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[P223]Personal Finance Software Reviews

by Francis Kier, Fra

Many successful people have mentors to guide them in learning the skills that lead to achievement, and I'll do my best to offer you some critical personal finance perspectives. They say that life is a school where you learn the lesson after the test. The same thing applies to money, but you can't go back in time to fix catastrophic financial mistakes that you have made over time. As long as you are alive, you are a player on the field of the money-game, and you need to know the basic rules before you get tagged by the experienced players.

Rule #1: To earn money from money. The only way to escape becoming a wage slave for the rest of your life is to set aside savings. The profit on your savings can be used to increase your lifestyle spending, reduce the number of years until you retire, or allow you to actually have any retirement at all. How are you doing so far toward saving and getting it to earn money for you?

Every dollar that you spend eliminates its ability to earn money for you in the future. I am not recommending that you stop eating at restaurants and going to movies, I am recommending that you use some common sense, like looking at your four biggest expenses over the last few months and aggressively finding a way to reduce them.

The biggest obstacle for the first rule is personal debt of any kind (other than a mortgage for your home) or a lease of any kind. Every personal debt that you incur reduces your net worth which could have been working for you over your life time. Acquiring personal debt is exactly like putting a large hole in your wallet. In the money-game, a huge transfer of wealth occurs between the ‘Haves' and the ‘Have-Nots' over the words, “I can afford that monthly payment.” Here is a hint: the “Have-Nots” are the ones who make that statement. So please don't ever look at whether you can afford a monthly payment to make a purchase; pay in cash after you've saved for the item. [Everything that you buy with a 0%-interest payment plan must be over-priced. Behind the scenes, your payment contract is sold to a lender with an interest rate, and retailers don't do this without building-in an acceptable profit for themselves. Ask retailers how much the item will cost if you pay in full, and you could get a lower price.]

Rule #2 Always keep your finances under control. The first step in losing financial control and spiraling into debt and money problems is simply not dealing with personal finances. Prepare for catastrophic financial accidents with health, life, disability, and auto insurance. Plan and save before you buy something. Create a balance sheet for yourself at least once a year to see how you are progressing. Pay every bill on time, or contact the creditor to tell them what is going on and make a partial payment. If you are temporarily unable to handle any of this, ask for some help immediately and find someone trustworthy who will do this for you.

The most common source of financial trouble is a trauma in your life. This can be a health problem (large expenses or unable to work), an emotional problem (divorce or loss of loved one), or a financial problem (losing a job, cut in pay, relocation, unexpected expenses). Whichever the source may be, it leads to three emotional problems: the first is denial, the second is being overwhelmed, and the third is hopelessness. Denial causes people to not open their mail and continue spending as usual, and being overwhelmed paralyzes people from getting assistance and dealing with the situation. For example, if you just lost a loved one, balancing your checkbook and paying bills is not high in your priorities. Unfortunately, tiny amounts of debt grow with interest and penalties into seemingly insurmountable mountains of debt; leaving you with loathsome options such as bankruptcy, poor credit, declining lifestyle spending, and added stress that you bring to relationships and work.

Rule #3 Pay attention to the finances of the people with whom you spend the most time. Whether they are relatives, friends, or co-workers, these people have the most impact on your financial life. Do they consistently follow the first two rules of the money game? Do they earn about the same money as you? If the answer to either of those is “no”, then I recommend that you start spending a little less time with them; and this is why. If they don't consistently follow the first two rules, it is unlikely that you will either. You unconsciously model the people around you, and the more people you are exposed to that don't follow the first two rules, the more likely that you will unwittingly follow them. No one thinks they are ‘trying to keep up with the Joneses', but we all do it to some extent, and this is the mechanism. On the other hand, if they earn a lot more money than you, you may rack up a lot of debt trying to keep up with them (meeting them at their favorite expensive restaurant, joining them for another expensive vacation, buying a new car because yours is the junker among all of your friends, etc.) On the other hand, if most of your friends earn a lot less than you, you will turn into the group's banker. For example, you'll find yourself in the pattern of putting your credit card down to pay for dinner and they'll all say they'll pay you back later, but 50% of them never do; and they don't mind taking advantage of you because, after all, you earn a lot more than they do. Or, you and your friends need to pay a deposit for renting a house and they expect you to write the checks because you have the money available and they do not.

