15 Minutes to Financial Freedom

The email message contained a single-word subject: Help! The sender, I’ll call her Emily, had been asked by her community group leader to give a 15-minute presentation on how to achieve financial freedom. She was honored to have been asked, excited to do it but also panicked by the thought. She asked if I would help. 

My first thought was I can’t even introduce myself in 15 minutes. How could I, Emily or anyone else tackle that subject in just 15 minutes? But then I got to thinking: If money management is, as I believe, not that difficult, why couldn’t she do it? Why couldn’t I do it? I decided to give it a try.

Save. Do not confuse saving money with spending less, as in “I save money when I buy things on sale.” You are not saving at all, you are spending less. Saving money means that you actually put money into a safe place for some future time. Do that. Starting right now and forevermore, make it a rule that you will put some amount of your paycheck into a savings account before you spend any of it. Make it automatic and you won’t miss what you don’t see. Goal: 10 percent of all you receive goes straight into savings.

Give. Give away the same amount as you save. Just give it away — no strings attached — as an act of gratitude for what you have and how you are blessed. Goal: 10 percent of all you receive, give it away.

Live. Rein in your lifestyle so that it fits into 80 percent of your net (take-home) pay. Pare down your lifestyle. Reduce your spending in every area of your life by a small amount, and you will be able to achieve this goal — probably sooner than you ever dreamed.

Credit. You need only one credit card. Pick the MasterCard or Visa you’ve had for the longest time. Cut up all the others (but don’t close those accounts because would do terrible things to your credit score). Now you cannot use them. If you have a balance on the one card you keep, do not carry that card with you. You’ve given up that privilege until you are able to pay it down to $0 every month.

Debt. The only debt that is safe for you to carry is secured debt (mortgage, car or anything with collateral). All others are dangerous to your wealth. Make a plan to pay off all of your credit-card and other unsecured debts quickly. This is critical to your financial health.

Anticipate. Not all of your expenses occur on a monthly basis. Figure out a way to put aside a little bit each month to handle those expenses that are irregular, intermittent and even unexpected. It will do wonderful things for your peace of mind to know that you have the money for that semi-annual insurance payment, family vacation and summer camp tucked away ahead of time and ready to go.

Cash.  It’s proven that you will spend about 30% more if you depend on plastic to pay for day-to-day spending even if that plastic is a debit-card! Leave the plastic at home. Live as much as possible with cash. Inconvenient? Yes. That’s the point.

Plan.  Society wants you to believe that living spontaneously brings freedom. Just the opposite is true. You need to have a spending plan (a way that you “pre-spend” your paycheck on paper, which some call a budget) so that you know ahead of time where the money will go. Write it down and then stick to it. Take control of every dollar so you are telling it where to go, then pay attention to make sure it does as told.

Support. You need to know that you are not alone. The best way to do that and to keep your focus every day is to get support. Find a community. There are thousands of people getting control of their financial lives.