Are You Good With Money?

[NW-Bound]

Am I good with money?

I guess I am good enough, to be able to retire early despite leaving megacorp early to pursue some business ventures that went belly up, while people in my pay grade were still working last I knew.

That does not mean I cannot be better, as one of the slogans of my former megacorp touted: "Continuous Improvement Process".

 

[kcowan]

I would add:
Good at spending was the first skill: Buying what we needed and no more. Sometimes highest quality because we had a discount source and so upgraded to the best for a price under the cheapest. Learned about loss leaders.

then when it was possible

Good at saving: Putting money away and not including in our spending budget. A company stock purchase plan helped with that. I still own a substantial stake even though I sold tranches along the way to avoid debt. I always disliked debt.

Good at investing: This came last and should have been developed earlier but no one recommended it. It has evolved from chasing hot stock tips to maintaining a balanced portfolio.

 

[Shanky]

For many years I was very good at earning money and that was it. I would earn more than I could spend in spite of my lack of discipline. When I reached my late 40's, I stated saving. Retired at 55.

 

[medved]

When people think about the idea of "good with money" they seem to mostly focus on not spending too much, LBYM, paying off high interest debt, diversifying investments, saving for retirement, and such financial hygiene.

A harder (for some of us) type of "good with money" is making sure you spend enough. Not being unnecessarily frugal in a way that impairs your quality of life. Making sure you use your money to buy as much happiness as money can buy. Not being so focused on wealth accumulation and preservation that you fail to use the money for enjoyment. That sort of "good with money" is probably less often discussed, but I guess equally important.

 

[Danmar]

When people think about the idea of "good with money" they seem to mostly focus on not spending too much, LBYM, paying off high interest debt, diversifying investments, saving for retirement, and such financial hygiene.

A harder (for some of us) type of "good with money" is making sure you spend enough. Not being unnecessarily frugal in a way that impairs your quality of life. Making sure you use your money to buy as much happiness as money can buy. Not being so focused on wealth accumulation and preservation that you fail to use the money for enjoyment. That sort of "good with money" is probably less often discussed, but I guess equally important.

Well said, agree. Also the idea of "good at making money" will help with some of the other obvious "good with money" traits.

 

[scrabbler1]

When people think about the idea of "good with money" they seem to mostly focus on not spending too much, LBYM, paying off high interest debt, diversifying investments, saving for retirement, and such financial hygiene.

A harder (for some of us) type of "good with money" is making sure you spend enough. Not being unnecessarily frugal in a way that impairs your quality of life. Making sure you use your money to buy as much happiness as money can buy. Not being so focused on wealth accumulation and preservation that you fail to use the money for enjoyment. That sort of "good with money" is probably less often discussed, but I guess equally important.

One condition for when I ERed back in 2008 was that there would be no change to my everyday lifestyle. That is, I would not have to alter my already basic spending patterns. If I felt like going out to eat once in a while, I would not worry about its impact on my budget. If I went on a small spending spree once in a while, I would not worry about its impact on my budget. To do this, I built into my budget a cushion, or surplus, to cover such things, so the worst thing to happen would be the surplus got eaten up once in a while.

 

[Hermit]

When people think about the idea of "good with money" they seem to mostly focus on not spending too much, LBYM, paying off high interest debt, diversifying investments, saving for retirement, and such financial hygiene.

A harder (for some of us) type of "good with money" is making sure you spend enough. Not being unnecessarily frugal in a way that impairs your quality of life. Making sure you use your money to buy as much happiness as money can buy. Not being so focused on wealth accumulation and preservation that you fail to use the money for enjoyment. That sort of "good with money" is probably less often discussed, but I guess equally important.

Someone on this forum says one of his favorite pastimes is counting his money and watching it grow...

 

[NW-Bound]

You rang?

Yes, I like to count my money. Actually, Quicken counts it for me. And I make it do that several times a day, as I own a lot of stocks which are fun to watch during trading hours, compared to MFs that you only know about 2 or 3 hours after market close.

