Yesterday was, of course, Independence Day. We did the usual hot dogs, watermelon, fireworks. Then I came home and read Chris Brogan’s blog post A Day of Independence. He talks about how important independence is to us as Americans, with the exception of our financial independence. We seem to expect all of our financial security to come from one company, he notes. He says, “The most peace and content and happiness I’ve yet felt on this earth comes from the fact that I choose every project I work on, and that my future is firmly held in my hands.” He goes on to talk about how his life has changed from worrying about where money was coming from to sharing with others, all because of this independence he has exercised as an entrepreneur.
His post made me think about this book I’m reading. Last week I picked up a copy of “Smart Women Finish Rich”
I’m not in the habit of reading books about money, so I’m not sure where this one sits in comparison with other personal finance books, but I’m finding Bach’s book very helpful. What I like about the book is that it encourages the reader to start thinking about money by relating it to your values. He recommends that you ask yourself the question, “What’s important about money to you?” By thinking about what money means to you, you start to think about your spending and saving in a whole new way.
For example, I have been self-employed since 1997, and for most of that time I’ve only worked part time (I’ve also been the full-time, stay-at-home parent for most of those years). My husband’s job has supported us and provided us with health insurance, giving our family the security that has allowed me the independence to start two businesses. I realized as I was reading Bach’s book that I would like to be able to return the favor, to provide financial security so my husband could become an entrepreneur, too. Having more money—by spending it differently, working more hours, saving in different ways—could offer him the opportunity to enjoy career independence. For me, it seems, money is all about independence.
I agree with Chris Brogan’s assessment of self-employment: real contentment and happiness can come from being your own boss, feeling in control of your fate instead of being at the mercy of your employer and a victim of the next downsizing. But of course true independence can’t come unless you are financially successful as an entrepreneur. And I think that understanding your relationship to money, what it means to you, and what you value, is important (if not absolutely necessary) to gaining that success and independence. I recommend David Bach’s book if only as a place to start that conversation with yourself about what is most important to you and how money fits into your plans for achieving your goals.
I want my kids to grow up and be independent, and we don’t often say it this bluntly, but so much of that depends on money! A friend who’s going through bankruptcy told me that the mandatory class she was taking “should be taught in high schools.” Why isn’t it? Why don’t we talk and think more about money? Or maybe I should ask, why don’t we talk and think more about money in more productive, helpful ways? What do you think?
I think the most important thing we can learn for ourselves (and subsequently teach our children) is fiscal responsibility. Stay out of debt if at all possible, reduce the debt you have as quickly as you can, credit cards aren’t free, save for what you want, save for a rainy day, and don’t spend more than you have coming in. Our family goals include paying off the house (we pay extra to bring it down faster), saving for our son’s college education (we make this a monthly obligation and started as soon as he was born), saving for retirement (we make a point to max out our retirement savings as much as we can), and for me personally, keeping a reserve of cash in the bank for “emergencies.” I can’t tell you how many times that “rainy day fund” has come in handy. I also think it’s important to differentiate between wants and needs. Needs first, wants second (if and only if there are still funds available). It seems to me that people struggle with living within their means. Look at the mortgage crisis or companies “needing” bailouts; even our government can’t balance a budget. Doesn’t really say much for our society now, does it?
I totally agree with you, Lisa. In thinking more about it, I am pretty sure that we don’t talk about money because it IS so wrapped up in our values, and those things are considered too personal to teach in school. There should be some fundamental things, though, that we can all agree on and teach our kids (whether in school or at home). While I enjoyed advanced math classes, a more practical lesson in budgeting and balancing a checkbook would have been helpful, too. My parents taught me about those things, but not all parents do that. Isn’t that more important to kids’ success than some of the other things they are taught?
I’ve just added a new post about financial planning, and hope to run a series of related posts with Robert’s tips and advice. I’d love to have your feedback on those posts, as well. I really appreciate your thoughts, Lisa!