It's not what you make, it's what you owe! I realized this when I was in my early twenties. I was making about $8.50 an hour working for an insurance company as a Licensing Specialist. Among my crowd, this was considered a very good job and a pretty good salary. However, I couldn't make ends meet. So I went out and got a second job.
When a friend asked me about my salary at the insurance company, her comment was, "Why do you need to work the second job when you make such good money at the insurance company?" My response was, "Well, it's not what you make, it's what you owe?" My friend didn't ask about the amount of debt I was in, and how much money it took to pay my bills each month.
It's amazing how, in our society, we only focus on salaries when we think about financial success. If someone makes $100,000 a year, they must be very successful, right? However, what if that same person has two mortgages, makes payments on two cars, pays credit card bills, auto insurance, electricity, water, gas, cable, internet, telephone, commuting, food, supplies... How much extra do you think they have in their pocket on a Friday night? Don't be surprised if it's not much.
Conversely, someone making $10 an hour that has no debt, lives with their parents, and takes the T to work could have much more extra money to play with.
So what's the point? A big salary doesn't equal financial success. And someone who makes plenty of money is not necessarily going to have more to spend.
Wednesday, May 16, 2007
Friday, April 13, 2007
Men vs. Women vs. Money
Men understand money better than women - does anyone believe this anymore? We're in the 21st century. A woman is seriously being considered for President of the United States. Is there anyone around that still thinks women can't do everything men can do?
Absolutely. And even if you think you're not one of them, think again.
Men and women still play specific roles in our society. Men are strong - women are beautiful. Men provide children - women raise children. Men make the money - women spend the money. And even though we are flooded with examples of instances where women and men don't reflect these stereotypes - the underlying social assumption is still there. Within many cultures in this country, plenty of people still believe these things. And even if you don't, be prepared that your financial partner does.
Some people are relieved to get into a relationship with someone who makes the money - woman or man. The feeling is that if they make money, they know how to manage money. Since men still make more money than women in this country, most of the time it's the woman gladly stepping aside and letting her male partner handle the bills.
However, regardless of the gender it still takes two to make any relationship work - that includes a financial relationship. Managing your personal finances is not a gender issue.
Absolutely. And even if you think you're not one of them, think again.
Men and women still play specific roles in our society. Men are strong - women are beautiful. Men provide children - women raise children. Men make the money - women spend the money. And even though we are flooded with examples of instances where women and men don't reflect these stereotypes - the underlying social assumption is still there. Within many cultures in this country, plenty of people still believe these things. And even if you don't, be prepared that your financial partner does.
Some people are relieved to get into a relationship with someone who makes the money - woman or man. The feeling is that if they make money, they know how to manage money. Since men still make more money than women in this country, most of the time it's the woman gladly stepping aside and letting her male partner handle the bills.
However, regardless of the gender it still takes two to make any relationship work - that includes a financial relationship. Managing your personal finances is not a gender issue.
Thursday, March 8, 2007
Smart people don't have money problems - HA!
An incredibly incorrect assumption made in our society is that people who have financial problems must be uneducated. However, most of my clients are very well educated and manage much responsibility, but they have problems getting bills paid on time every month.
What do you need to pay your bills? Enough money? Enough brains? Enough time? The truth is - all three! However, having money and brains can't do it alone. So many people I know don't allocate enough time to the task of managing their personal finances. In addition to assuming this is common sense, is the assumption that it's simple and will take a minimal amount of effort.
Many people don't want to spend a lot of time thinking about paying bills, so they put their energy elsewhere. The little consequences can really add up for some people. And intelligence has nothing to do with it.
True Story - A friend of mine was the personal assistant for a successful Investment Advisor. She had told me about how her boss had gone on a one week trip out of the country with his family to invest in a real estate opportunity. While he was gone he received the third notice on a $66 water bill he had been neglecting. His family returned on a Saturday morning to find that their water had been turned off. He called the Water Company who explained that they couldn't turn the water on until Monday morning. So on Monday my friend received instructions to drive the money to the Water Company and pay the delinquent bill. On the way, her boss's wife called her to find out how much longer before the water would get turned on. "This is ridiculous," she complained. "He's buying five million dollar condos, and I can't wash my hair!"
Don't make the assumption that sending your kids to a good college will teach them how to get their bills paid. Schools don't teach these topics and they are not common sense!
What do you need to pay your bills? Enough money? Enough brains? Enough time? The truth is - all three! However, having money and brains can't do it alone. So many people I know don't allocate enough time to the task of managing their personal finances. In addition to assuming this is common sense, is the assumption that it's simple and will take a minimal amount of effort.
Many people don't want to spend a lot of time thinking about paying bills, so they put their energy elsewhere. The little consequences can really add up for some people. And intelligence has nothing to do with it.