But it does not mean that I don't spend it. In between "counting money", I go do some other "stuff". I have been surfin' the Web refining my upcoming 6-week European trip. I only have a few gaps left to fill in, and finally found a hotel in Milan that has just been completely renovated, has free parking, and is close to a Metro station for us to get into town. I even researched the convoluted drive to get from the hotel to the paid parking lot near that Metro station.

Just a bit of rambling to say that while I enjoy "counting" money, I do like to spend it too. I also looked at several trattorias inside Milan for the meals.

Counting money is really fun, particularly if you still have plenty left after you spend some. Heh heh heh...

 

[medved]

Yes, I like to count my money. ...Counting money is really fun...

I guess that just shows that people have remarkably different ideas of what is fun. Personally, I cannot imagine anything less interesting than counting my money. I would put it pretty much in the same category as unrolling a toilet paper or counting from one to a million. Then again, I also find watching poker or billiards on television boring, and yet other people enjoy those things. So I guess different strokes ...

 

[NW-Bound]

It only takes a few seconds for Quicken to tally it up. As a stock picker, I need to know how my stocks are doing, even though I do not trade every single day.

Yes, I find investing to make money fun, as much fun as spending it. And I find watching spectator sports so boring (anything that involves a round object, or anything that moves fast) I must be paid a lot of money, and I mean a lot of money, to watch a game.

 

[Fedup]

When people think about the idea of "good with money" they seem to mostly focus on not spending too much, LBYM, paying off high interest debt, diversifying investments, saving for retirement, and such financial hygiene.

A harder (for some of us) type of "good with money" is making sure you spend enough. Not being unnecessarily frugal in a way that impairs your quality of life. Making sure you use your money to buy as much happiness as money can buy. Not being so focused on wealth accumulation and preservation that you fail to use the money for enjoyment. That sort of "good with money" is probably less often discussed, but I guess equally important.

I'm always good with money that way

 

[NW-Bound]

Speaking of counting money, I do not just count the money coming in, but also that going out. While I do not have a strict budget, I want to know where we are each year with respect to the target that I have in mind. I always keep track after the fact of all expenses to detect any telltale sign of lifestyle creep.

Yesterday, I was looking at my Quicken screen, and amazed myself that our spending YTD was lower than the first 4 months of previous years. Then, my wife reminded me that the upcoming trip expense, much of it already paid, was probably not accounted for. Duh!

What happened was that we booked a flight from LAX to CDG as it was less expensive than from our home city, even if we had to book Southwest flights to/from LAX. While booking the SW flight, I saw that they offered $200 for applying for their credit card, which is $100 after deducting the $100 annual membership, I went for that. They also said no foreign transaction fees, so I have been using it to book hotels, Airbnb, and to pay for the car rental.

And I have not gotten around to enter this new credit card account into Quicken for the latter to download all transactions. After doing that, I then saw that the YTD expenses were brought up to the same as last year. Hah! My wife has been paying all the bills. I only use my Quicken to do a higher-level look of where we are, so missed this credit card account.

I never spent as much time "counting money" like this when I was still working and bringing in money. Now that I have to live off my investments and savings, I pay more attention.

And seeing that the stash grows despite withdrawal for spending is indeed fun! If the stash shrank, it would no longer be fun, but then I would have to "count" even harder.

PS. The initial card bonus paid for much of the SW flight to LAX. Then, we waited to book the flight coming back to see if there would be better deals. My wife finally booked that, and by that time we had enough expenses on the card that the mileage on it was enough to get us a free flight back. Son of a gun!

 

[brett]

I do not think that I am particularly good with money. DW says that I am. I would say that it is more common sense mixed with a tinge of financial astuteness. Or rather being financially aware if you will. Our financials would indicate that I am good with money. More good fortune than anything else.

Some of our relatives would be in the 'poor with money' category. To a large extent I would say that their desire for instant gratification has always trumped their common sense or their ability to handle money even in the most basic way.

