Who: This post is for everybody who hasn’t mastered the Zen of Finance.
What: This post discusses ways to be more financially responsible and the benefits of becoming more responsible. Additionally, this post discusses the psychology of finance and how to make the most of your financial situation. You can also view the other posts in this series: ‘The Basics I: Budgets and Fees‘ and ‘The Basics III: Opportunity Cost and Risk/Reward

I’d like to think that A Financial Revolution will provide you with concrete, innovative ideas to help you get ahead financially. However, I can’t stress enough how important the softer side of finance is. AFR is not just about making money or spending all your time thinking about money. Instead, I want you to control your money and not let it control you. For this reason, in part II of the basics, I want to highlight 2 more abstract concepts.

1) Responsibility - Being financially responsible should not be a chore. If it is, you are looking at it all wrong. Being financially responsible should be rewarding and requires minimal effort. Forming solid financial habits is absolutely critical to taking an active role in your Financial Revolution. Without fiscal responsibility, you risk overspending, making poor financial decisions, and even falling into financial ruin (a little melodramatic, maybe).

  • BE ORGANIZED! KEEP GOOD RECORDS! - This will help you in many aspects of life, but these two simple things will make your life INFINITELY easier. Being organized and keeping good records really only requires 30 minutes a WEEK. It can save you a TON of money AND time when tax season rolls around. How do you do it? Stay tuned for some posts regarding organization.
  • Automate Processes - Many banks offer a free BillPay service. There are many ways to automate your bill payments so you don’t have to constantly be worrying about payments. Little things like organizing your credit cards so the due dates are approximately the same, can go a LONG way to making sure you remain financially responsible.
  • Make it a priority - But I don’t have time, William… We all know that’s BS. Everyone makes time for things they deem important. You make time for Monday Night Football and you make time for doing things to prevent you from remembering your Saturday night. You can make time to get yourself financially organized. It will pay off and in fact, it may allow you to save enough money for a bigger TV for Monday Night Football.

2) Psychology - People will tell you that being in control of your finances is a piece of cake. While it is true there are formulas and precise methods to make money, control your money, and curb spending, not all are practical. We’re all human, and robotic formulas don’t work for us (well, not all of us at least).

  • Set Goals - Everyone should have goals. Goals allow you to work towards things. If you’re young, you may want to save up to put a down payment down on a house. Maybe you are in college and you want to save up for a Spring Break blowout. Maybe you have been working hard for a long time and need a nice, long vacation. Maybe you want to set very specific goals for your retirement (X dollars by year Y). Regardless of what your goals actually are, the important part is that you HAVE them. If you have no goals, you have no reason to save, no reason to secure your future.
  • Be Frugal, Not Cheap - Yes folks, there is a difference. Scrooge was cheap. He was mean, spent only on himself, and even then barely spent money, and never enjoyed it. An important part of personal finance is being happy with your financial situation. The moment your financial discipline or responsibility makes you unhappy, that’s when you have a problem. Everyone’s got a weakness (or two or three)… It’s ok to spend money on things if they make you happy. But if you spend too much, you’ll make yourself UNHAPPY. The key is to find the balance. More on this later (surprise, surprise).
  • Know Thyself - This, like many other financial concepts will be very helpful in many aspects of your life. Who the hell do I think I am, Socrates? No, this is not some deeply philosophical mumbo jumbo. In terms of personal finance, it is important to know your habits (a budget helps with this), what you like (to spend money on), and your feelings on investments (risk profile). This will be an important part of my investment topics, so stay tuned for these too.

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