Just Plan Your Spending

Since the stock market has certainly not needed any help lately, I want to encourage those of you who, for various reasons, have nothing invested or have children without savings and investments.

First, my giant disclaimer: the reason I am a knowledgeable financial planner is that I have personally made most of the mistakes with money that have typified our spendthrift baby boom generation. Most come under the heading of “Borrow for Lifestyle.” After many years, I stopped digging my hole deeper. I decided that living on the edge financially was no longer worth the risks and thrills associated with it.

It took more years of concerted focus and effort to pay off accumulated debt, but it was well worth it. Karen loves it and, “Happy wife, happy life!” I only hope and pray that someday our elected federal officials could learn the same lesson.

When I have the opportunity to counsel folks still in bondage to the debt monster, I share that in 31 years of financial practice I have seen all sides and situations. Some professionals with incomes in the top several percent of world income just can't get by but others almost meeting the federal poverty guidelines are able to feed several children and build investment portfolios.

The extremely simple key to financial health is to live below one's means. It's easier said than done, but it also is a matter of inches, not miles. If a person is still a cigarette smoker, look no further for a fixable leak. I have also heard of instances in which a person would not take a hand up from Hillcrest Transitional Housing because of his Dr. Pepper addiction. Even a dollar coffee plus a donut each morning at a convenience store makes a difference. $2.74 a day equals $1,000 a year.

Therefore, friends and countrymen, resist the eternal temptation to try to buy happiness at the store – or online either. You can be just as happy or sad during the holiday season without overspending. I used to want to buy more for my family than was good or necessary, and even overspending could not give them everything thing they wanted.

In some cable music/TV trivia I saw recently, I learned that U.S. department stores have been inventing special ways to get us to spend more than we should on Christmas gifts for more than 100 years. And even though there is so much attention given to the economic benefits of retail trade, it is not your civic duty to run up credit card debt that will take months to pay, if then.

With all of these things (including human nature) working against you, you must have a plan. Don't call it a budget – no one likes to budget! Just take the impulse part out of the equation.

Plan what you spend, and then spend only what you plan. You will feel better, be better off, and your future self should thank you for it.

Ron Finke is president of Stewardship Capital in Independence. He is a registered investment adviser. Reach him at rcfinke@stewcap.com.