Monday, July 26, 2010

Baby, You're a Rich Man...

Do you know this Beatles song?

Baby you're a rich man, baby you're a rich man, baby you're a rich man too.  You keep all your money in a big brown bag inside a zoo.  What a thing to do...

I love that song, along with almost every other song they ever recorded, with the exception of Revolution #9 from the White Album, for which the term creepy is an understatement.  But on to the point.

Maybe you don't keep all of your money in a big brown bag.  Or maybe you do, but it's not in a zoo- it's under your mattress.  I wrote in an earlier post that we should save more and spend less.  I want to clarify that this does not mean you should keep your money stashed away like a maniac, waiting for guerrillas to knock down your door in search of it.  You should spend it.  Wisely.

There are a lot of people out there who keep absolutely zero track of their spending habits.  I used to be one of them, and let me tell you that it is no fun at all to let your money control you.  When you spend blindly and use your online banking balance as the Bible of your finances, you are doing just that.  It is unbelievably empowering to keep track of your money!

I was reading Daily Worth today, and it had a nice little article about budgeting.  DW recommends using Mint over Quicken, which is a matter of preference I suppose.  Personally, I use Quicken.  I used to be anti-budgeting and statement-reconciling and all of that mumbo jumbo, because for as long as I can remember, my mother was the finance-patrol, and it drove me insane.  I chose to defy her policing, while my little bro chose to follow it, and let me just tell you, he's done better than I ever did at 19.  I used to think my mother was the biggest Quicken advocate there was- until I met Raph.  He hounded me and hounded me until I finally downloaded the program and got crackin'.

When I first started using Quicken, I wouldn't let Raph look at it.  He'd offer to help, but I was too embarrassed of having no money, so I told him it was none of his business.  And while I still prefer to keep my finances private, I no longer frantically rush to close my laptop as he approaches.

Here are the benefits of using financial software (and by the way, in my opinion, you're not really using financial software if you're just uploading your transactions into your program.  Keeping receipts and manually entering them will make you think ten times harder about what you buy and why.  Trust me.):

1. You get to see the big picture.  If you input data from your checking, savings, retirement and investment accounts, you can see how much you have.  Enter your assets and you'll see you have even more.  Enter your liabilities, and you'll see that maybe you owe more than you have, or maybe you don't owe as much as you thought.  But either way, you see it all, and it gives you direction.

2. You can't make a budget unless you know how much you tend to spend.  You can't just pick random numbers out of thin air until you've watched your spending habits over the course of a few months.  If you give yourself only $200 on entertainment per month, when you're actually trending toward double that amount- you will feel like a failure.  I don't know about you, but when I feel like a failure, it makes me want to give up.  And I did.  I had to start over many, many times before I got it right.

3. Oh, the graphs!  I love the graphs.  You can see where you spend the majority of your money, and it can sometimes shame you into changing your ways.  I love to look at my pie charts at the end of the month and see everything in its perfect balance: rent-a gazillion percent, insurance-only a billion percent, tithing-ten percent, and so on.  Go see the wonderful Dave Ramsey for an idea of what your budget should look like.

4.  Control.  Oh sweet, sweet control.  We know that in the end God is in control, but at least He'll let us feel like we are when we're managing our finances properly.  And that, my friends, is a wonderful thing.

5. You see everything as it goes in and out of your accounts.  Like I mentioned before, it really does make you think twice before you buy a Starbucks everyday.  (Buy Gevalia and make it at home- it's way better anyway!)

So I listened to the Beatles all weekend while I crafted, and that song made me laugh because it reminded me of all the clients I meet who tell me their money is better off under their mattress.  Sure, keep a little bit under there for good measure (and a little extra padding)- but spending it is a good thing too.

I discovered a new blog today: Scoutie Girl.  There was an article about her on DW, so I started to poke around, and I find some of her posts on money to be rather insightful.  She talks in one post about how we tend to spend our  money on useless items and fill our lives with junk- all purchased with our hard-earned cash!  Why do we do that?  We really have no clear understanding about the value of money, that's why.  We purchase cheap products that fall apart too quickly- but we purchase so many of them that we end up with nothing left over to save.  So all we have to show for our hard work is a whole bunch of... nothing.  I should know- I've been buying "work pants" for what seems like decades.  I tell myself that it doesn't make sense to spend a lot on pants that I can only wear to work, so I purchase items that lose buttons, hems, color, appeal and fit.  They lose everything after a few washes!  They end up in my bag labeled: "clothes to use for crafting."  (So at least they go to a good cause!)

Spending is good if it's on things that will last or are worth your money.  It's also good if it helps small-business owners (or crafters on Etsy!).  It makes the world go 'round, and the economy go up. 

So stop sleeping on your money. 

How does it feel to be one of the beautiful people
Now that you know who you are
What do you want to be and have you traveled very far
Far as the eye can see
How does it feel to be one of the people
How often have you been there often enough to know
What did you see when you were there?
Nothing that doesn't show
Baby, you're a rich man
Baby, you're a rich man
Baby, you're a rich man too
You keep all your money in a big brown bag inside the zoo
What a thing to do
Baby, you're a rich man
Baby, you're a rich man
Baby, you're a rich man too
How does it feel to be one of the beautiful people
Tuned to a natural E
Happy to be that way now that you've found another key
What are you going to play?
Baby, you're a rich man
Baby, you're a rich man
Baby, you're a rich man too
You keep all your money in a big brown bag inside a zoo
What a thing to do
Baby, you're a rich man
Baby, you're a rich man
Baby, you're a rich man too

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