I am a former financial advisor. The company I worked for is not important (rhymes with “barbarian excess”), but the life and money lessons I learned from that experience proved to be very valuable.
For example, I learned that I can’t sell, which might have led to my career change into compliance oversight of financial services. I liked helping people, and helping them solve the puzzles that were their finances and their frustrating lack of progress towards their goals. But more often than not, I found that what was in their best interest was to keep their accounts where they were, and find a way to save more. But as with losing weight, people don’t want the difficult and slow, albeit tried and true way to get there. They want a magic pill that gets them results tomorrow. Which brings me to the first lesson I learned about people and money:
Budgets Don’t Work.
Well, let me qualify that – budgets will work, for people who are inclined to create and follow them anyway. By and large, these people aren’t looking for financial advice to figure out why they run out of money before they run out of month. It’s the spenders who need the help of a budget (you know who you are!) If you’re a spender, chances are you are doing your grocery shopping, buying home necessities, and spending a reasonable amount on entertainment and dining as needs and opportunities come up, but only sitting down to pay the bills about 3 days before your next paycheck. And finding things a bit tight.
Discretionary expenses will expand to take up as much of your paycheck as you allow them. You can budget if you like, but what you’ll find is that your paycheck minus your bills equals your discretionary spending.
So what does work? Automatic savings. Just carve out an amount to save, and a way to do it every month (or better yet, every paycheck) automatically. Don’t give yourself 12 choices a year to decide between savings and a night out – your piggy bank will lose! Whether through work, online, through your bank – set it up, then forget it. And especially forget how to undo it. You will see a difference in your savings. Every month, every year, it will continue to grow.
After 3 to 6 months, you’ll find that you don’t notice the change in your discretionary income. Which would be an excellent time to start a savings plan for just a little bit more…
SMART LIVING FINANCIAL
8668 Spring Mountain Rd, Suite 101
Las Vegas, NV 89117