For many college students, the freedoms associated with living away from Mom and Dad can be pretty exciting.  However, for students who have never to deal with money without adult supervision, college can end up being a series of mistakes on the path the financial freedom and maturity.  Here are five of the most common money mistakes that college student make—and how to deal with them:

1.  Getting into debt.  This has become more difficult for college students to do since the 2009 Credit Card Act made it mandatory for minors under 21 to have a co-signer or sufficient income in order to obtain a credit card.  However, many students will still find ways to live it up beyond what they can afford, either by spending every cent as soon as it comes in, hitting up the Bank of Mom and Dad, or misusing student loans.

What to do—Make a budget and stick with it.  If you know how much you can spend on necessities and fun, it’s more difficult to get yourself in trouble.  Also, making a budget will help you realize if you’re setting yourself up for failure.  You will certainly spend more than you make if your monthly bills eat too large a chunk of your income.

If you can use credit without getting over your head in debt, make sure you research which card will be right for you.  The best credit cards for college students offer rewards like cash back and often are set up to help new borrowers learn how to use credit responsibly.

2.  Not paying your bills.  Even without credit cards, you can do serious damage to your credit score in college.  Making late payments or skipping payments entirely can negatively affect your credit score for up to seven years.  While it can be tough to stay on top of bill-paying when you’re entrenched in college life, work and everything else, it’s vitally important to start your good relationship with your money now.

What to do—Be a responsible bill payer.  If you’re not the type of person who can plan and remember to sit down once a month with your bills, then automate everything.  Just make sure that you do have a monthly (or weekly) appointment with your online bank accounts to ensure that everything is running smoothly and you still have enough money for rent when everything is said and done.

3.  Spending student loan money on pizza.  Even if you’ve calculated precisely how much money you will need from your student loan, often you may find yourself at the end of the semester with “extra” student loan money.  It’s very easy to regard that as “found” cash and spend it on whatever you wouldn’t otherwise be able to afford.  But the bill will come due later, which means you’ll be on the hook for that amount plus the interest.

What to do—Send that money right back to your lender.  Technically, you’ll be making a payment, but it’ll be the best way to spend that money.

4.  Skipping classes.  The alarm rings at an unreasonably early hour and it can seem really tempting to simply turn off the alarm and sleep in.  After all, it’s a lecture class, and it’s not like anyone will notice that you’re missing.  However, you’ve spent money for the privilege of attending that class and learning.  You can sleep on your own time—it’s a lot cheaper.  Skipping classes cheats you of the education you are paying so much for.

What to do—Show up for class!  While it is that simple, you may find that your schedule of work, class, study time, sleep and fun might need to be tweaked to make sure that you have given yourself enough time for each one.  Be cognizant of what you need when you  make your class schedule.  Don’t assume that coffee will get you through it all.

5.  Making the wrong friends.  Just as your parents warned you about hanging out with the wrong crowd in high school, the wrong friend in college can seriously hurt your finances.  Watch out for the perpetually broke friends who just need to borrow “a little something” from you.  (And then you find they used your money to buy concert tickets.)  On the other side of the coin are the friends who either have more money or less understanding of credit than you do, and who always encourage you to keep up with their level of spending.

What to do—Just say no.  Keep your money to yourself and live in a way that will make your future bright.  Because these “friends” won’t help you to achieve it.

Being financially savvy in college may make you stand out from the crowd, but it’s important to remember just how good a distinction that is.

• How And When To Save For College For Your Children
• Will You Pay For Your Kids To Go To College?
• Don’t Let College Debt Crush Your Will To Learn
• What Does The Obama Student Loan Relief Program Offer?

Everyone has a financial framework. Even those without a budget have a financial framework. And yes, even those without financial goals have a framework. But that isn’t to say it’s a great one! If you want to build a strong financial plan – a robust financial framework – you’re going to have to follow a few steps.

Building your own financial plan isn’t easy, and it can take time to produce something that will last over the years. Remember, when you’re looking to build a financial framework, you want something that will apply to at least the next 5 to 10 years of your life – not something that will fizzle out as soon as an emergency strikes.

When I first got married, I spent a lot of time drawing flowcharts and diagrams on how money should flow from our income sources to our expenditures, debts, and investments. That financial picture has changed quite a bit since that time, and for good reason . . . I didn’t have a clue what I was doing!

Since then, I’ve learned a great deal about budgeting and planning for the future. I’d like to share these steps with you so you can build your own financial plan.

Step 1: Gather Sound Financial Principles.

This may take some time if you’re just starting to improve your financial life. But it is a step that can continue as you grow and learn about personal finance. Always be learning, and never close your mind. Be open to the advice of others – but being open doesn’t mean you follow everyone’s advice!

Here are a few of the most important financial principles I’ve learned over the past few years:

• Get and maintain a budget.
• Spend less than you earn – and confirm you are by tracking it!
• Debt is like a cancer to your financial life.
• Emergency funds are truly wonderful – they keep you from going into more debt.
• Giving should be at the top of your prioritized spending list – it keeps money in perspective and purpose in your work.
• Focus on individual financial goals will help you achieve financial freedom faster.

