Personal Responsibility for your finances

The following is a guest post from Steven Toschlog who works as an accountant in Richmond, Indiana.You can contact Steven at stoschlog (at) parallax.ws

Too many expenses, not enough income!

It’s a never-ending problem – not enough income to cover all of the expenses. Have you ever had one of those weeks when everything that can go wrong does? Monday: The car breaks down. Tuesday: Your place of employment for the last several years suddenly closes. Wednesday: The kids get sick and an unexpected insurance bill shows up in your mailbox. Thursday: Your bank calls threatening to foreclose if you aren’t current by the end of the month. Friday: Well, you get the picture.

The expenses keep rising, but the paycheck stays the same (if you’re lucky). What do you do when unexpected expenses keep mounting, or when everyday expenses like gasoline or groceries become virtually impossible to afford? Pray? That would be a great start, but don’t stop there.

Personal Finance = Personal Responsibility

Consider this thought for a moment: “Personal Finance = Personal Responsibility”. Within this statement lies the key to putting money in your pocket. You didn’t ask to be in the hole you’re in, nor did you intentionally make decisions that would ultimately lead to financial struggle. You were doing the best you could. However, you now have a choice to make. You can sit around “waiting for your ship to come in”, doing nothing of any significance to improve your situation. Or, you can roll up your sleeves and take personal responsibility for your financial future.

The next government “hand-out” may provide some temporary relief, but it’s not going to solve your long-term financial problems. You might as well take responsibility for yourself. No one else will. In fact, the degree to which you take personal responsibility for your money problems is the #1 factor that will determine whether you “make it” or become a statistic.

What does it mean to take personal responsibility for your finances?

You ask, “What does it mean to “take responsibility” for my finances?” First and foremost, it means that you do not blame others for your struggles. Were you treated unfairly – maybe. Is it your fault that the kids got sick or your company closed – probably not. However, blaming something or someone else will not put food on the table, gasoline in the tank, or pay the mortgage.

Below are 6 characteristics of those who take personal responsibility for their finances and put money in their pocket. These characteristics represent very doable, practicable, and realistic steps anyone can take.

1. A spending plan is priority- Proverbs 21:15 from the Bible offers very good business advice. It says, “The plans of the diligent lead to profit as surely as haste leads to poverty.” A spending plan, or budget, is nothing more than a written plan detailing income and expenses before they occur. Having a plan in place shows diligence, which leads to profit. There are numerous resources available that will teach you how to develop and implement a spending plan. Two such resources are talk show host Dave Ramsey, and Crown Financial Ministries (you may also want to download a free budgeting template).

1. Saving money is a priority – A responsible person knows that emergencies will happen. These emergencies will only dig your hole deeper unless a conscience decision is made to save money for them in advance. Saving, by definition, is spending less than you make. It may seem impossible, but when you truly get sick and tired of emergencies plowing you under, you’ll figure out a way save. Working extra jobs and cutting unnecessary expenses are the quickest and simplest means of doing so.

1. They recognize the difference between “needs” and “wants” – Is your car payment eating you alive? Yes, transportation is a need. However, the need can be met with a $3,000 beater. Reliable transportation does not require a $10,000 vehicle. Free yourself of that huge payment and sell the car. Guys, that nice 4-wheel drive truck you’re driving around is not worth it. You’ll sleep better at night and get along with your spouse better without the pressure of that big payment. Also, add up how much you spend on restaurants and fast food each month. You’ll be amazed how much you can save by cutting out this “want”.

1. They refuse to borrow money – So, your finished basement flooded and the insurance isn’t paying. You would like to get a loan to repair the water damage and refurnish. However, if you already struggle to pay your mortgage each month and keep the lights on, the last thing you need is another monthly payment obligation. Regarding your basement or any other loan “opportunity”, the best option is to sacrifice short-term to protect your long-term security. Take the money you would have otherwise spent on a loan payment and save it. As the savings builds, repair the basement little by little. If you can’t afford to save toward this, then you can’t afford the monthly payment that would result from taking out a loan either. Don’t borrow money. It will make things worse.

1. They don’t wait for friends, family, the government, or God to rescue them – A financial gift from a friend or family member is nice. A stimulus check doesn’t hurt either. But, don’t make the mistake of expecting these sources of income to make up for a lack of financial planning (see #1 above). How about God? Does He rescue people from their financial troubles? If you are a Christian, you may be familiar with the principle of tithing. The Bible does promise financial increase to those who are tithers, but giving 10% of your income to your local church is just the beginning. God will not cause a money tree to grow in your back yard just because you threw 10% (or even more) into the plate. He’ll bring the promised financial increase to you, for example, by opening up doors for good employment and by revealing areas where your spending has been out of control. It’s still your responsibility to put in the application, show up to work, work hard, and cut out unnecessary spending.

1. They are givers – Givers are the happiest, most fulfilled people in the world. Giving of your time, money, effort, and energy takes the focus off of your own problems. You need to get your focus off your problems from time to time, for your own sanity’s sake. Those who are constantly worried about their money, or their lack of it, have difficulty focusing on anything else. It makes them not as productive at work, for example, which can cost them a raise or even their job. Also, giving of financial resources to friends, family, or your local church is a way of meeting someone else’s needs. Sooner or later, you’ll have a need and be glad when someone else decides to give to you. Start the cycle; start giving today.

Personal finance is your personal responsibility. When it comes to money, life isn’t poker. You must play the cards you’ve been dealt. You can’t fold and keep your money. If you quit, what little you have will disappear very quickly. Don’t feel sorry for yourself; just start with what you have and where you are today, own up to your mistakes, and move forward. You have the power to do something about your situation. If you’re serious about fixing your problem, there is no limit to the progress you can make. Take responsibility – take action!

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2. Are you taking responsibility or playing the blame game?
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4. Government and Finances
5. Showing Your Finances The Light of Day
6. Classic budgeting with Mvelopes Personal
7. Don’t fall off the wagon with your finances
8. ABCs of Personal Finance: 26 Elementary Money Lessons