It’s the time of year when many people resolve to get their finances in order. As with dieting, this is also the time of year when all the fads compete for your attention. You start to see ads for everything including computer software, apps for your phone, programs/groups that promise to solve all of your financial problems, and whole “systems” that promise you control over your money. Books, software, classes, and support groups all compete for your attention.
The thing is, while some of these things might be useful in the right circumstances, the basics of personal finance are unaffected by these fads. There is nothing that any of these systems, apps, and programs can do that you can’t do yourself. When things start touting “never before seen tips,” “success without hard work,” and “a revolutionary approach to your money,” you’d better run away because they are lying.
Success with your finances boils down to one rule that never changes: You have to spend less than you earn. It’s the same with dieting. You have to burn more calories than you consume. That’s it. It is one simple rule that never changes no matter how many tracking programs, fads, or crazy approaches you throw at it. Yes, there are tools that can make it a bit easier to track various aspects of your finances or books that can educate you further, but if someone promises a revolutionary approach to financial success or guarantees you success with no effort on your part, they’re lying.
Spending less than you earn sounds easy, but it requires a lot of thought and continuous effort on your part. Any fad program that promises easy or instant success should be avoided. To be successful, you’ll have to figure out how much you bring in and how much you must spend every month to keep a roof over your head, have food in your pantry, and keep everything properly insured. If you can’t currently meet your basic needs, you have to look at ways to cut back or to bring in more income. You’ll also have to figure out how to save for your wants and your future needs. That might mean taking on another job or getting more education. There’s nothing easy or quick about any of it.
And it’s not a one shot deal, either. You can’t just deal with your finances once and forget it and expect everything to continue smoothly. You have to reevaluate your finances every time something in your life changes. If you get a new job, lose a job, get a new house, move to a new area, have a kid, or send a kid to college, you’ll have to go back and make sure that your budget is still working and adjust as necessary.
Does any of this sound like something that can be handled by a fad system rather than plain old hard work? I didn’t think so. Sure there are parts of your finances, like estate planning and investing, that stretch a bit beyond the strict “spend less than you earn” rule, but you can’t even begin to contemplate these things until you are spending less than you earn. That’s the only way you’ll have extra money to invest or to pass on to your heirs. So don’t fall for the fad pitches. Instead, stick to the tried and true rule of simply spending less than you earn.
(Photo courtesy of j_anet)
It is very important to establish what is important to you before you start developing your budget. Your goals (vision) need to dictate your budget, not your budget dictating your goals. It can be hard sticking to a budget. Not sticking to your budget equals not reaching yours goals. Tying the two together can help motivate you to stay the course.
There are plenty of accounting apps that are readily accessible to mobile phones. It allows you to manage your finances on the go. However, they are only useful if you commit to following your budget and not over spend. It requires a lot of discipline to follow your own targets.