• How Does The Leader Of The Free World Invest? President Obama’s Investing Strategy
• One Million Dollars: How Much Will It Buy In Thirty Years?
• Setting SMART Goals For The New Year, And Rewarding Yourself When You Meet Them
• How And When To Save For College For Your Children

One thing that I’ve seen over the past few years is that while the concepts of personal finance aren’t always rocket science, people still quite often have a hard time grasping them – or they are just willfully ignorant of them.   People are very good at finding ways to screw up their finances. Whether it’s maxing out their credit cards, or not being able to make the payments on a car they can’t afford,  they make the same mistakes over and over.  It it any wonder that the average credit card debt per household with credit card debt is almost $16,000? (source)

The sad thing is that so many people aren’t in debt, bankruptcy or foreclosure because of things beyond their control.  They’re making avoidable mistakes.

10 Ways To Screw Up Your Finances

Today I thought I’d put together a list of some of the most common personal finance mistakes that people make that can easily mess up their finances if they don’t stop making them.

1. Don’t save… ever: While the last few years have seen an increase in personal savings as people tighten their belts in the midst of a recession, the savings rate in general has been on a downward trend since the early 80s.   Far too many people have forgone saving up for the future, and instead just have a “cross that bridge when I come to it” mentality -where they never look further than a paycheck or two into the future.
2. Spend more than you’re making: It seems like a simple idea – to spend less than you make.  The problem is that in this day and age when credit cards and home equity loans are pushed like crazy, far too many people fall prey to advertising messages telling them to live in the moment and enjoy things now while they’re still young.  The end result is a pile of debt and a negative net worth.
3. Always finance big purchases: In the past people would save up and pay cash for big ticket items, even for a house in many cases.  Today’s easy credit living allows people to finance just about everything from a new TV, to a car and a house.  If people would instead save up and pay cash for most things they’d be in a much better place – and paying a lot less in interest.
4. Never look into the future, live for today:  Far too many people have an outlook that never seems to look past their next paycheck.  They never have a plan to get ahead, and instead they just worry about making their next payday with money still in their bank account.  Instead they should be trying to better themselves, get an education, and find a better path that allows them to get ahead.
5. Always buy the newest and the best:  Having the newest and the best has an allure – we all want to be on the cutting edge.  Unfortunately being on that cutting edge can mean that you’re constantly financing new purchases, buying items that depreciate as soon as you get them, and you end up selling the item soon after when the newest one comes out.  Instead, buy things used, fully research your purchases, and hold off on buying things until they come down in price – or have depreciated to a more affordable cost. (like a car)
6. Living on borrowed money… and time:  Far too often people end up getting behind on all their monthly obligations, and it starts a debt spiral where they’re paying for wants and needs on credit.  A mountain of debt quickly starts piling up.   You can only keep the game going so long before the house of cards comes down, and you’re filing bankruptcy.  Instead pay cash, eschew debt and try to stay ahead of the game.
7. Listen to your friends who know even less than you do:  Quite often you’ll hear people taking advice from others who have even less financial expertise than they do.  In some cases the advice is so bad that you wonder why they thought it was a good idea in the first place.   Instead they should find a trusted financial advisor or mentor who can help them to make a financial plan.
8. Working without a net:  Too many people these days have been walking the financial high wire for far too long without a net.  They don’t have any emergency fund, they have a mountain of monthly debt obligations and if one thing were to happen (like a job loss) they’d be plunging to their financial death.  Instead they should be saving up an emergency fund of 3-6 month of expenses (at least), buying the necessary insurance and getting rid of as many debt obligations as they can.  Minimize risk where you can.
9. Never calculating total cost and value versus calculating payments:  Too many people become monthly payment buyers, never actually calculating if they can afford something, but instead calculating if they have enough money during the month to make the payments.  They do this with houses, cars and even TVs.  Instead they should be figuring out what they actually need, calculating what the total cost is, and then proceeding to buy things they need that are a good value for their situation – even if it isn’t the nicest.
10. Not creating a budget or tracking spending:  Too many people just “wing it” when it comes to their finances, only occasionally checking their account balances or making the minimum payments on their credit cards.  They never track their spending or make a family budget.  Instead they should be tracking their spending (it can be eye opening), and then figuring out how much they need to spend, save and give – and then setting up a budget based on those values.  Then follow through on the budget and actually follow it.

In this day and age there is really no excuse for not being able to figure out your finances. There are a thousand and one educational resources online that can help you to get a hold of your financial situation, and much of it is common sense.

We need to be educating our kids about money, and taking responsibility for our own financial futures, otherwise we’ll end up screwing it all up, and end up just another statistic.

What are some ways that you’ve seen people screw up their finances?  Have you made some of these mistakes yourself?  Tell us your thoughts in the comments!

