Slow Money Movement

[disneysteve]

how would you go about teaching people how to spend money on the things they really want rather than what they have become accustomed to spending on?

I think the best way to do this is by a line by line, step by step analysis of their current spending. Have the person keep a written spending log for 30 days. Write down absolutely everything that they spend money on during that time. Then sit down with them and itemize that list. Split it into two columns - Wants and Needs. Also, cross reference that to their income during those 30 days. Did they spend more than they made? Did they put money into savings? Are they carrying consumer debt? Walk them through the areas where they could decrease spending to free up money to pay down debt and build savings.

[jeffrey]

Because everyone is at different stages when it comes to their own personal finances, do you think that having different stages of the Slow Money Movement would be beneficial? Basics, Intermediate and advance or should there be more? What would you place in each stage?

[krantcents]

A question to members since I assume that most of you are already part of this:

If someone were to put together a "Slow Money Movement" (the opposite of get rich quick) to show people how to get back to financial basics, what do you feel would be essential to make it work?

The basic framework is "live within your means" -- is that sufficient or do you think that basic rules are needed. If so, what rules would they be?

Rules are good, but not necessary if you buy in to the thought of looking long term. Before you can get back to basics, everyone needs to shift to long term goals. This is the antithesis of Wall Street's quarter end type of thinking. Last and perhaps most important learn the basics! Basic financial literacy is extremely important.

[disneysteve]

Because everyone is at different stages when it comes to their own personal finances, do you think that having different stages of the Slow Money Movement would be beneficial? Basics, Intermediate and advance or should there be more? What would you place in each stage?

I think there is a great deal of overlap. If you watch Suze Orman or listen to Dave Ramsey, you'll hear stories from people in their 50s or 60s having the exact same problems as people in their 20s and 30s. Consumer debt. Inadequate savings. Poor money management skills all around.

I think most of the lessons are universal. If you don't know them, you need to learn them. If you do know them, it can't hurt to have them repeated and reinforced in your mind to help keep you on track.

That said, someone just starting out with no savings and a negative net worth due to debt is in a different place than someone established in their career with savings, retirement plan, owns a home, has kids, etc. so there are some differences in the approach to those different groups.

[jIM_Ohio]

Because everyone is at different stages when it comes to their own personal finances, do you think that having different stages of the Slow Money Movement would be beneficial? Basics, Intermediate and advance or should there be more? What would you place in each stage?

Everything comes down to basics. Always. I train people for a living, and most questions are about applying basic principles to whatever the task at hand is.

The issue is how broad a scope does one need basic knowledge in to have all the basics needed.

For all of below it assumes basic math (addition, subtraction, division, multiplication and percentages)

So for personal finance it is

spend less than you earn
know what you spend
know what you earn

avoid making bad decisions (and most of these deal with spending).

for savings, the basics are
spend less than you earn
know what you spend (this is less important)
know what you earn (this becomes more important)
and what is the difference between what is spent and earned?
what types of accounts exist? savings, money markets, mutual funds, brokerage accounts
what are the goals with the savings?

for a retirement plan, it builds on savings
know what you earn
know what you spend
know how much you can save each month and each year
what types of accounts exist
how much do taxes impact the decision (this is most complex subject of this post).
how old are you
how much risk can you take (this might be second most complex question)



regardless of problem, it comes down to know what you spend, know what you earn, know how much you can save.

People like me will get into the details of all of above, but most people do not need that level of detail to know their own personal finances.

[jIM_Ohio]

I think there is a great deal of overlap. If you watch Suze Orman or listen to Dave Ramsey, you'll hear stories from people in their 50s or 60s having the exact same problems as people in their 20s and 30s. Consumer debt. Inadequate savings. Poor money management skills all around.

I think most of the lessons are universal. If you don't know them, you need to learn them. If you do know them, it can't hurt to have them repeated and reinforced in your mind to help keep you on track.

That said, someone just starting out with no savings and a negative net worth due to debt is in a different place than someone established in their career with savings, retirement plan, owns a home, has kids, etc. so there are some differences in the approach to those different groups.

Good post...

