Mindful Money Matters
By Donna Onacki of Grafton
 
     In a society where healthcare, technology, and education are so advanced, it’s both frustrating and sad to see our economy spiraling in the wrong direction.  The gap between rich and poor is widening as we pay higher prices everywhere with no energy plan in place, wages aren’t keeping up with inflation, and a mortgage crisis lingers over us.  We have definitely become a society that is motivated by external forces and instant gratification, which has contributed to this situation with an overall neglect of our own financial situations in one way or another.  This is however, a perfect time to come to understand money and finance and become familiar with our own personal situations and spending habits. 

     Simple activities like tracking your weekly spending habits, creating a budget, saving, and keeping credit card debt in check go a long way in creating financial well-being.  You don’t have to be a math genius to accomplish any of this, common sense and a little time will do.  I grew up in a household where my father taught us the value of economic and financial responsibility from an early age.  To him, financial responsibility was as important as a good diet and brushing your teeth each morning.  Although the lessons were simple they laid the foundation for being able to navigate through the financially challenging times. They are within everyone’s reach and are well worth sharing. One of the phrases I can still hear is never to live above your means, always know your means, and be grateful for what you have.  This can have a profound impact on spending choices and the ability to decipher between what you truly need and what you desire. 

      For starters keep a spending diary to keep track of what you spend during the week.  I did this as a teenager and was able to see where the money was burning a hole.  Back then it was candy, gum, soda, and hamburgers.  Today if you’re hitting the coffee shop before work or school you’re spending maybe an average of $12.25/week on a latte or $637/year.  Think about the nice savings plan you can start with the money saved on this, even if you’re just eliminating going for that latte three times per week.   This is where you can identify wasteful spending and rechannel that into wiser spending choices or saving for something bigger, like a contribution toward a college education, car, or vacation. 

     Create a budget and know your cash flow. This is a great vehicle for understanding how much income is flowing in and what expenses you incur each month including credit card debt.  Not only will this keep you from going overboard, but you may also find some money to sock away into some type of savings plan or mutual fund account or increase an already existing one. This also forces you to acknowledge your financial goals and start looking for the right plan to help you achieve them.   Whatever your goals are, there’s always going to be a juggling act between the short and long term planning and spending.  I call it creative problem solving.  One of my goals when I first graduated from college and had my first job was to join a gym.  With rent, car payments and insurance, school loans, and the savings plan I joined at work my disposable income was hardly anything.  It took me two years to be able to reach that goal.  During the two years, I monitored my spending and saved enough money so that I was able to pay for the gym membership without a credit card.  I was able to enjoy the experience because I knew that I didn’t have the stress of taking on more debt and wondering where the money would come from to pay for it each month.

     Managing credit card debt is critical and the toughest of all.  Beware of being seduced by store credit cards with their offers to save a certain percent if you open a credit card on the spot.  The interest rates and finance charges on unpaid balances are so high they are criminal.  Their billing cycles often don’t match the traditional MasterCard and Visa so that the payments are easy to miss. You should also beware of making a habit out of opening these accounts for the one time twenty percent off deal because believe it or not your credit rating can suffer because of this practice.  Credit card purchases should really be kept within your budget or you should plan to pay them off each month since there is no benefit to carrying a balance.  My philosophy is if I can’t pay cash then I just don’t buy it.  I never missed what it is I thought I wanted at the time.  There are times when I leave the credit cards at home.  I also only use two credit cards; one for store purchases and one for online purchases so that the monthly credit card expenses are manageable. 

     Knowing your financial means is a discipline that is worth cultivating.  The one thing that is also a very important part of financial management and well-being is remaining true to your personal situation. This means driving the car that is affordable, taking vacations within reach, and so on. By starting with simple practices and staying true, you can apply them to more complex aspects like shopping for mortgages, insurance plans, retirement plans, and equity lines of credit.  We are at a point economically where we can’t afford to go on the way we have been.  There are many benefits to us all if we spent some time knowing and understanding where we truly are financially.  As with healthcare, diet, and exercise, there is a wealth of financial information available.   Before embarking on any new financial obligations, it is worthwhile to set the time aside to read the information and ask questions, which helps to understand what it is you are in for.  Once you have a better understanding of your financial picture, you will become smarter consumers, and less at risk when sitting across from those eager to have you sign the dotted line.