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I woke up this morning excited to be heading out to the Financial Blogger Conference in Schaumburg, Illinois to meet up with a ton of the bloggers I’ve been talking with for the past 4+ years.   When PT of PTMoney.com came up with this idea a while back I thought it  sounded great cause I thought I’d be meeting up with upwards of 40-50 other bloggers who write in the same niche as I do.  Little did I know it would turn into something so much bigger and exciting than that.   At final count Phil told me that there were 280 attendees at the conference this past weekend. The conference sold out.

Looking at the listing of bloggers is a like a who’s who of the personal finance blogosphere.  Folks like JD Roth of GetRichSlowly.org, Ramit Sethi of IWillTeachYouToBeRich.com, Flexo of Consumerism Commentary, and a whole host of other big and small blogs alike.  I’m looking forward to meeting so many of  these people as the weekend goes on.

Driving To The Conference

I left the house at around 1:30 this afternoon after playing with my son this morning, and helping out around the house a bit.  I got in my car, and started off on my 7 hour drive through some nasty rain and wind.   I only stopped once to re-fuel and stock up on beef jerky, then continued on to the hotel.  I arrived at the conference hotel around 7:45 or so on Thursday evening.

As soon as I arrived, and throughout the weekend I shot the pictures and video, and put together the video above. I hope you enjoy!

Day 1 At The Conference: Meeting New People

After checking in and dropping off my bags I called PT and was able to meet up with him and a group of other bloggers down in the lobby to chat a little bit.

Among the cool folks that I met on my first night here:

• PTMoney.com:  Phil, the conference organizer has been a blogging colleague and friend since we both started blogging around the same time back in early 2008, and it was fun to finally get to meet him and his beautiful family in person after all the skype, email, chat we’ve had over the years.
• CanadianFinanceBlog.com: I met Tom Drake who besides his main site linked here also runs a whole empire of personal finance sites through Drake Media.  He’s a smart guy, one a lot of folks could learn from.   We had a great time talking about blogging and running multiple sites tonight with marketing and social media expert Murray Newlands and a gentleman from Intentclick. (sorry, I forgot your name!)
• BudgetsAreSexy.com:  Met J Money from Budgets Are Sexy, who at 6’1″ is a lot taller than I realized.  I’m still taller though J, I got 3″ on you .  Someone once told me that his hugs are like sunshine, and I can now confirm that is in fact true.  Nice meeting you J. Love Drop was awesome!
• PFFirewall.com:  Met Jesse from Personal Finance Firewall and was able to chat a little bit.  Jesse’s a super smart guy, and  IT genius from what I hear, but it hasn’t gone to his head. He’s super nice too.
• Among the other folks that I met, who were all super nice:  @MoneyTalksCoach @sooverdebt @debt_princess and Jenna from@adaptu – It was nice to meet all of you after reading your sites and chatting on Twitter!

Day 2 Of The Conference: Packing Bags, Love Drops And Speed Networking!

Day 2 we started bright and early by helping to pack up all the tote bags that everyone will be receiving when they register.   We packed and stacked bags and were done by 10am, and proceeded to eat donuts.

Had lunch at a great restaurant called Seasons 52 with a great group of bloggers including MoneySmartLife.com, CashMoneyLife.com, GenXFinance.com, MoneyCrashers.com, Wisebread.com, AmateurAssetAllocator.com.

After lunch we did the Love Drop at 3pm.  What’s the Love Drop?  Love Drop is a micro-giving network of people who unite as a community to help one person or family a month.We brough a good part of the personal finance blogosphere together to do a community event to benefit Schaumberg area cancer support organization Phil’s Friends. They help families that are being touched by cancer, and send care packages, and encouraging letters every week while the person is hospitalized.  While there we moved some heavy furniture around their warehouse, installed ceiling tiles, and some folks put together care packages.  It’s a great charity, and I encourage folks to check it out: Helping People With Cancer

After we did the community service project together we went back to the hotel where we met up with some folks to go out to dinner.  I had dinner at Gino’s East Pizzaria with the folks from Perkstreet Financial, along with ChristianPF.com and OneMoneyDesign.com.  It was tons of fun meeting those guys, and I think we had a great time hanging out at Gino’s.

After dinner?  The dessert reception and speed networking events were extremely hectic, but fun.  The only problem was that we all ended up almost losing our voices and barely being able to hear each other.

Day 3 Of The Conference: Speakers Galore, Learning And More

Day three of the conference was a ton of fun as well.  The day started off with JD Roth giving a talk about the power of story, helping people through giving them helpful advice and about building community.   He also had a startling moment where Benny Lewis from FluentInThreeMonths.com  jumped out of the crowd screaming in Klingon and waving a Klingon b’ahtleth – sword of honor.  I’m not sure anyone knew what was going on at first, but it ended up being pretty hilarious. (For a look at Benny’s Klingon speech – check out the video on his Klingon home tour)

After JD spoke Will Chen from Wise Bread gave a talk about building your site’s traffic to a million page views and how Wise Bread did it.  Download his other Wise Bread presentations here: FINCON11 Presentations.

Then Ramit Sethi gave the keynote speech, talking about a variety of things, but boiling it down to this:   “Be different. Focus on the problems people actually have.  Drive true behavioral change.”