I will agree with reiterate the main points, over and over again. Spend less than you earn. Save 20% of gross pay is a good goal. Repeat those points over and over.

Part of learning is repetition. I am prepping for the series 7, and I see certain questions repeated on every practice test, in my prep course, I saw certain points repeated throughout the 5 day course - the reason for the repetition is to drive it into one's head.

[disneysteve]

The other thing to think about is that the people who would most likely avail themselves of this type of help are people who are in need of help. People who are winning with money, have a net worth that is growing nicely, no consumer debt and solid savings aren't going around looking for help with basic money management. Nobody calls in to Dave Ramsey to say, "I just called to say I don't need your help. Everything is just fine." Those folks might seek professional guidance from a financial planner but that is very different than what you are talking about here, Jeffrey.

[jIM_Ohio]

The other thing to think about is that the people who would most likely avail themselves of this type of help are people who are in need of help. People who are winning with money, have a net worth that is growing nicely, no consumer debt and solid savings aren't going around looking for help with basic money management. Nobody calls in to Dave Ramsey to say, "I just called to say I don't need your help. Everything is just fine." Those folks might seek professional guidance from a financial planner but that is very different than what you are talking about here, Jeffrey.

I would still add the help comes down to basics.

If a person has a net worth of 200k or is in debt 200k

the basics of each problem are different
but how you get to solution has some similarities.

step 1 is spend less than you earn (in both cases)
step 2 is know what you spend
step 3 is know what you earn

2 and 3 might have different priorities- a person with a net worth of 200k is probably not going to want (or need) to track every dollar spent.

a person 200k in hole can gain significant traction by analyzing spending more.


A person with 200k net worth and if an experienced investor, would be concerned about ROI more than asset allocation (maybe) or want to make sure asset allocation was suitable for their situation. There are still basics involved- how much stocks, how much bonds, how much foreign, how much domestic, how much large cap, how much small cap- all simple things.

A person 200k in hole needs to look at expenses, debt interest rates, behaviors and other simple things.

None of this is rocket science.

[GREENBACK]

As for basic rules (certainly neccesary), I'd say that an emphasis on patience can't be stressed enough. Our basic survival instincts tell us to "get rich quick". Money has become the modern equivalent of securing food, water, shelter, etc.. People are not genetically programmed to accumulate things over time(vs. right now!) and I believe this is very much a learned skill.

For most of our human existence we've spent the vast majority of our time seeking instant gratification. I think of saving money for the long term as somewhat rejecting your natural inclination. With that said, I think people have to be patient and learn to see the reward for waiting.

[disneysteve]

Jim, I don't disagree but the point I was making was that you need to consider who your target audience is. I, personally, would never enroll in Financial Peace University, Dave Ramsey's program. I think it is an excellent program that helps thousands of people. It is just not something that I have any need for. I'm past all of that stuff in my life. I'm already debt-free except my home. I already have a 6-month EF. I already put 15% of income toward retirement. I already put money away for college for my kid. His program doesn't have anything to offer me.

So if you are putting together a new program, you need to decide who you are aiming it at and build the curriculum accordingly.

[snafu]

I think the secret to financial security is to learn to live with what we have. Debt as we see it on SA means posters are either spending too much or earning too little. No amount of income will fulfil all our wishes since there will always be a newer car, better house, new technology, more exotic/longer vacation, the desire to help someone else, to dream about.

Wish someone would tell the government that the debt they are carrying is unsustainable.

[maat55]

I personally would emphasize living debtfree. Saving to pay for everything(other than mortgage) would instill patience and good habits.

[disneysteve]

there will always be a newer car

You mean my 1998 Toyota isn't the latest model?

[jpg7n16]

Because everyone is at different stages when it comes to their own personal finances, do you think that having different stages of the Slow Money Movement would be beneficial? Basics, Intermediate and advance or should there be more? What would you place in each stage?

...you need to consider who your target audience is. I, personally, would never enroll in Financial Peace University, Dave Ramsey's program. I think it is an excellent program that helps thousands of people....[But] doesn't have anything to offer me.

