Tuesday, April 26, 2011

Basics For Personal Finance

Whenever I counsel people on getting their personal finances under control I always start with the basics.  No matter how much money they make or how much debt they have I start with just a few things.

The first is gathering some vital statistics involving their current situation.

  • How much money do you make currently?
  • How much are your monthly expenses?
  • How much debt do you have?
  • Why now?
The first three points are very basic and common sense driven.  The last point however is the most important and the one that I spend the most time on in our first meeting with someone new.  Getting your finances under control is not about your current situation.  It is about why you want to get out of debt.  This "why" could range from you woke up and realized you weren't living the life you wanted, to your family is wanting to go on a big vacation and your current situation does not afford you the ability to do that.

For me and my family it was the revelation that we were not stewarding over the money that God had blessed us with.  The "why" for me was the desire to glorify God by the way I used His money.  This was a strong "why" for my wife and I, and is the one that carried us through to paying off $50,000 in debt in less than two years.  Without the strong "why" it wouldn't have mattered what tools, information, or education we had.  Through that time we thought back to our "why" which was to glorify God and lean on Him for the strength to do so.

When accomplishing any goal, no matter how big or small your "why" has to be bigger than the goal you are trying to accomplish.  If it is not, you probably don't have a great chance of accomplishing it which is why it is important for me to understand with clients what that "why" is.  Throughout the counseling process we might go back to someone's "why" several times to help them to accomplish their goals.


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