After a variety of other great sessions during the afternoon, we headed over to the reception area again for the Ally Bank happy hour.  During that time The Plutus Awards were presented by Flexo of Consumerism Commentary and Tom Drake of CanadianFinanceBlog.com.   There were a lot of big winners, with GetRichSlowly.org and BudgetsAreSexy.com winning multiple awards each.

Most bloggers were still at the after party given by Ramit, but I was hanging out in the hotel lobby with some great bloggers including Jeff Rose of GoodFinancialCents.com, Tim Fraticelli of FaithandFinance.org, Bob Lotich of ChristianPF.com,  Kevin Mulligan with KMull.com and of course JD Roth of GetRichSlowly.org.  To me times like this were the best parts of the conference for me -sitting around with other bloggers talking shop, talking random clothing and fitness blogging, travel and a thousand other things.   As soon as people started returning from the party, the group started getting bigger and bigger, but the great conversation continued.  Thanks guys for the fun time talking.

Day 4 Of The Conference: ManVsDebt, Pat Flynn, Saying Goodbyes

On the final day of the conference they saved some of the best presentations for last.  Adam Baker of ManVsDebt.com gave a talk on creating and launching your own product. There was a ton of great material in there for all the folks trying to come up with their own products – so I’d recommend finding the presentation if you can.

Later Pat Flynn of SmartPassiveIncome.com came up and gave a motivational talk exploring how he’s been able to create his mini-empire.  A lot of it comes down to creating relationships, and doing your best to help your readers.  The money will come from the trust you build with your readers, they’ll end up buying the things you use because they trust you and your judgement.

When the conference came to it’s conclusion it was a little bit bittersweet, kind of like the feeling you get when you go home from summer camp as a child.  You’re happy to be going home, but it stinks that you probably won’t be seeing a lot of these new friends for at least another year.

I got home on Sunday evening and my little boy was so happy to see me – I never get tired of that.  I’m glad to be home – but I look forward to next year to re-kindle new friendships and for meeting even more new ones.

Conference Reactions and Takeaways

A lot of bloggers wrote about the conference when they got back. here are a few of the links.  Want your conference post to be added? Leave a comment! (hat tip to Glen at FreeFromBroke.com for the links)

• Blog Conference Expenses Are Tax Deductible. Don’t Forget To Claim Them.
• Life As A Financial Blogger: What You Need To Know
• Tips For Using Twitter For Bloggers
• The Blogging Your Passion Webinar Series: E-Course On Everything Blog Related

Earning and saving to reach the milestone of being a millionaire isn’t as unattainable as a lot of people think it is, in fact it’s a very achievable goal.  Most people have the idea in their head that the only people who ever reach that goal are people who are born into wealth, win the lottery, or who have huge real estate empires or successful small businesses.  But the fact is earning a big income doesn’t guarantee that you’ll have a high net worth, and just because you have an average income doesn’t mean you can’t become a millionaire some day.

Today I want to look at how earning and creating a net worth of a million dollars is possible for just about anybody, and how to  go about achieving that goal.

How Much Do I Need To Save?

He who gathers money little by little makes it grow. Proverbs 13:11

A question that a lot of folks consider is just how much you’ll need to save in order to have a million dollars by the time you retire at 65.   Based on an article over at Kiplinger.com in order to reach that goal, assuming an 8% return over the years, and with zero dollars currently saved – at these ages you would have to save this much to reach a million by 65.

• Age 25:  You need to save $286 per month to reach 1 million by age 65
• Age 35:  You need to save $671 per month to reach 1 million by age 65
• Age 45:  You need to save $1,698 per month to reach 1 million by age 65
• Age 55:  You need to save $5,466 per month to reach 1 million by age 65

As you can see, the earlier you start, the better off you’ll be due to the powers of compound interest.   I’m at age 35, and already have some retirement savings put away (not zero like the article assumes), so I should be right on track to reach that million dollar goal.

Want to calculate where you are today and see how long it will take you to reach 1 million?  Check out this millionaire calculator:

• Millionaire Calculator

How You Can Become A Millionaire – Baby Steps

So now we have a rough idea of just how much money you’ll need to be putting away for retirement if you want to reach a 1 million dollar goal.   So the question is, how do you get there?  If you’re not one of the fortunate or highly skilled that are already making huge incomes, here is a strategy for saving up a nice retirement nest egg.

Make Enough Income

The more money you make, the quicker you’ll be able to reach that 1 million dollar goal, but you can retire wealthy on an average income.  Check out the link for some stories of people who did.  But obviously the more you make, the quicker you’ll reach the goal.  How much income you can make may also depend on if you’re single, dual income with no kids – or a couple with kids.  Obviously having dual incomes will help quite a bit (as long as one income doesn’t all go to child care).

If you aren’t even making an average income (in the range of $45-55,000), then you may want to think about trying to better your situation by making proactive decisions to find a better job, continue your education or move into a new career field.  Changing your income and career path may not happen overnight, but in some cases it may be the only way to improve your chances of making more income.

