In money matters, balance is key

Question: I have been reading your articles and other posts about finance. While I find most of them very informative, I find them difficult to apply. How do I find the discipline to follow the rules that you, finance advocates, always talk about?-Joshua via Facebook

Answer: Let me start by saying this, “money is behavioral and not mechanical.” It is too challenging for us to follow the money “rules” because we think we can just flip a switch and be on our way like a computer program. The famous author Dave Ramsey said, “Money is 80 percent behavior and only 20 percent skill.” The struggle will always be about our behavior and how consistent we are with such behavior. The money “rules” may be very simple such as “do not spend more than what you earn,” “live below your means,”  “invest early” and so on. However, simple is not the same as easy and therein lays our struggles.

Finance advocates can give ideas that seem very sound but can sometimes be impractical. For instance, you will hear us say, “do not drink expensive coffee, do not upgrade your smart phones etc.” They are logical ideas, but hey, where’s the fun in that? I am a father of four kids and I know how important rules are, without them our household will be in constant chaos but my wife and I also learned how to set rules, relax the rules and be flexible—in other words, we are trying to strike a balance. With regard to money matters, it is the same—balance is key.

Having a budget is very important, you will need to track and allocate what you should be spending on. One of the many reasons why people are in a financial mess is that they are unaware they are over-spending. By the time they realize they are, it may be too late. A budget tells you where money should go, not just where it went. Allocating your money is critical to you being able to achieve your financial goals.

However, your budget should not be too stringent that it does not allow ‘fun’ items. Some finance advocates will give you very strict recommended budgets that even many of them can’t follow themselves.
For instance, you might have heard or read experts telling you that you should not spend your 13th month pay on buying gifts and festivities and just save and invest all of them. While it is a good suggestion, it’s actually easier said than done. We are people and we need to have fun, removing it will make us feel money is a hard taskmaster and we will find ourselves rebelling.

How do you strike a balance then? Unfortunately, there are no hard and fast rules on this. You will have to experience trial and errors until you find a balance that works for you. If your budget is too stringent that you feel like you are missing out on many things, adjust your budget. When you look at your bank account and you get stressed because your funds are so small, adjust your budget.

Know your priorities, we should all be responsible about our future. You should not sacrifice long-term gains by enjoying short-term benefits. After several trials and errors, I am sure you will find a balance that will allow you to enjoy the fruits of your labor, without sacrificing a comfortable future.  After finding that balance, you will still need to recalibrate it from time to time—that’s what life is all about.

Merry Christmas to all! Let us remember that Jesus is the reason.