Happy Sunday Everyone:
For the past 12 years I have done a monthly budget. Show’s how many checks came in, how many checks went out, what I saved (or didn’t), and what happened to my overall net worth. I have some overall benchmarks I’m always trying to hit, the most basic being to save 20% of my paychecks, and hopefully more. Someone might say I’m disciplined because I do, I can tell you being inside my own head, I do not consider myself disciplined. I have started and stopped on more things than I care to admit, but this budget is one of those things that has stuck, in large part because I’m required to go through it with my coach on a monthly basis.
3 years ago I asked my team members if they’d like me to review their budgets. I’m not sure I had ever been so nervous about asking a group of people a question. The initial response were blank looks of terror. I think Erica said, “there is no chance in hell I’m showing you what I spend”. It’s a fine line as I’m sure you’re thinking reading this….who am I at a workplace to ask someone if I can review their personal finances? I think a bigger question is how do you know someone doesn’t want help if you never ask them if they need it. Fast forward 3 years and I now review the majority of my team’s budgets monthly. It’s 100% voluntary, it’s zero judgement, it’s just me trying to help them with one space that I’m good at. Having a retirement strategy aside from death is important. I know this sounds harsh but to not acknowledge that fact is worse.
I was meeting with Brigitte last week to review her budget (she gave me permission to discuss this), and she saved more than she had thought, we talked about what else she could be doing with her money (i’m not giving investment advice, just general thoughts). I brought up the concept of compounding, something my team has heard me talk about many of times, but she needed a reminder. I asked her the question, “if you double a penny for 30 days, what is the penny worth in 30 days?”. She had no clue. Side note, I asked all my coaching students this last Thursday, no one knew, I was a little shocked. If you double a penny for 30 days in a row, you will have $5,368,708. As many times as I’ve done this exercise, I did it again this morning just to ensure no one tells me I’m wrong. Get out a piece of paper, write out 1-30 .1. 2. 4. 8. 16. etc…..the 30th number is $5,368,708….BTW-the 31’st number is $10,737.416. My point to Brigitte, and something I’ve learned from my parents, the first doubles aren’t very sexy, the last doubles can be amazing. The challenge however is whether or not you’re in the game, and if you don’t save a dime, you can’t be in the game. It’s not about what you make, it’s about what you save. I’ve seen 2 school teachers have a net worth of 2 mill and I’ve seen people making a 1 mill a year, have zero. Delayed gratification is spending less, saving more. Instant gratification is putting it on a credit card at 28% interest w/ no intention of paying it off.
Einstein said “Compound interest is the eighth wonder of the world.He who understands it, earns it … he who doesn’t … pays it.”
Brigitte literally had me in tears. She was just having a conversation with me but she had a look of possibility in her face, and said “no one has ever taught me anything like this in my life”. She explained some of her family members financial situations and how sad it was, because they never understood there was a different path available. Brigitte joined our team w/ very little in “net worth”, and now has a very respectable number that continues to grow. Had I never asked if anyone needed help, this wouldn’t be in play today.
I think it’s worth asking the question if anyone needs help w/ their finances on your team, worst case is they say “no thanks”, but they still know you care enough to ask. It does require consistency though, going through it once is a bit like a new year’s resolution. Similar to looking at a scale consistently to stay on track with your weight, a budget does the same for your money/debt/savings/retirement strategy.
Enjoy the rest of your Sunday.