Financial lessons from Washington
“Laws are like sausages, it is better not to see them being made.”
— Otto von Bismarck
If you’re like most, you have grown tired of hearing about dangling off the Fiscal Cliff, hitting the Debt Ceiling and spending cuts vs. tax increases. The only thing more painful than watching lawmakers in Washington deal with money is wrestling with your own financial life. Here are six lessons learned from observing Washington that can benefit your life today.
1. Do not make financial decisions under pressure or spontaneously. At best, you won’t accomplish anything, and you will probably just have to return for damage control later. Most responsible decisions are made over time and after some reasonable consideration. The best antidote to misguided spending is to decide how your money will be spent at the beginning of each month and stick with the plan. Be intentional with your finances and you will be rewarded with greater peace even under tough conditions.
2. Do not borrow more money to meet your budget. Unlike the government, we cannot simply print up more money when our account runs dry. If you find yourself with a tight or failing budget there are only two healthy options… Reduce your expenses and increase income. While increasing income can be challenging these days, most of us can find some room to trim our expenses. Start making lunches instead of eating out and consider scaling down your mobile phone plan or using internet television and entertainment instead of pricey cable or satellite plans.
3. Cut the “pork” out of your financial decisions. It is common for lawmakers in Washington to piggy-back pet projects onto large legislative bills dealing with much more important issues. These special interest projects cost tax payers millions each year in what is often wasteful spending. It can be very easy to add-on seemingly harmless extras to our lives that weigh down our financial flexibility. We are constantly bombarded with pressure to add to purchases that we probably didn’t need to make in the first place. Think twice before agreeing on up-sells like protection plans on appliances and electronics, discounts for opening a new store credit cards and extra super-sizing your large combo meal. Your wallet and your heart will thank you.
4. Do not wait for tomorrow to do what could be done today. Being responsible with money will at some point require tough decisions to be made. Human nature leads us to put off dealing with tough choices when we really need to make them most. It feels counter-intuitive, but we must step into those tough decisions intentionally to keep from making decisions under pressure. Make a list of five things that you can do immediately to maximize your financial impact in the areas of spending, savings and giving. Make it a priority to act on them by the end of the week.
5. Remove money from its throne. Money is a ruthless Master. Most of us spend far too much time worrying about losing or hoping to gain more money. Money left unmanaged is empowered to occupy our hearts and minds through fear and greed. How many men and women have set out to conquer wealth only to realize that they are consumed by it? Master your money with an executed action plan and remove its power to create worry of loss and obsession to gain more.
6. Maintain your character above all. Money brings out the best and the worst in people. Make it a priority to always choose the high road.
RC Arseneau is a Certified Financial Planner and lives with his family in Delaware. Please submit any questions or topic requests to AskRc@mail.com.
The information and opinions in this column are provided only for educational and entertainment purposes. Any reference to a financial product or strategy is not to be considered an endorsement or recommendation. The information is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional financial, legal or tax advice. Investment Performance may vary due to timing and expenses. Rc recommends that you obtain your own independent professional advice before making any decision in relation to your particular requirements or circumstances.