Friday, April 23, 2010

"Money management isn’t about the numbers; it’s about goals and dreams."

The area of finance has always been a little intimidating for me. I didn’t particularly pay much attention in maths class so when I have to deal with numbers I get a little toey. I was fortunate, though, that my mum taught me how to create a basic budget and a savings plan when I was young, so those skills have served me well as an adult. I’m actually quite proud of myself in that area and when I was reflecting on it earlier this year I realised that the reason I don’t get anxious around budgets and savings plans is because I feel confident. Anything beyond that (in the world of finance), however, is a different matter. So this year is about taking the fear out of money issues by arming myself with knowledge.

Part of my research and reading has lead me to JD Roth, author of Get Rich Slowly. I read this interview with him recently and loved what he had to say about finances and lifestyle:

“Q: I think the problem for some people is they feel stuck – at a job they hate, or in a lifestyle of a certain type (with spouse and kids expecting certain things, perhaps). How do you change from this, so that you’re not sacrificing your happiness for money?

A: That’s a great question, and I think it gets at the heart of personal finance. Money management isn’t about the numbers; it’s about goals and dreams. That sounds a little new-agey, but it’s true.

If you feel stuck, the first step is to figure out why you feel stuck. You can’t solve the problem if you don’t identify it. One way to help achieve some clarity is to take some time to actually set some financial goals. From my own experience, I know that if you don’t create a map for yourself, it’s easy to get lost; and when you get lost, it’s easy to become overwhelmed.

Also, I think that when many people feel trapped, they just sort of freeze. They don’t do anything. That’s how I was for a long time. When this happens, the best thing you can do is take small steps toward what you really want. If you’re stuck at a job you hate, then maybe take night classes in something that interests you. Start moving slowly in the direction of your dreams. Even a little bit of change can help you relieve some of the pressure.”

Such a lovely, considered response. Take a step and then another step until you find yourself where you want to be. It may not be sexy, headline-catching advice, but it’s sensible and it works.

I also like that Roth doesn’t offer us get rich quick schemes or “be debt free in five days” advice. I generally don’t trust anything that panders to our Must Have it Now! mentality. I think the key to conquering most fears or difficulties is to research, get to know your topic and see what works best for you. No single answer is going to work for everyone.

I think I’m currently at the second of five stages that Roth believes we all go through in our financial maturity. Read the rest of the article and enjoy his insight, especially if money has been on your mind lately.

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