I’ve always had a thing with money. Not always a good thing- usually a lot of stress and worry. Much of this came from my money experiences growing up. In fact, much of what we believe about money comes from our experiences in childhood.
When I was a kid, my dad had a really great job- upwards of $10k a month great. Then the dot-com bubble burst and the company he worked for had to make some cuts. My dad lost his job, and we struggled to make ends meet for the next several years during the economic downturn.
As a result, I was paranoid about having enough money. This was no fault of my parents because they did the best they could, and we always had enough to cover our needs as far as I knew. But spending money stressed me out. Getting a job as an adult and supporting a family stressed me out. Fast forward to present day, and I have a great paying job, no high-interest debts, a wife, a child, and a positive net worth.
For the millennial generation, I’m definitely not a unicorn. But I don’t feel like I’m just average either. In many ways, I have been very financially fortunate.
Over the last couple years, I have taken a greater interest in personal finance and personal resource management. I’ve decided to dedicate part of my blog to discussing these topics. I don’t want to brag, and I don’t claim to be an expert on personal finance. On the contrary, I feel like I don’t know NEARLY as much as I would like to about money. But I do want to share the knowledge I have with those who feel like they want to get a grip on their finances from someone a little more relatable than Dave Ramsey.
So, as my first personal finance post, here are 3 basic principles that have helped me along my financial journey.
1. Pay God First
As a kid, I was taught the Judeo-Christian value of paying tithes, meaning one-tenth of your increase (income). In high school, I would often forget to pay my tithing (to the local church). Since I was committed to living the principle, I would just take more money out of my next paycheck to cover both. Well, that would leave me with less discretionary money for that paycheck. I decided that if I wanted to really put God first (and consistently have more money on hand), I needed to pay my tithing before doing anything else with my money.
I believe that by paying my tithing I have been able to manage my money a lot better than I otherwise would have. I don’t have a ton of data to back up my claim other than my own experience. However, whether you believe in God or not, there are many studies that suggest that when you donate your time or resources to charity, you feel happier.
Your contributions are also tax deductible, so that’s a plus.
To recap: pay God first. Donate to your church freely. If you don’t believe in God, give back to your community or a charity you trust. (You can do this too, even if you believe in God…)
2. Save, Save, Save
Because of my family’s financial situation for much of my upbringing, I learned to save my money for the things I really wanted or needed rather than on frivolous things. As I got older, I started to apply the common phrase of “pay yourself first” (second, in my case) by putting away money into savings whenever I got my paycheck. Saving helped me always have enough to cover my expenses and to work toward bigger purchases in the future.
By saving your money, you’re able to create a safety net for yourself should something happen that would significantly impact your financial wellbeing. Rather than living paycheck to paycheck, you’re able to set your sight on the future by investing and planning for big expenses.
According to a recent survey, nearly 57% of Americans have less than $1000 in savings. The numbers get worse for those in my age group. Around 61% of millennials aged 25-34 have less than $1000 in savings. Factors such as student debt and lower starting salaries aside, this is a problem. When you don’t save, you hurt your ability to build financial independence and security. Not saving for a rainy day or retirement is like playing Russian roulette.
Saving your money takes a lot of self-discipline. You have to say to yourself, “You know what? I don’t need that right now. I want it, but I don’t need it.” This enables you to be in control of your money rather than your money controlling you. Ideally, you should save at least 10% of what you earn. My wife and I try to save upward of 20% of what we make, diversified between increasing our emergency fund and investing for retirement.
The earlier you can develop the habit of paying yourself first (or second), the better.
3. Money is a Means, Not an End
When it comes to the proper role of money in our lives, I often see two extremes. There are those who think money is “the root of all evil” and those who think that having money is the be all and end all.
People who fall into both of these camps are wrong. First, the idea that “money is the root of all evil” is a misquote from 1 Tim. 6:10 of the KJV Bible which says “the love of money is the root of all evil.” People in the second camp have no problem with giving all or most of their love to the pursuit and obtainment of money.
Money is not an end. It’s not good, and it’s not bad. It’s a tool. Money can be used for nefarious and malicious purposes, but it can also be used to do a lot of good.
Our desire to obtain money should not be to just have lots of it. We ought to desire to earn it for a specific purpose like providing for ourselves and our families. It’s when we start to chase after money that we become consumed with greed, and we fail to see what matters most in our lives.
I have experienced both of these extreme perceptions of money, and neither of them is desirable. It wasn’t until I shifted my paradigm to this way of thinking that I was able to let go of many of my concerns about money. This view also helps to cool any arguments that would usually arise between couples in relation to finances.
If you keep your head on straight in relation to money, and you’ll be on the right road to financial health.
Bringing It All Together
These three principles, paying God first, saving, and having the proper view of money, are not the only important money principles. These are just a few that have helped me get to where I am today and will help me get to where I want to go.
Money is a big stressor in a lot of people’s lives and relationships. At the beginning of my marriage, money was a stressor. (Mostly because my wife didn’t want to spend ANY money ever; I was the spender). But over time, these principles helped us align our financial goals and work together to make them happen.
Now, we’re both obsessive in reaching our financial goals. We donate 10% of our paychecks to our church. We have a set savings percentage we contribute to retirement and our emergency fund each month. We also talk about finances; we set goals and make plans about what we need to do and what it will take to achieve them.
Managing your money doesn’t have to be rocket surgery. Hopefully, this article has given you some insight on how you can make your personal finance management better. What principles have helped you manage money? Leave a comment below!