The neighborhood that you live in also creates financial pressure to violate the first two financial goals. Your neighbors are likely to become friends (and I've already gone over this), but they also influence the size of your home, extent of your landscaping, price of furniture, and the size of your TV. So pay very close attention to the finances of your neighbors – if you don't like how they are measuring up for first two rules, move somewhere more in alignment with your financial goals. If your family and friends, don't measure up financially, find some additional people to spend time with that have financial habits that you'd like to emulate and learn from. I have friends with a wide range of income, but it is much more difficult to follow the first two money rules when I am with the extremes from my own income. You'll just find it easier to reach the next rule when the peer group that you hang out with aligns closer to your economic level.

Rule #4 Accelerate the other three rules:
Add to your savings by increasing your income through advancing your career. It doesn't matter whether you enjoy it; it is a means to an end – with the end being progress toward the fulfillment of rule #1. Increase the amount that you save by aggressively lowering four of your highest expenses. Start spending time with people that talk about investing money and are systematically building their wealth the fastest. The combination of all four of these rules will hopefully offer a next-step for you to take today to start getting more ‘wins' in the money-game.

When hit with a financial crisis, the first thought on the minds of many will be to cut out major expenses. While this can be helpful if you're willing to make the sacrifice, it doesn't necessarily have to come down to such drastic measures. Being more prudent with those little daily expenses could end up saving you a good deal of money over the long haul that can more than make up for any unexpected events or changes in revenue that may occur.

Things you may have grown accustomed to and not pay much mind to could be draining your budget more than you might imagine. Eating out or ordering food too often is a crux that many bear, and can really sap a budget. Even just ordering food twice a month could cost you $50-$80 or more. That's approaching $1,000 a year simply ordering in twice a month. Cutting that down by just one a month could save you $500 a year.

Morning coffees at the local coffee shop are another commodity that can quickly add up, and this one is a personal demon of my own. Spending $1.50 a day on coffee amounts to nearly $50 a month, while you could easily spend $10 a month on homemade coffee, cream and sugar and drink twice as much coffee for a fraction of the price. Sure the taste isn't quite the same, I'll be the first to admit that, but it all comes down to priorities. Besides, we mainly drink coffee for that kick of caffeine and/or sugar, not so much for the taste, so it really shouldn't be a difficult concession to make.

When considering food, breakfast should be a top priority. Eating a good breakfast will set you on a course for the rest of the day whereby you can save money on the more expensive meals of lunch and dinner. If you like having snacks at work, consider buying in bulk and bringing them in to work with you as opposed to paying $1 a pop from the office vending machine, same thing goes with that can of pop for lunch. It goes without saying that if you're buying your meals at the office or eating out for lunch every day, you should seriously consider bringing in your own lunches. There's absolutely no shame in brown bagging it to work every day, no matter your position or standing in the workplace.

Transportation is another area where costs can quickly escalate. It's no secret that gas prices continue to hit record highs, to the point where even a drive of a few blocks to the grocery store could cost you a great deal in gas money. Plus paying more for fuel instead of cash. Bikes are your best friend and are also a great help to the environment and your own personal health. The message is getting out there, and more and more people are biking to wear they need to go more often. Carpooling to work is also a great alternative to having four or five cars going it alone. It saves you all gas money, and you get the pleasure of hanging out with your co-workers more...don't snicker.

Entertainment is probably the king of all little expenses. It's become so ingrained in or lifestyle that it's almost impossible to imagine going without it, but there are plenty of alternatives if you're willing to consider them.

You need to consider what truly makes sense within your budget. Do you need satellite T.V with 500 channels, of which you watch maybe 20? Do you need high-speed internet when you're only online for a few hours a week? Do you need to attend sporting events when you could watch them on T.V?

It's not easy to give up on some of these little conveniences, no doubt about that. It's just a matter of considering how important each one is to you in relation to the cost. You certainly don't need to implement all of these little fixes, but at least a few could really help brighten your financial standing now and in the future. You may even find that you don't quite miss some of these things as much as you thought you might while you still had them.

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Both Francis Kier & Eric Jilson are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Francis Kier has sinced written about articles on various topics from Finances, Financial Planning and Finances. . Francis Kier's top article generates over 9900 views. to your Favourites.

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