Jeffrey's review of USA Today Financial Diet Course

[jeffrey]

USAToday.com is running a six week "Financial Diet" course that aims to be a "six-week series that will show you how to tone up your finances, slim down your debt and build up retirement savings."

I will be reviewing this course and give my opinion on where I believe it (and most financial experts) falls short.

You can see the course here: <A HREF="http://www.usatoday.com/money/perfi/basics/financial-diet-digest-2005.htm">USA Today's Financial Diet</A>

The six week course if broken up into the following sections

Week 1 - Start by cutting the little expenses
Week 2 - Make (and stick to) a budget
Week 3 - How to cut credit card debt
Week 4 - Basic retirement planning
Week 5 - Saving for college
Week 6 - How did we do on our diet?

This week they began with week one and cutting the little expenses.

While cutting little expenses is an essential part of the saving money process, I personally feel it is the worst place to begin. There seems to be an assumption among financial experts that if you ask people to begin to make "only little cuts" saving money will come easy. The truth is that nobody wants to make even these small cuts or they would have done so long ago. Simply telling people not to smoke a pack of cigarettes or not drink their daily latte does absolutely nothing <b>unless you can first show them the benefits of saving the money</b>.

I therefore think that cutting little expenses should come later in the saving process. The authors actually make a perfect fit by calling their program a "financial diet" - because a diet brings the image of having to sacrifice things that we like and is something that most would not begin and continue with joy or excitement. How many people do you know that willingly and happily decide to go on a diet?

By setting up the program to ask for sacrifices from day one and to give it a name that instills that sacrifice, they will lose the majority of the people they want to participate even before they have begun. That is truly too bad since it's an area where so many people need help.

So where is the correct place to start? My opinion is that it should be with cutting expenses that require no sacrifice at all.

Instead of telling people not to use the ATM machine because they are charged "$2 every time you use the ATM" teach them to open an account with a bank that doesn't charge ATM fees. This allows them to save the money without any sacrifice on their part (they can still use ATMs).

While this is not possible for all things, there are plenty of areas that every person can start out with and significantly reduce their spending without having to make the sacrifices they most dread. By laying down a foundation and showing people that saving money can be accomplished without being forced to give up things, the course would have interested many more people and ultimately been more successful.

[jmjj215]

Jeffrey,
I couldn't agree more. The first step of advice I give people when they want to "diet" (lousy choice - why not "change" or "improve" ?) is to simply write down everything they spend. People come to smart conclusions very quickly when they face reality that way. And instead of just telling someone to cut out X expense, they think to themselves, "man, this is adding up. I can do without." They see their spending in a different light and no longer feel it's a sacrifice - they see the money saved as a benefit.

Looking forward to your following reviews.