Dollars & Sense Education

Don’t get me wrong, I love to shop, buy a new outfit or two, but I have never been the type of woman who stands in front of my closet saying…I have nothing to wear.  Maybe it is my oversized sense of self or just my decisive nature, but it is just something I don’t do.  Many of my friends agonize over this decision daily, ultimately resulting in the purchase of more (and more and more and more) stuff.

The thing about stuff is, you will NEVER have enough, there never comes a point where you will say, yep, that’s it.  Anyone remember Amelda Marcos, the wife of a Philipino dictator in the 80s?  She had 3,500 paris of shoes.  Nuff said.

If you are trying to get ahead financially, this infinite money suck, called your closet, is not an asset to your financial health.  My suggestion is, set a monthly clothing number.  You will probably spend it the first week of the month, I always do!  And the number will vary wildly from person to person based on your income and other monthly outlays but setting up monthly limits will tame your inner Imelda and help release your inner Warren Buffett:)

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Dollars & Sense Education - Raising Your Financial IQ!
www.daseducation.com
nicole@daseducation.com
215-499-3834

I have written a couple articles such as this one and this one on the psychology of money.  There is the MBA finance chick side of me who looks at sheer numbers, then there is the realist who says wealth building isn’t all about the numbers it is even more about personality and psychology. 

 SO what are the money personality types as I see them:

Slow and Steady Wins the Race - These folks are the ones that follow all of the rules.  They max out their 401Ks, IRAs, have 529s for their children, an emergency fund, pay their credit card bills in full.

Get Rich Quick - These folks really want to be rich but don’t have the discipline for long term wealth building.  So instead they typically try to build wealth with the “investment of the moment”.  Sometimes this strategy works, but most of the time it doesn’t.

I Could Be Hit By a Bus Tomorrow - These people are the folks that aren’t so focused on wealth building period.  Its just not on their radar.  They can range from simple to extravagant folks, the common thread being they are way more interested in living life than thinking about money.  Fortunately, most of them never get hit by a bus.  Unfortunately, this means they never planned financially for not getting hit by a bus.

Nervous Nellie - Nervous Nellie is a hybrid of Slow and Steady Wins the Race and Get Rich Quick.  Nervous Nellie is the type of individual who knows what the rules are: invest in Retirement Accounts, 529s, etc.  But gets really nervous when the market is unstable.  This is the investor the buys high and sells low because they think that the world is ending when the DJIA loses 5%. 

Broke as a Joke - This person is broke they don’t think about money because they are barely covering expenses.

I would love to hear your thoughts on this subject and see if any of you have identified other money personality types.  In a subsequent entry I will talk about how these folks should invest differently!

Please contact Dollars & Sense Education to bring our seminars to your company or organization! 

The Golden Rule is a fundamental moral principle which simply means, “Treat others as they would treat you.”  It is arguably the essential basis for human rights.  Similarly, in my mind there is a Golden Rule for Personal Finance.  Like the moral Golden Rule, it doesn’t encompass everything you need to know but unless you tackle it, the rest is moot. 

Golden Rule of Personal Finance:  You must earn more income than what you spend.

Sounds simple enough but so many folks don’t follow this rule.  Check out this link to an awesome skit on SNL.

[youtube=http://www.youtube.com/v/cmAm8GNJ_IA&rel]

My one pet peeve with MOST personal finance blogs out there is their almost religious commitment to being thrifty.  I have read articles lately about refilling toothpaste bottles and reusing cereal liners.  In my opinion that’s not personal finance, that is borderline homelessness. 

I know there are people out there that are mired in debt and need to use these gorilla tactics to crawl out of the hole they are in.  I have been at those points in my life where I had to stretch every dollar reeeeeeeeeeeeaaaaaaaaaaaallllllllllllllyyyyyyyy far.  However, I suspect that there is another group of individuals out there that are so turned off by the “personal finance paupers” that they eschew personal finance blogs, articles and tv shows.  My belief is that you can still have a comfortable life and build wealth.  You just need to budget accordingly.

I have a confession to make: I eat out every day.  That’s right.  Every day.  No, I don’t buy my food in bulk at Sam’s Club.  And you know what else, I drink alot of beer at bars.  I have budgeted these things into my life because they make me happy.  Could I sock a little bit more into my savings account if I ate at home and drank a six pack all by my self.  Sure, but what fun would that be?  I have been able to invest a hell of alot of money from age 22-29 without living a boring life.  Does it help that I am single with no children? Sure.  Does it help that I live in a city with a low cost of living (Philly)? Sure.  Does it help that I have made a decent salary over the last few years? Sure.  But I am convinced you can have your cake and eat it too.  In college, I made $12,000/year.  My pay was able to cover rent, electric, gas, car insurance, food and alot of partying.  Did I have to skimp on luxuries? Obviously.  But I budgeted around my priorities and 12K went a long way.

My view is personal finance should be about finding the sweet spot between growing your net worth and living a fulfilling life.  Just my 2 cents.

 Please contact Dollars & Sense Education to bring our seminars to your company or organization!

Dollars & Sense Education - Raising Your Financial IQ!
www.daseducation.com
nicole@daseducation.com
215-499-3834