I read a great review of a finance-tracker app called “Personal Capital Money and Investing”“. Since I’m always looking for tools to recommend to those financial coaching clients who are interested, I read the reviews (great), and decided to download it and give it a try. so I gave it an email address, and the first thing it asked for was the name of my bank…and my account login and password. And that’s where I stopped. Any financial institution I deal with has security software and regulations about access – and while I’m sure having all my information at my fingertips in one place might be more convenient, I’m just old fashioned enough to wonder if a free app is the place to have it. Is that so yesterday?
“Literacy”, according to Webster’s dictionary, is “the ability to read and write”. So it follows that “Financial Literacy” is the ability to read and write numbers. When I first saw the term “Financial Intelligence” on the cover of the book by Karen Berman and Joe Knight, I thought “THAT’s what I’ve been looking for!” – because a lot of us can READ numbers, but what we really want to do is TRANSLATE the numbers and figure out what they are telling us. Right? Numbers are like a language – only easier: if I’m learning Spanish, I have to learn nouns, verbs and adjectives, feminine and masculine, past, present and future AND the grammar rules that give a sentence that wonderful rhythm – and meaning! Numbers don’t have tenses or genders or parts of speech – but they DO have meaning. Leave the complicated stuff to the professionals and learn the simple stuff: what is the story my numbers are telling me. If you need a translator at first, check out http://www.financedog.com or any of the books on “Financial Intelligence” at The Business Literacy Institute http://www.business-literacy.com. Before you know it, you’ll know your story – and you can begin to write the next chapters!
For a real light touch, if business books are not your thing, check out the Financial Intelligence graphic novel (okay – comic book) at http://www.business-literacy.com
The most straightforward definition of “budget” (n) is: “a plan for the coordination of resources and expenditures”. Hmmm. Coordination. What a great word – sounds so logical. And yet, the word “budget” tends to evoke the same emotions as “diet” (whose simplest definition is “food and drink regularly consumed”): feelings of deprivation and constraint. And the very thing you tell yourself you are cutting back on is the thing you can’t live without at that moment. So what if you don’t call it a “budget” at all? What if you make up a word or phrase that shifts whatever you feel when you say “budget” to something you like – “travel plan” – or make up a word that makes you laugh or feel good (“mugwump”?). Great. Now you have the label out of the way – what next? What is “normal” for a budget? Well, “normal” is having expenses that are less than income. But to really get at it, you can start with your income and the “50/30/20” split: 50 percent of your income is for housing and related bills (maintenance/utilities/insurance/rent or mortgage), 30 percent is for personal expenses (education/clothes/kids/entertainment) and 20 percent is for savings (emergency fund/debt repayment/retirement). And please note, I said START – the percentages can change depending on your values: maybe your housing costs are low and you choose to spend more on personal expenses – so you look more like “30/50/20” – or maybe you are focusing on paying down debt and saving as much as possible right now, so you look more like “30/30/40”. Wherever you are, just start somewhere and make a plan, and review it every month to see if it’s working for you The whole point of a budget or a mugwump or whatever you want to call it is to give yourself choices: you want to be proactive in your choices instead of reacting. Don’t take your cue from the government battles – “budget” IS a fighting word in that context. But in your house it doesn’t have to be.