Being Faithful in the Small Things

Posted on Wednesday January, 6 2010 | 0 Comments

Why do some folks get ahead financially while others struggle? Why does one person go on to achieve their financial goals, while another flounders from one mistake to another?  I contend that it's adherence to the little things that can make the difference between success and failure with money.  What are the little things?  Below is a list of the little things that one cannot ignore if you want to make progress financially. 

  • Have an emergency fund of 3 months expenses.  Not having an emergency fund will always prevent you from climbing out of your financial troubles.  Unexpected expenses are going to happen.  Not being prepared for the unexpected will result in you going further into debt.  An emergency fund acts as a buffer between you and the unplanned expenses that come your way.
  • Have a written budget.  A written budget is a drill instructor for your dollars.  You need to know where your money is going.  You can craft a budget using Quicken, MS Money, or a simple spreadsheet will work.  You designate categories for your money.  Some sample categories are: Housing, Groceries, Insurance, Medical, Gas, Credit Cards, and Transportation.  The 'writing' part of this is important.  You must have it visual and able to be revised monthly.
  • Communicate regularly with your spouse about finances.  Whether you manage money in accounts separately or not. you must still communicate.  Who pays what bills each month? What financial goals do you have?  How will you measure progress towards goals? How will you pay for and be prepared for financial emergencies?  Communication is critical for couples to progress financially.  The number one reason for divorce is money fights.  Don't let money differences ruin a lifelong commitment.
  • Practice caution when it comes to debt.  Opportunities to go in debt are all around us.  You need to understand that debt is bondage.  As much as possible, save and pay cash for large purchases.  If you can't pay cash, don't buy it.
  • Distinguish needs from wants.  You can upgrade anything these days.  Cars, appliances, cell phones, and cable packages are just a few examples.  The questions is whether these upgrades qualify as a need.  If the model you have isn't broke, why upgrade?  The 'gotta have more' mentality can bust a budget quickly.
  • Balance your checkbook every month.  Balancing your checkbook is a litmus test for your finances.  Balancing your checkbook reveals areas for improvement in your financial record keeping.  I am constantly amazed at what I forget to record.  My ATM withdrawals often never get recorded in the check book.  Giving the check book a once over keeps things honest and allows me to catch errors before they catch me.

There's my list of little things that can make a BIG difference in your financial picture.  It's easy to agree that these small things are important.  The difficult part is the 'doing' of them.  How many of these do you practice?  Are there any that I left out?