Personal Finance — 3/8 — Beating Broke

Personal Finance is a Life Skill

December 17, 2013 By Shane Ede 11 Comments

ChristianPF posted a very thought provoking article a while back. In it, he talks about how spending money wisely is a life skill. The choices that we make in spending our money are the root of how we live our lives and can bleed through into the businesses that we run or work for. Basically, the way that you spend money is a very important.

I think I would take it one further. Not only is the way that you spend your money a very important skill, but, as the title of this article states, the entirety of your personal finance management is a life skill.

Schools all around the world concern themselves with teaching children life skills. Skills like writing. Reading. Wood Working. Mathematics. Science. And even Cooking (0ne of my favorites). Perhaps personal finance isn’t as important as things like mathematics, writing and reading (the three Rs), but I would argue that it’s just as important (or more so) than the rest. I would argue that personal finance is a life skill.

Improper management of your personal finances can lead to some pretty dire circumstances in your life. You can find yourself falling into a trap of revolving debt and upside-down mortgages. Too easily, you can find yourself making the choice between ramen and gas to go to work. And yet, people continue to put personal finances aside as something that isn’t all that important.

Over the last decade, I’ve spent my time learning many of the tenets of personal finance management. Even with the knowledge I had gained, it was a very difficult trip to take. I started as close to the bottom as I cared to get. I’m still a long ways from the top, but I’m getting there. And most of that is owed to learning to manage personal finances properly.

Take the time today to learn something about taking care of your finances. Teach it to your children. Teach it to your friends. If we all learn a little bit more each day, week, and month, we can turn our situations around and help more people. The more people we help with this, the less likely that our economy will ever find itself in this situation again.

Investing in Your Personal Finances

July 9, 2013 By Shane Ede 6 Comments

In business, we talk all the time about investing in your business. We’re not talking about actually buying stock in your own company, although there are those that do that as well. What we’re really talking about is investing the things that will make your business better. For a cab company, that might mean investing in an extra cab or two. Or replacing some of the older cabs in the fleet with newer ones. It might be something as simple as sending an employee (or yourself) to training. But, as much as we talk about investing in our businesses, how many of us actually invest in our own personal finances?

How to Invest in your Personal Finances

Investing in your personal finances can be something as complex as buying new investments. But, it can also be something as simple as providing yourself with the training you need to improve your personal finances. What part of personal finance scares you? Is it the budgeting? Is it the balancing? Selling? Buying? Investing? Maybe you just don’t understand how savings accounts work? Investing doesn’t mean you need to spend money either. All those things I just listed can be learned online for free. It might take a bit longer because it isn’t all consolidated like it would be in a course. You might need time sorting through sites like this one learning what the authors have to teach. But, it can be learned. And, when you’re done, and you understand something a bit better, you’ll have invested in your personal finance.

Earning Dividends on your Personal Finances

In the investing world, dividend paying stocks are the ones that many investors (for sure income investors) will look at first. Why? Because, even if the stock doesn’t gain any value, it’s still going to pay that dividend out in most cases. The people who run the company have invested in the business to improve it enough that it can pay some of it’s revenues back to the shareholders. You can do the same. As you invest in your personal finances, and implement the things that you’ve learned, your finances will get better. You’ll be working on them all the time to improve them. As they get better, you’ll start earning dividends on your investment. Maybe it will be in a higher rate of income. Maybe a higher rate of savings. Or, maybe it will just be a higher rate of understanding that leads to a calmer sense of where your finances are headed.

The quicker you start investing in your personal finances, the quicker you’ll start earning those dividends. Click on a few of those links in that list up there. Learn about something that you don’t feel in control of. Invest in your personal finances today.

Are You Leading Your Finances?

June 5, 2013 By Shane Ede 12 Comments

This last weekend, I attended a young professionals conference. As you can imagine, a large part of the conference was spent talking about leadership. One of the speakers was legendary basketball coach Dale Brown. One of the breakouts was entitled “Visionary Leadership”. I’ve also just started reading the book “Entreleadership” by Dave Ramsey. In all of those places, there are lots of buzzwords that describe leadership, and what a leader is.

Of course, this being a personal finance site, my mind couldn’t help but apply as much of it as possible to personal finance. When we think of our personal lives, we rarely apply the word leader to any aspect of it. We apply it to ourselves and others in our work and volunteer lives, but not our personal lives. Why not?

When it really comes down to it, we are the leader of our lives. We are the ones who apply the same principles that leaders apply to business and volunteer organizations to our lives. Or don’t. We try and become better leaders at work. We expect better leaders to lead us. But rarely do we try and become better leaders in our personal life.

Leading your Finances

Personal finance aren’t all that much different from a business and a business’ finances. We still have income coming in, expenses going out, and the profit left over. Unfortunately, for many, that’s where the parallels end. Let’s change that. Let’s apply some of those leadership principles to our lives. Specifically, let’s apply them to leading your finances.

Financial Efficiency

Business leaders are always looking for ways to make their business and employees more efficient. Over the years, businesses have foregone the paper and pen and replaced them with computers. They’ve replaced old marketing tactics with websites and social media. Leading your finances means finding, and embracing, new ways to make your finances more efficient. Forego the old check and envelope method of paying your bills and sign up for bill-pay. Or automate your bill paying by setting them up for auto-pay. Find ways to save that also create income. Look into better rates at better banks. Learn about dividend investing. Learn about peer-to-peer lending.

Financial Opportunity Seeking

Many of today’s biggest and brightest businesses wouldn’t even exist today if their leaders hadn’t been continually opportunity seeking. If all Apple still made was computers, it wouldn’t be the multi-billion dollar company that it is today. If Steve Jobs hadn’t seen the opportunity in the iPhone, iPod, and iPad, they’d be just another company making computers. Apply the same to your finances. Peer-to-peer lending hasn’t always been what it is today. There was a time where it was still a fledgling opportunity. A small percentage, relatively, of the population saw the benefit of it as an investing avenue, and, for most, their finances are the better for it. Be open to services and products that can help you make your finances better.

Continual Financial Improvement

Good enough is never good enough for a business leader. The only thing that stays the same is their desire for improvement. Beyond always seeking opportunity, we must also always be finding ways to improve our finances. We must always be assessing the risk involved with those new opportunities, and making decisions on what will best improve our finances.

Financial Failure

Businesses fail. If they have good leaders, they only fail momentarily and spring back stronger than ever. They’ll have set the company up to be diversified so that any one failure shouldn’t be enough to ruin the company. Investors talk all the time about the importance of diversifying an investment portfolio. But, it can be applied elsewhere in our finances. Having all of your money in one online bank is great. Until your internet goes down and you can’t get to it to bill pay. Diversifying to have a set amount of cash available in an emergency can help you out there. Not depending on just stock investments is another great way to diversify for failure. Prepare your finances so that an opportunity that fails only sets you back, doesn’t bankrupt you.

How can you improve your finances today? What opportunities can you learn more about and assess for use in your finances? What efficiencies can you create to make your finances better? What other leadership qualities can you apply in leading your finances?