You could also consider taking on a side job.  There are a lot of ways to make money in your spare time, in fact starting a business in your free time is a good way to improve your situation and potentially create a lucrative small business for yourself.

Live On Less Than Your Means Will Allow

We’ve all heard of people who make huge incomes, but then also have expensive tastes and end up spending more money than they’ve made and going into bankruptcy.  The problem is if you have caviar tastes, it’s always possible to outspend your ability to earn.

In his book “Stop Acting Rich“, Thomas J. Stanley talks about how far too often we settle for a life where wealth is only an illusion, and we kill our ability to create real wealth.

Ours is a culture of hyperconsumerism.  Not only can and do we buy nearly anything (except for the truly outrageously expensive), but we seem to have come to believe that we can and should have it all and that who we are is dependent on the ability to live in the right neighborhoods, with appropriately sized homes filled with brand-name appliances, with prestige cars parked in the driveway with expensive golf bags and clubs in the trunk and so on. And so we spend.

You can act rich or actually become rich.  Few of us will ever be able to do both, and we certainly won’t bet rich by acting the part before we have the financial resources with which to pay for la dolce vita.

Stanley goes on to discuss how the truly rich people that he has interviewed are actually very aware of living below their means, and of not overspending.  They appreciate value in the things they buy and aren’t afraid to spend a bit more if it will last longer.  But in the end, they spend well below their means.

Save And Invest Your Money Regularly

While this may seem to be obvious, far too many people don’t save or invest any money on a regular basis.  Too many people live on the edge from paycheck to paycheck, spending until the balance in their account says “zero”, never planning to save and invest their money as a part of their budget.

It’s important to set up a financial plan and a budget in which you’re paying yourself first, putting aside at least 10-15% of your income every month towards your retirement savings – more if you can afford it.

I’m a big proponent of making that savings and investment as automatic as you can, so that it gets to the point where you don’t even notice it every month and your retirement savings slowly grow without too much intervention from you. At our house I have 401k and Roth 401k funds deducted from my paycheck before I even see it every two weeks.  That way I never miss the money – it just goes into the retirement account.  Then we also have automatic savings goals setup with ING where money is automatically deducted at the beginning of the month and transferred to our online savings account.

Once you’ve setup and are saving money regularly in retirement and savings accounts, make sure that you’re getting the best possible return on your money by educating yourself about stocks and bonds, diversifying your holdings and making sure your investments have as low expenses as you can, while still making good returns.  If you’re not a savvy investor, consider getting some professional help.

Wash Rinse Repeat

Once you’ve got a good plan in place, the most important part is to stick with the plan, and keep at it for the long haul.  It isn’t rocket science to save a nice nest egg, but it will take determination and hard work over a long period of time.    Again, the basic steps to creating a million dollar nest egg are:

• Create income
• Spend lower than your means
• Save and invest regularly
• Repeat

While these steps are of course simplified, and there may be other roadblocks in your path, it really is important to focus on the basic principles sometimes because they can often get lost in the shuffle.

Other things you’ll want to consider to make sure that you don’t short circuit your progress is to have good insurance, save up a good sized emergency fund and always keep an eye on your goals. Of course, never forget to always be generous as well, and never allow a pursuit of wealth or money to become the end goal. Make sure you have goals for wealth building, goals that will leave you happy, not just wanting more.

Are you on track to reach a million dollars by the time you’re 65?  Tell us what you think in the comments.

• Conventional Wisdom: Invest 15% Of Yearly Income Once You Are Out Of Debt
• How To Do A 401(k) Loan: Pros And Cons Of Borrowing From A Retirement Plan
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• The Future Value Of Your Roth IRA

One of the most exciting financial milestones in many lives is the first job. Whether it’s your very first job working part-time while a high school student, or your first job after graduating from college, you need to make the most of it.

Starting out right is vital if you want financial freedom later. So, here are a few things to do once you land your first job:

1. Create a Plan for Your Money

It’s vital that you create a plan for your money. Think about your priorities, and put together a spending plan or budget that reflects your most important goals. Make sure you plan to give to church and/or charity, save for the future, and create a plan that allows you to live within your means. Track your spending, and do your best to adjust your habits to your income. Make it a point to save up for purchases, and create a plan that helps you avoid debt. Whether you are in high school, or fresh out of college, a plan for your money will help you better reach your financial goals.

2. Open a Retirement Account

One of the most important things you can do for your future is to open a retirement account. Start investing in your future now. You can arrange to have a portion of your paycheck automatically deposited into a retirement account in many cases. Even if you can’t have it deducted from your paycheck, you can set up an automatic transfer so that money moves from your checking account into your retirement account on a specified date.

Even if your job doesn’t offer the ability to contribute to a retirement account, you can still open an IRA (or a Roth IRA). Even a high school student can contribute part of his or her earned income to an IRA. The earlier you start, the better.

3. Start Building Good Credit

You also want to start building a good credit history, now that you have income. If you are starting your first job after college, you might already have a student credit card. Use your card regularly — and pay it off. Get a small loan from your bank. Make sure all of your obligations and bills are paid on time and in full. Responsible use of credit now will help you in the future, resulting in lower interest rates on home and car loans, and even in lower insurance premiums, saving you thousands of dollars over your lifetime.

