Have the fortitude to put your budget plan in place
The Proverbial budget. It is so vital to good money management. It seems so easy to do. After all, what is there to know you earn, you spend, if there is something left, you save it. But as one person said: “ I don't need help putting a budget plan together, I need someone to make me implement this plan, because I cannot.”
And that is the crux of the whole matter having the fortitude to put your budget plan in place.
A budget need not be elaborate. Our fellow columnist Roger Crombie (we miss you, Roger) had the simplest non-budget I've ever seen. He has one goal more money in the pot at the end of the month than the beginning. If it is a bad month, and that goal is not realised, the next month everything is tightened up, I surmise, to catch up.
A couple of months ago, I asked readers to consider sharing their budget hints (and frustrations) with
A brave reader, we shall call her Canuck, volunteered to discuss her financial philosophy and how her family handles the proverbial budget
And so we met.
It was fascinating to hear her family biography, while comparing and contrasting it with one's own and other families. How did our parents, siblings, friends handle money (or not)? I have never asked a reader to share specific personal financial information. While confidentiality is an agreed boundary, each individual has a different comfort factor about their financial lives.
The gossip factor is also a big deterrent as we Bermudians, in general, are so nosy (and shrewdly intuitive) that one or two facts can uncover an identity. Specifically, too, budget numbers that are perfectly acceptable to one family may be perceived as demeaning to another family simply because the way we handle our money defines us in society.
Some very interesting themes emerged from the discussion with our reader.
Goal Focusing Learned implicitly through Family Lessons. Canuck revealed that she has always been goal-oriented. Raised in a modest family with several siblings, saving was emphasised from the time she was old enough to understand that money bought treats.
Price versus Quality. At times, her parents were so focused on having a savings safety net, that even when the real savings goal was achieved, the eventual purchase (i.e. a toy) was still the cheapest item on the shelf, not the great brand placed on the Christmas or birthday wish list, and coincidentally, the more expensive toy was made to last. Parents do/did their best as we know. For anyone over the age of 30, one understands only too well that there were few safety nets back then.
Many of us have had similar family experiences. Our parents scrimped and saved for so long, that they could not allow themselves to enjoy the experience of buying something that they had always wanted. They found virtue instead in denying themselves, sometimes even the basic necessities.
Soup every day for a month, or as long as it took. From the good start with her parental examples, she defined her own set of life values. Her parents were disciplined in their saving. She followed this discipline in two ways: “If I really wanted something, I would eat soup for a month in order to save for the prize. Further, the prize had to very good quality (for that kind of sacrifice), otherwise, what was the point. Exercising the personal discipline to delay wants (gratification) means having control of one's life.
If something new comes in, something has to go out. Canuck is not into accumulating possessions believing in clarity versus clutter. Items no longer wanted are donated, used up, or sent 'down the road'. Many mindless possessions becomes incredibly confusing and tiring to manage, leading to a less coherent life.
Educations sought is education gained. She ardently believes in acquiring skills along the way. The result a number of promotions. The education pursuit has made her feel confident in her abilities and completely fearless in taking on new challenges.
No Debt no debt, folks, because that means loss of control. And the thought of debt controlling one's lifestyle is more than depressing. Good debt used to buy appreciating assets is paid off as quickly as possible.
The Responsible One. It is all very well to talk about emulating parental values and habits, but what drives one individual in the family to become a successful money manager, and others to merely plod or languish their way through life?
Could it be birth order whereby the oldest child is pushed implicitly to assume responsibilities, given more attention, and thought to be more dependable? We don't know if that is a large factor, but one other factor stands out loud and clear the willingness to assume responsibility: for oneself, for one's partner, parents, and in many cases that I have seen both children and siblings.
Responsible individuals routinely support others, taking on a mantle of care that is quite extraordinary. Do they assume responsibility because they have the knowledge and drive to support the family, or do the take the responsibility because they know they can handle the additional skills required for more compensation. I don't know the answer but, what I can say is that a truly responsible person is almost always a good money manager.
What kind of relationship does a responsible person have with the rest of the family? Now this gets complicated, and here I share instead what professional financial advisors have observed in many families. The responsible, supportive individual in the family may or may not be respected, but very often their success is resented by the family members being supported. Ironic, don't you think?
It's complicated, as they say! Every time one presents oneself to the rest of the family group who has not been able to practice personal disciplined savings, it can be taken as a repudiation by other siblings of their less than ideal lifestyle. Rather than being perceived as a role model and motivator, the responsible person's success is rejected offhandedly or even generates sibling envy as “well, you always got more because Mom (or Dad) liked you best”.
The contrast in those who are really challenged to manage their money are also many. Personal insecurity, inability to control gratification, fear of failure, willingness to upgrade education / math skills hampered by economics and family responsibilities. Sometimes, it is a defiance in the I-will-show-them syndrome manifested in flash, dash, and trash bling prominently displayed, but purchased with debt. It is not easy to be successful, it requires great courage.
Managing money is a large component of the attributes of a complex individual. It isn't just the money. It is how we feel about ourselves, how we see ourselves within our families, and community. Our confidence in our decision making, and perspective on our future lifestyle that is the overwhelming factor in learning to control our financial surroundings.
Complete belief in oneself. This confidence radiates from you across the spectrum. It enforces the character of a take-charge individual who is confident in her surroundings and her work home / environment. The quietly confident belief sends a message to those who know her that no matter the situation, she will step up to the plate, follow the process and implement the decision.
A supportive loving partner who shares your value system and goals is the final addition to a successful budget and satisfactory lifestyle. If you are lucky enough to know this unique person, cherish him or her.
So, it doesn't matter where you came from or whether your family was perfect or totally dysfunctional. Yes, those are factors, but you and only you have the power the power to overcome these obstacles. Change your habits now.
Start simply. End each month with more savings than at the beginning of the money. Focus, focus on achieving financial success what other option is there?
Stay tuned for articles on investments, retirement, real estate, immigration / residency and domicile, crossing borders, taxation, estate planning, foreign currency, insurance, reader stories, and relationships in recession part 2.
Martha Myron, JP CPA CFP(US) TEP, is an international Certified Financial Planner™ practitioner in private wealth management. She specializes in independent fee-only cross border investment, tax, estate, and strategic retirement planning services for Bermuda residents with United States and multi-national connections, and US citizens living and working abroad. She is a Masters in Law candidate in International Tax and Financial Planning and the American Citizens Abroad Country Contact for Bermuda. www.americansabroad.org For more information, contact martha.myron[AT]gmail.com or 296 3528 at Patterson Partners Ltd.