How many times have you heard the word “economy” mentioned in the news this week? Once? Twice? Five times? More?!
It seems that every news source—Internet, TV, the papers—has something to say on a topic as diverse and multi-layered as the state of the national economy.
Well, I have something new to propose: Let’s ask the Internet to stop giving us streaming stock quotes, and let’s ask the folks on the evening news to stop giving us the daily value of the budget deficit. Why? Because really, you are what the economy is all about.
Let’s start at the beginning: “Economy” comes from the Latin root “ecos,” meaning “household.” So if you want to know what’s going on with our nation’s economy, don’t look at the stock market, look at your house. I mean your financial house. If you have any sort of income—whether from a part-time job while you’re finishing grad school or a full-blown salary with benefits—you indeed have your own financial house. And like any “home-owner” in the U.S., you have a lot of control over your money.
So the question is, do you want a big or small financial house? I bet I know your answer; it’s the same as mine and probably everyone you know. Even if you’re not making a lot of money right now, you know that our country gives all of us equal opportunity to achieve the dreams we want, if we are willing to work hard and be smart about what we have.
Whether we want to admit it or not, we have entered the path of adulthood. And with the process of maturity comes knowledge of handling our money. No special secret is reserved for the “Bill Gateses” of this world. Rather, it is simply a matter of being aware of the power you possess, and moreover, a great deal of respect for it.
Here are three steps to help raise your awareness about money so you can enjoy it and live your life well.
[SPEND YOUR MONEY] Thought you’d never read that as financial advice, huh? Well, the truth is, the only way to figure out what you have in life is by exercising what you have. A good runner doesn’t know how fast he is if he doesn’t run. And you won’t understand the power of your money if you don’t spend it. The runner uses a stopwatch to measure his progress. Similarly, you must clock your spending patterns to understand your financial power.
Of course we all know from real life and the movies that power can be abused. But even the most evil of villains knows one thing for sure: They are aware of a certain power they have. Of course, I know you only want to do good things in life—and you will—but you need to know yourself well. One of the worst things you can say in life is, “I don’t know where my money goes.” That’s the same as saying, “Outside forces have control over my money even though I’m the one who works for it.”
You need to spend your money, and you need to know exactly where you are spending it. Don’t just say to yourself, “Okay, that movie ticket was $7.” I mean, write every purchase down. Buy a little memo pad and casually write down what you buy and how much it costs.
Your first responsibility is to be diligent about recording every cent that you spend. But do nothing with this information for a full week. Think of yourself as a scientist; you are just collecting data. Then, at the end of the week, do what every good scientist does: Review your data and draw conclusions.
Divide your purchases into categories such as movies, CDs, DVDs, restaurant bills, etc. Then add up all the purchases in each category. Carefully review each total. How much did you spend on CDs this week? What about eating dinner out? What about the movies?
Do you see clearly where your money is going? Where did you spend the most? The least? Only by knowing yourself can you decide what’s important to you.
For example, let’s say you want to buy a collector’s edition boxed DVD set. Well, look at how many times you went to the movies this week or ate dinner at a restaurant. How many of those trips equals the amount of the DVD set? If the DVD set is really important to you, the little notebook is going to tell you in black and white that it’s not getting enough of your power. By knowing that X number of trips to the movies is the same cost as the DVD set, you can then figure out if you really want to go to the movies, or if you will skip going to the movies this time because there is something else you’d rather buy.
You know that knowledge is power. Wield it wisely by prioritizing.
[LOOK AT YOUR PAYCHECK] What’s all of that stuff on your check? Federal Income Tax, Social Security Income Tax, State Income Tax. Look closely, because you’ll notice “minus signs” in front of the dollar amounts listed there. You know what that means: The government is subtracting money from your paycheck.
At first glance, it looks like this big, faceless institution is taking your money. But what you may not realize is that they are also giving you something very valuable in return. For example, some of those subtractions from your paycheck are paying into a system that provides funding for schools. Also, your town and state receive some money for maintaining parks, picking up the garbage and paying police officers directly from your paycheck.
But perhaps more importantly, those deductions from your paycheck are one way of recognizing your place in society as a contributing citizen. That means you are as much a part of the system as your parents or the Wall Street bankers. It means that you have a voice in our government, and every politician is expecting you to have your say in the government by voting. In fact, they need you to speak your piece because they recognize your power. Remember, when you vote, you have the power to give one person a job and take a job away from someone else.
Your paycheck deductions go toward paying for things that you use everyday. When it’s your turn to vote, use your vote to make sure you are getting your money’s worth.
[OKAY, NOW WHAT ABOUT SAVING?] A car. A leather jacket. A trip. Going back to school to get a Master’s. If it’s important to you, make it happen. That’s the only thing you need to know about reaching your goals. The first thing to do is to decide what’s really important to you, because if it is, you will have to throw the whole weight of your power behind it. In other words, it’s a commitment.
There’s a big difference between self-discipline and self-denial when you’re saving. After all, you are working hard today, and you deserve the reward of spending your money today. But you have to know how much your goal costs and what small steps lead up to achieving that goal. A lot of things might be important to you, but remember, the world was not created in one day, but piece-by-piece. Build your world in the same controlled manner, and make choices that will make you happy.
Also, talk to your family and friends, and let them know what your goals are. You’d be surprised, but the minute you put that energy out into the universe—speaking out loud what you wish for—you’ll see everyone rising to your side and working with you to help you reach your goal.
[Yvonne Pesquera is a professional writer who can imagine no greater glory than waking up every morning.]