4. If You Have Debt, Plan to Pay it Off Quickly

Finally, now that you have income, it’s time to pay off your debt as quickly as possible. Most high school students don’t have debt yet, but if you are starting your first job after college, chances are that you have some student loan debt, at least. Look at your obligations, and figure out how you can pay off your debt as quickly as possible. Create a debt repayment plan, and stick with it. The sooner you stop paying interest to someone else, the sooner you can put that money to work for you.

• Personal Finance Bible Verse of the Day: Do not borrow
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• Will A Short Sale Hurt Your Credit, And Will You Even Qualify For One?

When I look at the search results for this site it’s pretty common that people find themselves here when searching for phrases like, “how to get rich“, “how to make more money“, or “how to become a millionaire“.  Judging by their searches, and the sheer volume of the number of those searches I’m beginning to think that there are a lot of people out there who want to become wealthy.  Not surprising really.

The question is, what are their reasons for wanting to become rich?  Have they actually thought out the proposition of being rich, and what it means?  Why will they need all of that money?

They all start with this as the proposition:

• I wanna be rich

So they start searching out high paying careers, ways for making money on the side, get rich quick schemes.  In other words, finding ways to make as much money as they can as fast as they can.  And that’s where I believe far too many stop.  They don’t make any consideration of what the real reasons are of why they want to be rich.  They just want to be rich. Period.

Why Do You Want To Be Rich?

So if you want to become rich, why is it that you want to become wealthy?  Do you want to enjoy the finer things in life?  Do you want to travel to far off lands?  Do you want to be able to help others with your wealth?

Thinking about why you want to be wealthy is an important exercise, and if you don’t, you can easily get lost in a meaningless circular pursuit of wealth, where nothing, and no amount of money ever satisfies.

Ecclesiastes 5:10 Whoever loves money never has enough;  whoever loves wealth is never satisfied with their income.   This too is meaningless.

For me, as a Christian,  I think it’s also important to remember that we need to be careful of pursuing wealth and other material things as part of our long term goals.   When we do those things can quickly become counterfeit gods and idols in our lives, keeping us from focusing on the things that are truly important like a relationship with Christ.  Can a rich man still enter the Kingdom of God?  I believe so, but it can be hard when wealth competes with a reliance on God.

Are Riches In Themselves  A Bad Goal?

For far too many I think that being rich in and of itself is the end goal.  Being rich is the ultimate in status that will allow them to “be someone”.  They believe that wealth validates them, will make them popular, and in the end make them happy.  It is the universal score card.  But then, when they finally do become wealthy they realize that it comes with a whole new set of problems and pressures – and doesn’t make them happy.   Far too often the riches are just temporary anyway, as we’ve seen recently in the economic downturn.

Proverbs 23:4-5 Do not wear yourself out to get rich;  do not trust your own cleverness. Cast but a glance at riches, and they are gone, for they will surely sprout wings and fly off to the sky like an eagle.

Money is just a thing, a tool to be used to further our goals.  Being happy is a decision that happens regardless of whether you’re rich or not.

So what are your goals?

Setting Goals And Expectations For Wealth

For me, I don’t have any aspiration to be rich or to be living a gaudy lifestyle, but I do hope to be a good steward of the resources I’m given, and to provide well for my family.  I want to be able to provide a good home for my family, an education for my kids, and I want to be able to travel and experience different places and cultures.  I also want to be able to earn more to be able to give more to our church, as well as to other causes that we believe in.   I also want to be able to work because I enjoy it, not because I have to – or because I’m worried about eating, getting health care coverage  or losing my home.

So my goals for earning wealth would be:

• To provide for my family.
• To give more to our church and other causes.
• To provide freedom and peace of mind.
• To give us ability to enjoy travel and family time.

So, with my goals for wealth put out there, tell me why you might want to grow wealth, and what your goals for wealth are?

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I‘ve been reading a lot of  discussion lately surrounding the topic of having kids, and whether a couple should wait to have children until they get out of debt.   I thought it was an interesting debate as just about everyone has a different take on the topic.

A recent poll on BabyCenter.com asked, “ Should people get out of debt before having kids?“.  48% said “Yes“, 40% said “No“, and 12% said “I’m not sure“.   When asked if they had waited until they were out of debt to have children 68% said “No” and 32% said “Yes”.   So as you can see, there is a pretty even split when it comes to those who think you should and shouldn’t wait, yet quite a good number of people who thought that waiting was a good idea, nonetheless went ahead and had kids without being out of debt.

I should throw in the disclaimer that my wife and I ended up having our son only after we had gotten rid of all of our debt, but it wasn’t necessarily because we believed we should wait.  To the contrary I’m one of those who believe that having children shouldn’t necessarily be purely a financial decision. Sure it should factor in to some degree, but there are a host of other things to consider.

Today I thought I’d look at some reasons why I think it isn’t always the best idea to wait to have kids until you’re completely out of debt.