 

[Markola]

I do not think that I am particularly good with money. DW says that I am. I would say that it is more common sense mixed with a tinge of financial astuteness. Or rather being financially aware if you will. Our financials would indicate that I am good with money. More good fortune than anything else.



Some of our relatives would be in the 'poor with money' category. To a large extent I would say that their desire for instant gratification has always trumped their common sense or their ability to handle money even in the most basic way.

+1. I've been good and bad with money but I have always had a vision that I would invest and become wealthy enough to not have to work when I'm old. In my 20s, pre-internet, I found a book called "Get Rich Slowly" (no relation to the more recent blog), which explained how 401ks and mutual funds work. It made my own path pretty clear and I reinforced it with more knowledge and DW and I have built up seven figures and no debt slowly but relentlessly.

Other people I know, some far smarter, educated and accomplished, just don't have a vision for their future like I do. Money comes in and money goes out because spending is like a gas - it expands to fill all available space.

I only wish I'd had a vision in my 20s to retire by 50. I had no concept or role model for that. Accordingly, the financial plan that a planner did for us at age 30 called for having enough to maintain our lifestyle at 59.5. I'm 51 and, if present trends continue, I'll have exactly enough for that at 59.5. I might trim lifestyle to go part time before then though.

 

[athena53]

I can do math. Good at sums. P&L's,balance sheets, cash flow statements and margins are not strangers to me. I understand the difference between red ink, black ink, depreciation, and retained earnings.

If you understand math, numbers, margins etc. it goes a long way toward living within your means and avoiding debt-especially consumer debt. Leads to value based purchases at the right time for the right price. Allows one to push the boat out and splurge once in a while without much thought to the expense.

Yep. I also learned compound interest when studying for actuarial exams and was fascinated by it. I think it helped me look at the big picture when taking on (or considering) monthly payments. I have Ting on my cell phone (which I bought outright). Next month I'm dropping Comcast in favor of Google Fiber (Internet only) plus Netflix. Cars have been a low priority- buy something used and reliable, take care of it, drive it till it's no longer reliable. Any one of these things is small on a month-to-month basis but over a period of years it adds up.

More money left over for plane tickets.

 

[scrabbler1]

Yep. I also learned compound interest when studying for actuarial exams and was fascinated by it. I think it helped me look at the big picture when taking on (or considering) monthly payments. I have Ting on my cell phone (which I bought outright). Next month I'm dropping Comcast in favor of Google Fiber (Internet only) plus Netflix. Cars have been a low priority- buy something used and reliable, take care of it, drive it till it's no longer reliable. Any one of these things is small on a month-to-month basis but over a period of years it adds up.

More money left over for plane tickets.

I majored in economics in college and took a finance class which explained more how compound interest worked.

My favorite TV quote about interest is from a Seinfeld episode. Remember this exchange between Jerry and George in "The Junior Mints" episode?

George: "Yeah, interest. It's an amazing thing. You make money without doing anything..."
Jerry: "Y'know, I have friends who try to base their whole life on that principle."
George: "Really? Who?"
Jerry: "Nobody you know..." [makes a funny face while turning away from George]

 

[Badger]

I'm sure we can all add an item or two on the list that would make it more effective and still keep it simple. I was surprised that how you spend was not addressed. Most people who would benefit from easy to understand lessons in personal finance might be best served to know the difference between "Need" and "Want" and how to apply that knowledge.

Cheers!

 

[brett]

Years ago, after buying a home, I purchased a little blue mortgage table book.
It was one of the best investments that we ever made.

First off we switched our mortgage payments from monthly to biweekly. That cut a year or two off the 25 year mortgage. Then we upped the payments slightly. That cut another 5 years off. We also paid a portion on each anniversary date.

As interest rates fell we kept our payments the same. It was amazing. With little or no effort or impact on our daily lives our mortgage amortization was reduced from 25 years to 16 years. It became more challenging after that so I plowed my stock plan and commission cheques into it on the anniversary dates.