Wise Money Management

Written by Charneise Alston, M.Ed

There are certain milestones in one’s life that serve as markers in the journey of adulthood. Unfortunately for many of us, fiscal responsibility is a concept that is usually refined in the latter years of our lives. Conversely, adolescents and young adults tend to burn through money without any discretion or desire to save. Impulsive buying is fueled by the surge of a new-found independence and unnecessary debts become additional weights in our travels to financial freedom. As we mature and become more astute in our money management, we learn the importance of getting out of debt so that money can function according to its purpose.

According to businessman and author Dave Ramsey, money has three purposes. The objective of money is to invest, give, and enjoy. Maintaining a healthy balance amongst those three purposes is both the challenge and goal. Many times we are enjoying money to our own detriment because we’re not setting boundaries or creating plans. I was taught that if you are not living according to plans, then you will live under pressure. And as we all know, life’s responsibilities provide pressures in the forms of bills and deadlines.

In order to activate the purposes of money in its full potential, one must aspire to live debt-free. Financial freedom is the truest liberation that signifies independence and allows you to create a legacy for your future heirs. Therefore, it is important to develop discipline and a budget. Everyone needs a budget, regardless of your income. If you are not intentional about your money, you are interfering with its ability to yield a maximum return. A budget allows you to monitor your expenses and track a record of your spending.

How much money did you spend this month on going out to eat? How much money did you spend this month on shopping? The great perk of technology is its ability to keep you informed. Each year, I create a budget to help govern my spending. I create financial goals, weekly and monthly. Fortunately, financial apps help keep us updated and informed about our spending. After downloading the Mint app, I was given a reality check about my spending. I was guilty of underestimating my spending habits. The Mint app gave me an idea of what I was spending on a periodic basis and determined what areas needed adjustment.

Once a budget is created, you have to be disciplined to stick with your newly-set limits. Articulate the “why” behind what you are doing to preserve motivation. Write down your budget to cast the vision for your finances. For example, it is my goal to have my mortgage paid-in-full by the time my daughter graduates from elementary school. Why? Once my home is paid-off, I can have the flexibility to invest more into her future and expose her to international traveling. Therefore, I pay additional money towards my mortgage to lower the principal balance. I am willing to pay the short-term price for the long-term gain.

I also save money for my daughter’s future education. While it is my daughter’s decision whether or not she chooses to go to college, it is my responsibility to help guide her in the direction that is most sensible for cultivating her gifts and talents. The summation of applied knowledge, training and good character equals success. As odd as this may sound coming from a school counselor, college is not for everyone and a degree does not guarantee success. However, the applied knowledge gained from college to enhance your skill set will always be valuable. I want to facilitate in helping my daughter chase her wildest dreams. Therefore, I must prepare now by being financially diligent in my quest for financial freedom.

The biggest lesson that I learned when choosing to heal my finances was that every dollar is not supposed to be spent. I had to shift my mentality from disposable income to discretionary spending.  I was the person who had the latest gadget, designer bag, and smartphone. However, I did not have a matching savings account. I also rented an apartment for seven years, victim of increased rental rates, before deciding to purchase a home. Do you have an emergency fund? Unfortunate life events like the loss of employment, divorce, unexpected medical bills, and home repairs can all be financially traumatic. My life’s motto is that it is better to prepare than repair. So, begin saving now.

Once I realized that the numbers were not making sense or cents, I decided to be aggressive with my ability to save. I lost the taste for certain things that used to excite me upon purchase. I began training myself to embrace delayed gratification. My lifestyle changed because my values changed. I had to redefine what was most important in my life. I no longer received an intrinsic satisfaction from materialistic consumption. While there is absolutely no problem with having nice things, I had to learn to live within my means. Just because I can afford it does not mean I should buy it, I quickly became a smart shopper.

Smart shopping is the skill of making savvy purchases in efforts to achieve price savings. As a smart shopper, I do not pay full price for anything. I love a good sale and understand that items with a depreciating value are never worth the retail price. I keep my vehicle for at least ten years before upgrading to a newer vehicle, cars are not investments. I also buy quality clothing, on sale, that will last throughout the years as I rotate and adjust my wardrobe. Do yourself a favor and create spending limits. Saving money excites me because when I control my spending, I’m not seduced by retailers or in competition with anyone. I choose to live my life within my means and have a contentment for all that I possess.

As the holidays are quickly approaching, I urge you to start setting boundaries. Have a realistic budget established for your holiday spending. Ten years ago, I took pride in giving the best gifts. I would over exert my spending to appease the expectations of others. Now, because I have a disciplined lifestyle, I am fortunate to give consistently instead of seasonally. I love displaying random acts of kindness by blessing my friends with “just because” gifts or deposits via Cash App. Ironically, my generosity is an extension of my self-restraint.

How well you manage what you presently own indicates whether or not you are able to be entrusted with more. Your quality of management is a reflection of your character. Are you a person of integrity? What is your attitude towards paying debts? Do you pay your bills on time? Do you delay repaying borrowed money? What is your reputation surrounding money? Are you trustworthy? Do you pay off the entire balance of a debt or do you allow interest to compound over time?

In closing, don’t be apathetic and just accept your current financial state. There is always room for improvement if you are willing to do the work. Once you have eliminated your debts, invest. It’s good to invest 15% of your household income in good growth mutual funds and real estate. Cultivate your money growth by investing wisely and heeding to sound financial counseling. Don’t let your debts fall onto your succeeding generation. Instead, create a legacy that will break past financial patterns and commence financial empowerment.

“No discipline seems pleasant at the time, but painful. Later on, however, it produces a harvest of righteousness and peace for those who have been trained by it.”

Hebrews 12:11