This week, someone told me that money isn’t important to them.  Really?  I’ll admit that money is pretty darn important to me.  It provides the means for me to work on, improve, and enjoy the meaningful things in my life – relationships, intellectual growth, career, health, emotional vitality, charitable work and less financial stress. Money builds hospitals, churches, schools, and museums.  Money is central to much of the good we accomplish in the world.

There are people who say money is overrated. Those people obviously do not have much of it.  Having money is a lot better than not having money.  I like having it.  I can do a lot of stuff with it I could never have done without it.  So do not ever diminish the importance of money or the joy of having it.  If you do, you will not ever have much of it.

– Larry Winget

I regularly visit local high schools and conduct workshops focused on smart financial planning for the future.  During the class, I ask kids what they think they need for financial success.  Basically, what is required to bring financial security to their lives and support all the things that are important to them?  Almost always, the answers are a good education, a great career, a high income, and an extensive network of contacts.

If you stop and think about all these things together, they certainly provide an ideal confluence of qualities leading to the perfect financial life.  However, I meet people every day that have one or all of these benefits, yet struggle fiscally.  Just this week I had a customer visit me for a loan – he makes $250,000 a year in income, but has over $100,000 in credit card debt.  His home is mortgaged to the max and his credit scores are, well let’s just say, less than impressive.  But looking at this customer on paper, he meets all the qualifications set forth by the students in my financial success workshops –  an education from a wonderful college, a great career, an impressive income, and a wonderful network of contacts.  Yet…no financial success.  Why?

People don’t plan to fail, they fail to plan.

– Anonymous

Two words – spending discipline.  Throughout my banking career, I’ve known many poor doctors, lawyers, accountants and company presidents and still more wealthy truck drivers, janitors, and production workers.  In fact, studies now show that for each additional level of education – going from a high school degree to an associate degree to a bachelor’s degree, etc. – savings goes down by $1,700 per year.  The old cliché holds true – the more we make the more that we spend.  And the best way to make yourself better off financially is to quit buying things!  Below are a few facts and statistics that may surprise you about the way we earn, spend and save:

  • “90% of people in our culture buy things they can’t afford.”
  • The vast majority of people do not have a plan for their income and do not budget and track their spending.
  • Most people will make well over a million dollars in their lifetime yet live a financially stress filled life and will have nearly no savings at retirement.
  • 49% of Americans could cover less than one month’s expenses if they lost their income and 78% of Americans said they would borrow on a credit card if an emergency came up.
  • 60% of consumers don’t pay off their credit cards each month.
  • At best, most families run a lifestyle where income minus outgo equals zero every month.
  • Most people don’t understand, or at least value, the difference between good debt and bad debt.

Almost any man knows how to make money, but not one in a million knows how to spend it.

-Henry David Thoreau

Here’s the secret that I always share with my financial workshop students – fiscal success comes from a few small disciplines practiced every day.  Spending $4 on the morning latte, springing for the daily lunch out, or buying those fashion forward shoes you don’t really need…these are all little expenses that can add up over time to create big financial problems.  Too often, we don’t believe the small things matter.  $10 here and $15 there – it’s so subtle that we usually don’t feel any immediate consequences.  Instant gratification masks the future loss.   I often stress to my students that they can have anything they want in life …. but they can’t have everything they want in life. The trick is qualify the “anything” – narrow it down to what is truly important and meaningful to your success and happiness.  Don’t’ get bogged down in trivial things that gobble up your finite resources.  Just a few small changes in your spending can yield almost immediate results.

A final thought – keeping up with the Joneses should not be the reasoning behind your purchases.  As Dave Ramsey states, “Don’t keep up with the Joneses.  The Joneses can’t do math and THEY ARE BROKE.”  Believe me, I AM a Jones, and I do not drive a fancy car, live in a mansion or go on month long cruises.  I focus on buying the things I love and the things I need and try to leave everything else for everyone else.  I will ask you the same question I’ve asked many customers over the years – when you envision your future, do you see yourself bankrupt or sleepless with financial stress?  Or do you see yourself enjoying a comfortable, debt-free life?  Maybe relaxing in a retirement for which you’ve planned and saved?  Let that vision of the future guide your decisions today.

Financial success doesn’t require a master’s degree, an enormous income, or a Rolodex full of contacts.  In fact, it can be almost as simple as watching what everyone else does and doing the opposite – spend less.  Practice fiscal conservation.  Look into your future and consider the long term consequences of your spending decisions – good and bad. As financial guru Dave Ramsey offers, “If you will live like no one else, someday you can live like no one else.”