The Joy Of Having Children

Having children has been one of the single most joyful things to ever happen to my wife and I.  It’s amazing at how much having a son has changed our lives, and how much happiness and joy it has brought us (I mean, look at that face above!).    It has brought our family closer together.  There is nothing quite like walking through the door at home and having a smiling happy little boy running towards you for a hug. Why deny your family that same joy?

If You Wait Too Long, You May Have Increased Health Risk Or Infertility

One very real concern that a lot of folks have is that the risks of having children grow the longer you wait.  The risks for someone having a child in their mid to late 30s versus in their 20s are quite different, for the mother and the child.  The child ends up having higher risks of certain birth defects, while the mother may having higher risks of miscarriage and infertility issues.   Both the mother and father may have infertility issues as both the number of egg and sperm tend to decreases after the age of 30.

Babies Aren’t As Expensive As You Might Think

One objection to having kids I hear quite often is that they’re so expensive, and that having them while you’re in debt could jeopardize a debt reduction plan.  What I’ve found in our lives is that our son isn’t nearly as expensive as I thought he would be.  Yes, there is the baby food, regular doctor visits, clothes and other things, but the costs aren’t nearly as high as I might have thought.   We also didn’t have to pay for childcare, so that is something to consider.

I’ve also found that there are a ton of ways to cut back on baby spending – and I’ve discovered that a majority of the baby spending is often to please the parents – and not the child.  There are a ton of ways to cut back on baby expenses if need be. Yes, when the children get older the expenses will rise, but hopefully by that point you’ve been working on that debt reduction plan and are in a better place financially.

Having Kids Can Help Focus Your Efforts

Having kids can really give you the reason you need to kick things into high gear and fast track your debt reduction plan.  I know when we had our son, even though we were debt free,  it was still a wake-up call that we needed to get certain areas of our finances under control.  Having kids really has the effect of focusing your efforts, and giving you the added determination and inspiration you may need to make necessary changes.  You don’t want your kids to have to suffer for your poor planning or efforts, and I know it gave me the inspiration to work extra hard.

There Is Never A Perfect Time To Have Kids

If you wait for perfect conditions, you will never get anything done.  Ecclesiastes 11:4-10

Life is almost always going to be busy and hectic, and there most likely is never going to be a perfect time to have kids.  Waiting for the perfect time could mean that you’ll be waiting for a long time.  If it isn’t a problem with too much debt, it may be a problem of  attending grad school, or not having enough money saved for an emergency fund, or wanting to travel before having kids, and on and on.  There will probably never be a perfect time.  You can try to choose the ideal time, but you can make yourself crazy finding reasons why the time just isn’t right.

Make Sure To Plan Ahead If You Do Decide To Have Children

While I’m firmly in the camp that says that it’s OK to have children while in debt, I’m also a big proponent of making sure that you do plan ahead for parenthood when you’ve decided to head down that road.  Make sure you’re doing your best to plan for the expenses of having a child, getting your finances in as good a place as you can, and making sure you know what you’re in for, especially if you’ll be living on one income. Also make sure that you’re in a good place in your relationship with your spouse and that having children is something both parents agree to.

So what are your thoughts on the topic?   Should people wait until they’re out of debt to have children?  Did you wait or are you planning to wait?  

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Day to day living in modern times includes much more sophistication than  that of our Biblical predecessors. Very few of us hike to a well several times a day for water. We don’t spin our own cloth, rely on crude lamps for light, nor do we have to walk everywhere. We own more than two or three articles of clothing and almost more of our time is spent in leisure than in hard labor.

Compared to our ancestors, we live like kings.The challenge for most ancient people may have been learning to depend on God because they had so little. I believe our modern age presents the opposite challenge: how to depend on God because most of us have so much.

The Savior phrased his warning in a vivid, memorable way when he said, “it is easier for a camel to fit through the eye of a needle than for a rich man to enter into the kingdom of God (Mark 10:25).” Further study reveals that simply having lots of money and possessions doesn’t bar the wealthy from God’s presence. Rather, it’s the haughty, stubborn attitude that so often accompanies riches.

To be “rich” is a relative term depending on where you live in the world. Whether you’re lucky enough to enjoy exorbitant amounts of dough, or simply a comfortable life (i.e. a steady job, a roof over your head etc.), several, key areas deserve a moment of reflection if you desire to pass through those pearly gates.

Stewardship

He that is faithful in that which is least is faithful also in much: and he that is unjust in the least is unjust also in much. If therefore ye have not been faithful in the unrighteous mammon, who will commit to your trust the true riches (Luke16:11)?

Remember who “your” wealth really belongs to. Properly understanding your role as God’s steward puts earthly possessions in perspective. By viewing riches as a special charge the Lord has put in your care, financial decision-making can spring from a deeper place of wisdom, frugality, and worthy intent.

Humility

By humility and the fear of the Lord are riches, and honour, and life (Proverbs 22:4).

