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.

Posted by RC Arseneau on Jan 9 2013. You can follow any responses to this entry through the RSS Feed. Comments can be made below.