Five Financial Realities That We Do Not Like to Face

By brooger on Jan 16, 2010 | In Business Ideas | 2 feedbacks »

1. Your money will not manage itself. Fail to manage your money, and you have sown the seeds of financial failure. The number-one pitfall that people fall into is to think that somehow by some magic their money is going to manage itself. Nothing could be further from the truth. The plain truth is, if you don’t manage your money, no one will.

2. Of far more consequence than how much money you make is what you are doing with what you are now earning. Researchers tell us that often, the more money that people make, the poorer money managers they become. You say,” What? How could this be?” It’s because they live under the false illusion that making more and more money will solve their money problems. Unless a person manages his money, the more money he makes, the more money problems he is going to have.

Follow up:

I knew a man who made an average income and had some money problems, but as a result of successfully marketing a new gadget he had invented, his income was multiplied ten times within a year. At the end of that year, instead of having ten times the money problems, it appeared to me that he had a hundred times the problems. The year that he made $80,000, he actually had to file for bankruptcy. How you manage what you earn is far more important than how much you earn.

3. A person cannot afford to spend more than he makes.

A sixth grader could tell you that is you make $200 a week and spend $212 a week, it is not going to be very long until you are in financial trouble. Reality – you cannot afford to spend more money than you make.

4. Easy credit on items that depreciate rapidly is a bummer. The item is used, worn out, gone, and what do you have left? A bill and more debt. Question – if you cannot afford to pay cash for it now, how can you afford to pay it later, plus 18 percent compounded interest?

5. No matter how much you make, there are many things you cannot afford. This is one difficult reality that is hard for us,, who have been brought up in an affluent society, to accept. I for one like to think that I can say yes to anything I want for any member of my family wants. But the stark financial reality is that there are many things I cannot afford to buy. Let’s face it, we are all in the same boat. There are a lot of things that none of us can afford to buy. So why not accept financial reality and say no. We need to say no. Don’t we?