Who do you credit for your success? It’s tempting to attribute it to personal skill, strength, and hard work, but take time to remember the Giver of those gifts that led to your prosperity. Adequately recognizing his hand in all your success allows for a soft heart and teachable mind. Humility is knowing there’s always room to grow, more to learn, and many to thank. It’s knowing full reliance on God is the only recipe for true, sustained success–be it earthly or heavenly.

Humble yourselves in the sight of the  Lord, and He shall lift you up (James 4:10).

Charity

As Christians, our goal is to follow the Savior and become as Christlike as possible–that is, Charity personified. All the riches, houses, clothes, cars, and esteem in the world amount to nothing if we live life with hard hearts and indifference toward the suffering of others. The Lord tirelessly gave help, healing, counsel, food, comfort, time, friendship, and forgiveness. Who are we not to do the same? Beyond securing our basic needs, earthly possessions and riches are meant to be used for the good of others. What better way to acknowledge the Lord and his compassion towards us? Sharing our bounty and serving others is a heart-felt way of glorifying God.

…Inasmuch as ye have done it unto one of the least of these my brethren, ye have done it unto me (Matthew 25:40).

But remember, it must be done with true charity–a condition of the heart rather than an outward display of piousness (see 1 Corinthians 13:3).

Strive For Obedience, Humility, Charity

God is the ultimate provider. Be it food, safety, health, or finances, the Lord is just as concerned with our temporal needs as He is our spiritual well-being. The scriptures are brimming with examples. Manna from heaven and flowing water from a rock for the weary Israelites. A never-empty cruse of oil for the faithful widow and her son. A sea parted for safe passage. A bounteous meal from nothing but scraps of bread and fish. A pillar of fire. A shadow by day. A ram in the thicket. A plea of forgiveness said on a cross. An empty tomb. The Lord will always provide what we need. Most have more than enough. Don’t let your earthly riches keep you from a much more satisfying and eternal reward. Strive for a heart full of obedience to God, humility, and charity. That is true wealth.

Jesse Mecham is founder of the financial software company,YouNeedaBudget.com —because you do! Based on four fail-safe rules, Jesse’s revolutionary software teaches a method that helps people break the paycheck to paycheck cycle, get out of debt, and save more money faster. You haven’t budgeted like this.

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Many people know that I am a huge proponent of using automatic savings, and automatic bill paying to help manage my finances. There are many advantages to doing this – fighting temptation to spend “extra” money, saving time having to make these payments/transfers every period, and simplifying your finances, immediately come to mind.

However, there are also certain risks involved with putting your finances on auto-pilot. We will discuss several of them below.

Failing To Reconcile Accounts

To me, the biggest risk with automating your accounts is the fact that you may fail to reconcile your accounts. This can happen in one of two ways. First, if you are automatically paying your credit card bills when they come in, you may overlook the fact that you need to check the statement for errors.

What if there are charges on your bill that don’t belong to you, or are for more than they should be? You may go a few months without checking your statements and could end up missing fraudulent charges, interest rate increases, or other important information. By paying off the balance (or even just the minimum payment) automatically each month, you may miss all of these important notifications.

Also, if most or all of your transactions are automated, you may not stay up to date with your checking account. If your account is hit with any unexpected transactions, then you can easily be thrown into an overdraft situation! It might not even be errors which need to be detected and corrected, but it could be an infrequent expense (such as a subscription) that causes chaos in your checking account.

This is not to say that you will never take a look at your finances if you choose to set up automatic payments; but it does make it a lot easier to overlook certain things.

Disconnected From Your Financial Reality

One of the things that I have found is that by automating payments, I have become disconnected with my finances. Now, I try to go through my transactions and savings every two weeks (the Saturday after I get paid), but it’s still not the same.

By having everything automated, it can feel as though your finances are operating on a continuous cycle that doesn’t require your involvement. Because you do not have to look at your statements and review every charge in order to pay your bills, you may not be as inclined to look for ways to reduce your expenses or increase your income.

You may find yourself going a few weeks without looking at your bank account. Then that may grow to months. By having all of your bill payments and transfers to savings and retirement accounts happen automatically, managing your finances can easily fall into the background of your life.

Start To Lose Motivation

If you don’t have your goals constantly set before you, you may lose your motivation to push toward that goal. Whether that goal involves trying to pay off debt, building up an emergency fund, saving for retirement, or being in a position to increase your giving, it helps to visit that goal often.

By automating your finances, you may miss the opportunity to check your progress often. For instance, if you have set up automatic transfers to establish an emergency fund, you probably won’t look at the balance of the account very often. However, if you have to log onto your bank’s website and set up a transfer every two weeks, it will help to set the goal before you. Of course, if you use personal finance software, you should be able to see all of your account balances at a glance – but you still need to look!

If you have long-term financial goals, you need to stay motivated in order to see them through. Automating your finances can help you to give those goals a place of priority in your finances, but it can also take away your motivation by allowing you to be less involved.

Reader Questions

1. Do you automate your finances?
2. Are there any bills/transfers which you choose not to automate? If so, why?
3. Have you found any other potential problems with setting up automatic payments?

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