I think one reason that some people get themselves in financial difficulties is they simply have not put a priority on knowing the state of their finances. I listen to The Dave Ramsey Show every day, and one thing always amazes me. People call in asking for his financial advice on some topic. The first thing he asks is how much do you make, and you hear the long pause and they stammer, “Uh, well, I’m not sure. I guess maybe $2,500 a month.” OK so how much debt do you have? Again, “Uh, well, I don’t know. I think we have about $5,000 on credit cards, and we owe on the cars but well I’m not sure how much….” It’s clear to me that the first problem they have with their finances is they really don’t have a good idea of what shape they are even in.
Are you a nerd or a free spirit?
Now, I understand why this doesn’t come naturally to everyone. In his Financial Peace curriculum Dave talks about 2 kinds of people. The nerds and the free spirits. The nerds are the ones that love playing with the numbers. Nerds would never be like the caller I mentioned above. Free spirits on the other hand are a party looking for a place to happen. Looking at a list of numbers is the last thing in the world they want to do. I can understand that. God has gifted each of us differently. For some of us doing a budget ranks somewhere between watching paint dry and getting a root canal.
That said, the writer of Proverbs is making it a point that we need to pay attention to our herds. Coming from an agricultural society, this is really the equivalent of stating that we need to pay attention to our financial condition. This does not mean you need to have a master’s degree in finance in order to have success. But it does mean you have to make a little effort.
If you are married, generally one spouse is a little more geared toward the numbers. It’s ok if that person does the budget. However, it is very important then for both spouses to go over the budget and come to an agreement.
The “B” word
The budget is really the first step in “paying attention”. By getting everything down on “paper”, it forces you to face where you stand right now today. I’ve often had people tell me that they kind of knew they had a mess but they were afraid to write it all down for fear of how bad it might be. But then when they actually did write it all down they felt so much better even if what they saw on paper confirmed they had a mess. The unknown can be a very harsh master. Creating a budget is one of the first steps to knowing the condition of your flocks.
A little light reading
You should also take a few moments to review your statements each month whether you get copies mailed to you or you get statements online. When the bill arrives scan through the statement.
- If it is for a credit card double-check the transactions. Make sure they are all legitimate charges you made. If you see things that you know aren’t yours you need to report them to your bank. It’s possible you may be the victim of identity theft.
- Take a quick look at all the additional fees and charges that may be added. They may be legitimate, but if you see things you don’t understand, call customer service and politely ask for an explanation of any charges you don’t understand.
- Check for errors. Companies aren’t perfect. Occasionally mistakes are made.
- Check the services you are purchasing. For phone bills, cable bills, cell phones, are there services or packages you really don’t use that could be removed?
- Check your bank statements too. Make sure you don’t see any items that you know shouldn’t be there.
It only takes a minute or two to scan through the statement and see if there is anything you don’t understand. If you find something, take a moment to call the company’s customer service department. If they are unwilling to patiently explain your bill that might be a good sign you should be taking your business elsewhere.
Keep an eye on the horizon
You also need to periodically review your longer term goals. If you have investment accounts, retirement accounts, college savings accounts or the like, at least a couple of times a year check to see how they are doing. If you have an investment advisor, schedule a meeting at least once a year or even perhaps just a phone call to review your accounts, discuss any life changes you have experienced recently and review your long-term goals.
Don’t forget insurance
You also should be regularly reviewing your insurance on at least an annual basis. If your homeowner’s insurance doesn’t have guaranteed replacement cost (and most don’t) it is vitally important that you review this periodically to make sure you have enough coverage. Check your policies to make sure everything is still accurate. Are there adjustments you can make to save some money? Changes in marital status? Did you have a child? Need to update beneficiaries? These are all things your insurance agent should be happy to help you review.
Don’t let your sheep and cows wander off
Taking a little time to each month to check “the condition of your herds”, will help you sleep better at night and will help you make sure you are able to live the life you desire.
What is one thing you need to take some time to review today?
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