Lately I have been talking to people a lot about personal finance. I am trying to get people out of the consumption mindset and seriously look at why we spend money on things that we don’t need, when important issues such as savings (for emergencies, purchasing a home, etc.); which are far more important than 500 channels with nothing on, excessive dining out, whatnot. I figured I might as well make a full-on rant about personal finance.

1. You’re smart. You’re smarter than the people who are marketing to you 24/7. But they think you are an idiot who is not curious about how they use the profits you give them. That’s your money, you work hard for it. Keep it and make them earn every penny if you decide to spend it. The problem most people have is no planning whatsoever. What do you want to do with your money? A few suggestions - get out of debt, start a saving account, save for retirement, earn a decent FICO score, purchase a home, etc. Once you have decided what your goals are (Congratulations!! This is a very big first step), don’t let anything you can control come between you and your goals.
2. I have been a long time believer in paying yourself first. Here is what I do. On the first of the month (when I get paid) I put X amount into an ING Direct account, and then a certain amount goes to credit card debt (I earned this when I was laid off. The debt is still there but I have 0% interest on it). BUT before I even see the money, I max out my donation to my IRA. My employer is kind enough to match up to 10%, which means I save 20% of my gross salary automagically. I don’t know anyone rich enough to leave money on the table like that. Leaving free money out there is stupid and I cannot stand it when smart people make stupid decisions. After you do this at the first of the month it is much easier to adjust your spending for the rest of the month to live within your means and meet your financial goals.
3. I am religious about tracking everything in Microsoft Money but there are other tools including free ones. When I first started, I just tracked net income vs spending. About 6 months ago, I started tracking gross, taxes, etc. This allows me to keep up better with my net worth with the IRAs. Money has great investment tracking tools with its portfolio manager, and if you track mutual funds (my investment choice) then it makes querying which funds with regard to performance, investment type, etc. so that you can research if there are funds out there you should be in. I have not seen anything this useful on Fidelity’s web site.

Let me wrap up with this. Money and how you use it is very complex emotional equation. Financial security and the freedom of choice it provides are the only real emotional benefits that are worth a damn that money can provide. Once you don’t have financial security and need it, you see how important it is but then it is too late. You may also be more risk tolerant to try new things, apply for a better job, etc. But spending has never once supplied a real long-term emotional benefit. And when you think about what damage overconsumption does to the environment, how we as Americans are saving less and how this benefits places like China and the Middle East. The smartest thing to do personally benefits you, your country, and your planet. But most Americans are too fucked in the head irresponsible to change their behavior. Even after all we have seen in the past couple of years, now that gas price has scaled back, hybrid sales have fallen, despite hybrids paying for themselves over time.