So if you are putting together a new program, you need to decide who you are aiming it at and build the curriculum accordingly.

This verse is one of the guiding factors in what I want to do with financial planning:

Jesus answered them, "It is not the healthy who need a doctor, but the sick.
Luke 5:21

If you're making a program to help people who are hurting, you shouldn't target it at DS His financial picture is perfectly healthy. Financial anti-biotics would do him no good.

So you should first determine, "What financial disease am I trying to cure with this program?"

And like DS was saying, that determines everything. I'm sure he could give an excellent example of how you must determine the disease before trying to prescribe the treatment. And I think we'd agree that it should be the same with your program.

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If it's a 'back to basics' program, you should build that level first. Establish what the basics are. What are the basics to you?

Do you want to focus on the practical side of how to do it? Or the psychological side of evaluating your relationship with money?

For me it'd be like: Which areas of personal finance are critical and fundamental? (budgeting, savings, debt reduction, etc.) What are strategies for beginning to implement these ideas? (written budget, family budget discussions, envelope system, automatic transfers, etc.) How much should I be spending on X? (home, car, food, etc.) Why should I be saving and how much? What is debt? What is interest? What is an 'emergency fund'?

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An intermediate/advanced program wouldn't deal with the same topics at all IMO. And though DS said there would be overlap, I think it should be minimal. There's no need to tell DS "here's how to keep a budget: 1st determine your income..." He'd be insulted and it'd be wasting his time.

The overlap would be like, "as part of your budget, set aside $x for..." or "now that you've established your EF, you can begin to invest" said with the understanding that the participant should already have a budget, and a proper EF in place. But with no need to explain how to budget or what an EF is.


You could do like an 'accomplishment' sort of thing, where you say up front:

"You know you're ready for the advanced portion when:
a) you've kept a written monthly budget for at least the past 12 months
b) you currently contribute 15-20% to your retirement/savings accounts
c) you have a proper EF in place of 3-6 months,
d) you have paid off all high interest debt
e) etc.....

If you have not completed these tasks, keep on working the intermediate program"

Essentially stating that if you're taking the advanced program, you should know and practice all of these things by now - that way you don't have to cover them again.


And you could determine ok - what behaviors do I feel someone has to exhibit before they can consider themselves an intermediate level in personal finance? how about advanced?

[David / Slow Money]

There is indeed a Slow Money movement afoot in this country

What a heartening discussion to find. There is indeed a Slow Money movement afoot in this country, and hints that it will begin taking off in other countries over the course of the next few years. See:

It all started with this book, Inquiries into the Nature of Slow Money, and for anyone intending to integrate Slow Money into their financial planning practice, I would highly recommend getting and reading a copy. It's just come out in paperback. It has also been translated into Italian and Korean, with a Japanese edition forthcoming.
See:


Like other posters, I would like to propose differentiating between what you might term "sound personal finance" and Slow Money investing. Sound personal finance can take many hints from the overall Slow movement, coming to terms with your own priorities and slowing down enough to plan so you can really live a life in tune with those priorities. Slow Money comes in and builds on that foundation at both an inspirational and practical level. First of all, the promise of Slow Money is that there really is a reason to save - so that you can invest in your own community, in line with your values, in something that makes a difference, in enterprises that you can see and touch and taste and smell and reap the rewards of in your daily life (or perhaps seasonally, depending on the enterprise you are investing in). Slow Money is about rooting money in a real place over time, to create healthy communities, healthy enterprises, and healthy returns.

At a practical level, the Slow Money network is empowering people to take personal control of their own assets and make direct investment decisions. Slow Money has both seasoned and novice investors. Regardless of experience level, for many Slow Money members getting involved as investors in this way is the first time they have undertaken due diligence on a direct loan or private equity offering and made their own unmediated investment in an enterprise.

I would encourage you all to learn about what Slow Money has already accomplished, say from or the Wall Street Journal or the organization's own website. So when a client tells you they are convinced that they want to put their values to work with their money and invest 1% of their assets in local food systems, you can help steer them to fulfill their wishes.

NPR:
Wall Street Journal:
Website:

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