Beating Broke

Personal Finance from the Broke Perspective

Investing in Your Personal Finances

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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

Invest in your personal FinancesInvesting 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?

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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

Leading Your FinancesPersonal 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?

Rainbows on the Road

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The other day, as my daughter was on her way to the car when I picked her up from daycare.  Along the way, she noticed something on the ground.  In the excited voice of a 4 year old, she said “Daddy!  Look!  A rainbow!”, and then pointed at the spot on the ground she was looking at.  As I got closer, I found that she was looking at a spot on the wet ground where some sort of oily fluid had likely leaked out of the bottom of a vehicle.  Of course, oily fluids, on wet ground tend to separate out into what you and I would probably best describe as an oil slick.  But, to my 4 year old, it was a rainbow on the ground.  As we drove off to pick up her brother at school, I began thinking about what had just happened.

The thoughts were amplified when she noticed another “rainbow” on the ground on the way into the school.  On our way back out of the school, with her brother, she excitedly called her brother over to show him what she had found.  My son is 6 (nearly 7), and so has a slightly more advanced knowledge of the world than his sister.  I fully expected, in the way that only a brother who doesn’t understand a 4 year old is likely to do, that he would quickly dismiss it for what it was, an oil slick on wet ground, and that her excitement would quickly dissipate.  Instead, as she pulled him over and pointed it out, saying “Look!”, he quickly said “A rainbow!”.  He saw it too.

Rainbows on the RoadAs parents, we’re always so excited to teach our children new things.  We’re often quick to correct them when they don’t get something right, or don’t understand it.  They saw a rainbow.  I didn’t.  All I saw was an oil slick.  Obviously, I saw the resemblance.  But, I knew what it really was, so the wonder that my children had for it was lost on me.  But, it kept me thinking.

How often do we take what we know, and use it as a filter for the world.  Surely, that’s what knowledge is for, right?  I know that 1+1=2, and that certain letters spell words, and that drops of oil on wet ground make a oil slick.  Yes, it’s colorful, but it’s an oil slick, not a rainbow.  How many times do we become so certain in our knowledge, and the filtering that we use it for, that we fail to see the rainbow?

How many people out there are so set in the knowledge that a bank is the lender, and use that to filter the idea of peer-to-peer lending as a sham, without allowing for a little of the rainbow to shine through?

The point is this: If you never question what you think you know, how will you ever know if you’re wrong?  Sometimes the formula and constants change.  Sometimes, the environment itself is what has changed.  Heck, look at the newspaper industry.  How long did they refuse to see the emergence of blogs (like this one) as a major change in the dynamic of how people get their news?  Some of them still refuse to see that rainbow.

If you do one thing to improve your personal finance today, question what you think you know.  Most of the time, you’ll still be right.  But, maybe, just maybe, you’ll see a rainbow instead.

What are some rainbows that you’ve found by questioning what you thought was true?  What methods do you use to find the rainbows in your life?

Original Image credit:Oil slick. @blackmetalbike by Growinnc, on Flickr