wealthy people end up in debt.
No matter how much money you make,
if you spend more than you earn
you shall be eternally poor.
Money is so easy to spend that an alarming number of us have put away little or nothing toward our later years. Applying fiscal discipline is a central part of managing your money. Most affluent people become and stay that way due not to extraordinary incomes, but to an unassuming lifestyle and the self-discipline to spend less than they earn, while investing the rest.
Pay Yourself First
Make it an ironclad rule to pay yourself by putting away ten cents of every dollar you ever earn until you are seventy years old, and teach your children to do the same. Before you pay the bills, before you pay the IRS, before you give to charity, put that money away as if it never existed and learn to live on the rest, no matter what. Put that ten percent aside in a safe nest-egg account or very conservative investment and let compound interest work for you all day and all night over the years. Never mind the fancy investment strategies, schemes, and experts. If you do have money to experiment with, that’s icing on the cake. In a true emergency, give yourself a few days to decide if you really need to draw out any of the principal to spend. Never draw out more than half of the principal. At the age of sixty-five or seventy, it is yours to do with as you wish.
Earmark Your Money
Whether your income is derived from a salary with taxes withheld, or whether you are self-employed, one of the most practical steps you can take in managing your money is to create a budget, clearly earmarking your money for distinct categories. Once you’ve created the budget, then stick with it. While this is not a radical idea, few of us put it into practice, given the level of credit card debt in this country. Unless you already have tax withholding at your work, divide any income as follows: For every $1,000 you make—
Immediately put away $100 (10%) in your savings.
If you are self-employed, put aside whatever percentage of your gross income that goes to state and federal taxes.
If you are committed to donating a share of your income to charities, earmark that fund next; don’t wait until the end of the year to see if there’s anything left. If you decide to donate five percent of your gross income to charities, that would be $50 out of each thousand.
Put $50 into a rainy-day fund.
Put $50 into an account for Christmas, Hanukkah, or other holidays.
Put $50 into a vacation account.
That’s a total of $450, leaving $550 (out of every $1,000 you make) for household expenses: the mortgage or rent, food, utilities, medical care, etc. The exact percentages may vary from household to household, depending upon the makeup and age range of its members, but the principle is the same —earmark and budget your money. Exerting this financial discipline will eliminate a great deal of pre-tax as well as post-retirement stress. You gain self-reliance and self-respect by taking responsibility for managing your money in this way.
The Two Essentials of Business Success
In order to succeed in nearly any business enterprise, whether you work for a large corporation or are self-employed, you must operate on these two principles:
First, be good at what you do. That means ongoing study, practice, innovation, and refinement. Treat your work as a form of skill training. Never believe that you are as good as you can get. Each day, each year, strive to master your work. No matter what you do, if you become one of the best in your field, you will do well (if you also pay attention to the following principle).
Second, be good at promoting what you do. There is no telling how many exceptional, gifted people exist in every field who are not successful because they were unwilling to promote themselves. I know extraordinary musicians whose songs will never be heard by more than a few people, while the top forty charts include many forgettable but well-promoted clichés. It’s a sad irony that those most dedicated to their art or craft, who most love what they do, understandably want to spend their time getting better at what they do but fail to grasp the need to promote themselves.
Ask yourself: Am I good at what I do? Do I provide a valuable service? If the answer is no, then stay out of sight and work at improving what you do. But if your answer is yes, then blow your horn! You can’t help anyone if they don’t know you exist. Whether or not you have any innate interest in promotion and marketing—whether or not you enjoy it—it has to become at least half of your job, your energy, and your attention at the beginning stages of a new venture. Promoting your business helps you to help others and provide a valuable service in the world as only you can do it.
The service you render others
is the rent you pay for your room on earth.
The Soul of Money
It is easy to get lost in the practical details of managing money and forget the higher purpose of this gateway: to provide a foundation for spiritual practice and to free your attention from the task of survival. Lynne Twist, co-founder of The Hunger Project, put it this way to Michael Toms on New Dimensions Radio:
Money is an inanimate object [but] we can assign to it a spiritual meaning and voice and power if we choose to, and give it some soul. Money doesn’t have any soul, but we do, and we’re the people through whom money flows and with which money speaks . . . And when our spirit is unleashed, what’s unleashed is the prosperity of the soul, of the heart. . . and in that truth, the whole world belongs to you.
When I became committed to teaching whatever I learned, more information poured in. In the same way, as you contact the joy of sharing your abundant spirit, more spiritual wealth pours down from the heavens, bathing you in its light. Managing your money is provides another arena of practicing everyday enlightenment.
From that point of awareness, we turn now to the source of all beliefs—to the mind. It serves as a prison for some, but for you can also hold the key to freedom.
Authors Details: Dan Millman Website