True Story - A friend of mine was the personal assistant for a successful Investment Advisor. She had told me about how her boss had gone on a one week trip out of the country with his family to invest in a real estate opportunity. While he was gone he received the third notice on a $66 water bill he had been neglecting. His family returned on a Saturday morning to find that their water had been turned off. He called the Water Company who explained that they couldn't turn the water on until Monday morning. So on Monday my friend received instructions to drive the money to the Water Company and pay the delinquent bill. On the way, her boss's wife called her to find out how much longer before the water would get turned on. "This is ridiculous," she complained. "He's buying five million dollar condos, and I can't wash my hair!"
Don't make the assumption that sending your kids to a good college will teach them how to get their bills paid. Schools don't teach these topics and they are not common sense!
Wednesday, February 14, 2007
If I just had more money...
The basic assumption is if we just had more money, all our problems would go away. Many parents tell me, "I teach my kids to save their money," thinking that equals "They'll know how to pay their bills." But teaching someone to save is teaching them how to NOT spend money. Paying bills requires knowing how to spend your money, as well as knowing how banks work, how to manage a checking account, and how to be smart about credit cards.
We daydream about buying a new house, new cars, and being able to travel, not realizing the amount of money management that is still necessary with the luxurious lifestyle.
Someone with a high income who lives in a really expensive house can get overwhelmed with all the bills and paperwork involved with maintaining their personal finances just as easily as a person making a low income living in a modest apartment.
I went to visit a client at his home. He had three months of mail piled up on his desk. He said bill collectors call him regularly and he's been trying to stay on top of things, but it's out of control. I sat down and spent an hour and a half organizing his mail and making a list of his bills. When I got to his bank statement, I noticed he had $65,000 in his checking account. I asked him, why he hasn't paid his bills? His response was, "I don't even know what I owe. It takes up all my time just to manage my business!"
Managing your personal finances isn't about how to get more money, it's about managing the money you have.
We daydream about buying a new house, new cars, and being able to travel, not realizing the amount of money management that is still necessary with the luxurious lifestyle.
Someone with a high income who lives in a really expensive house can get overwhelmed with all the bills and paperwork involved with maintaining their personal finances just as easily as a person making a low income living in a modest apartment.
I went to visit a client at his home. He had three months of mail piled up on his desk. He said bill collectors call him regularly and he's been trying to stay on top of things, but it's out of control. I sat down and spent an hour and a half organizing his mail and making a list of his bills. When I got to his bank statement, I noticed he had $65,000 in his checking account. I asked him, why he hasn't paid his bills? His response was, "I don't even know what I owe. It takes up all my time just to manage my business!"
Managing your personal finances isn't about how to get more money, it's about managing the money you have.
Thursday, January 4, 2007
Oh, you're teaching Common Sense!
I'm in a local bookstore searching through the Personal Finance section. It's a rather large section so I stand there for a good 30 minutes scanning every book, trying to find one that will cover many of the items that my clients need help with. No luck. I find books on how to get rich quick (or slow), how to invest in the stock market, and how to save for retirement/college education. But these aren't the questions, we need answers to.
"What do I do right now if I don't have enough money to pay my bills?"
"Paying taxes, how does that work?"
"What does it mean to balance a checkbook? Do I need to?"
I have clients of all incomes and backgrounds, and these are the questions they don't ask, but need to.
Most people have to deal with basics of managing their personal finances, but we don't do anything to educate ourselves in these areas. It's assumed that our parents will teach us, or the information is so simple, that we'll just figure it out when we need to. As a result, we've created a whole generation of people who believe this information is common sense.
The more serious issue is that because we all believe this is common sense, we're not asking to be educated. And we, as a culture, have developed a real sense of embarrassment around this topic. If we write out a check incorrectly, or forget to pay the electric bill one month, we don't talk about it. We berate ourselves for not knowing better, and try to do better next time.
Education is the key.
"What do I do right now if I don't have enough money to pay my bills?"
"Paying taxes, how does that work?"
"What does it mean to balance a checkbook? Do I need to?"
I have clients of all incomes and backgrounds, and these are the questions they don't ask, but need to.
Most people have to deal with basics of managing their personal finances, but we don't do anything to educate ourselves in these areas. It's assumed that our parents will teach us, or the information is so simple, that we'll just figure it out when we need to. As a result, we've created a whole generation of people who believe this information is common sense.
The more serious issue is that because we all believe this is common sense, we're not asking to be educated. And we, as a culture, have developed a real sense of embarrassment around this topic. If we write out a check incorrectly, or forget to pay the electric bill one month, we don't talk about it. We berate ourselves for not knowing better, and try to do better next time.
Education is the key.
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