Tuesday, October 4, 2011

Wealth is Within Our Grasp

For some years I had responsibility to help families in trouble financially.  They would come to me hoping the Church I represented could assist, and we usually did.  The first step was to look closely at their budget.  Frankly, most did not have a real budget.  They knew what they earned each month but didn’t have much of an idea how much they spent, nor the detail of what it was spent on.  

I would have them give me a few of their bills to get them by for the next month.  My first requirement was to keep copious track of all income and expenses for the next six weeks, and we would speak again at that point. 

Many never had to come back for more help because just the simple process of tracking their money helped them get their situation under control.     I would meet monthly with those in deeper financial trouble.  We would carefully go line-by-line through their expenses. 

Generally they were in deep trouble because their credit cards were maxed-out.  I would have them cut up their credit cards. Some months or years later, I would help them learn how to use the right credit-cards and never fail to pay off the balance every month. Credit cards are a financial tool, not a debt accumulation machine, as the companies would have you believe.  NEVER, NEVER, NEVER allow a credit card balance to move forward into the next month.  Pay it off on time EVERY TIME.    

As we reviewed their expenses, on every item I would ask questions.  Such as: is there a way to lower this expense?  Do you really need two cell phones?  Do you really need a data-package with your cell phone?  Do you need cable TV with all the bells and whistles?  Do you have to go out to dinner weekly?  Is there a way to cut your mortgage expense without destroying your credit or family well-being? 

My experience helping families with these challenges taught me that even those doing fine with their finances could save more each month if they would go line-by-line through their budget and ask themselves, how could I cut this expense. 
Our personal rule-of-thumb has been to factor in our budget 11% to charity, and at least 10% to retirement savings, 5% to an emergency fund, then live on the other 74%.  The interest you earn never stops working for you, day or night.  Your money works for you even when you sleep. 


After making the young-couple mistakes during early marriage we have followed this process for thirty years and thereby have managed to accumulate a nest-egg for our retirement years.  We look forward to the future with excitement even if Social Security never comes through.  Wealth is within our grasp by budgeting and simplifying our lifestyles.
Wealth can only be accumulated by the earnings of industry and the savings of frugality” John Tyler, 10th President of the United States.