Foundations of Finance

Sorry for being so lazy in my blogging (or NON blogging).  Apparently I’ve been busier than originally anticipated.  Anyway, luckily I’m back and I have a personal budgeting/emergency story.

My sister and I participate in a city basketball league in our area.  The other night we had a game where my sister dislocated her shoulder TWICE!  (She was a bit irresponsible and decided to go back into the game when she put her shoulder back in the first time and had rested for about 30 minutes…back idea cause it came out AGAIN!)

The second dislocation was much worst than the first and we had a very hard time getting it back in.  During this whole interlude, we were both very aware that if it came down to it, she’d have to go to an instacare or hospital.  HOWEVER, her insurance is pretty much non-existent.

That’s where the budgeting aspect comes in.  At the time we were both nervous about not being covered by insurance and how much it would cost her.  At the same time, however, she knew that she had enough money to cover the cost because she had budgeted for emergency situations.

She puts aside money each month in an “emergency” fund.  Basically, she makes sure that she has the capabilities to pay for an accident.  While she did this because her insurance wasn’t really existent, this strategy of saving can, and should, be practiced by everyone-insurance or not. 

We have all heard how important it is to save for a rainy day.  Sometimes we just brush it off and acknowledge that it’s a good idea, but don’t take the time to make a plan and actually follow through. 

It’s essential to save for those times when you have unexpected expenses.

Oh-by the way-a doctor showed up for the game after us and put it back in…turns out she didn’t end up needing the savings, but she COULD have…and if she did, she would have been prepared!

Several years ago, my highschool business and marketing teacher, in an attempt to convince us to “sieze the day”, exhorted the entire class to seriously consider opening a mutual fund while at such a young age.  He explained some of the legal implications, but specifically mentioned the huge economic benefits that it could bring in later years.  Of course the attitude of “want it now” put a damper on the idea, seeing as how we would have to wait for said benefits, but nonetheless he called on us to give it a try.  Today in a whirlwind economy, we are hardly interested in trusting financial firms, banks, and so on.  However i am still convinced that financial advisors are not motivated by commission in aquiring us as clients, but rather enjoy studying the market and will help us fullfill life’s adventures through wise investments in stocks, bonds, and investments in certain markets and fields.

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There are things that I have now that I didn’t ever think I needed when I was a kid.  It seems that prior ‘wants’ have now become ‘needs’.

Let me give you a couple examples: two cars, high speed internet, upgraded phone plans (with internet on the phones), digital cable, HD cable, Tevo, etc.

Most of those examples point to the television.  I’ve been thinking about that aspect of my budget lately.  Probably because a guy came by the other day offering digital cable for just ten bucks a month!  That’s a steal!  And, for a second I thought, “oh, that’s a great offer, I think we should get it.”  But really do I need that?

Even though it’s only ten dollars a month, that adds up to $120 a year!  That may not seem like that much, but really-think of what that money would do for you if you were to set it aside and put it in a Roth IRA, mutual fund, or other investment entity.

When I was a kid we had something like 10 channels…maybe.  Could have been less.  But, we never watched tv anyway.  We watched movies together as a family, but other than that, we just had basic channels.  It definitely depends on family dynamics and how often you watch television.

However, my point and proposition is to only get what you need.  Cable is fine-don’t get me wrong.  I have basic cable and get about 60 channels.  And that’s plenty for me.  But, as a suggestion, upgrading to get higher quality tv or even more channels is just not necessary.

Again, I’m not saying to go smash your tv with a bat.  I’m simply saying that you can have more flexibility in your personal budget by sticking to the basics.

It’s all about choices and deciding what you really need as apposed to something you just want.