Soucheray: Time to separate needs, wants

It’s early January, the holidays are past and the cold, at least for today, seems to be swirling around us. Now may not be the happiest time to have this conversation, but it may be the wisest. How is your bank balance and what kinds of financial goals have you set for yourself, and your family, for 2013? This is our opportunity to remain steadfast in the face of continual news of higher taxes, inflated food prices and what seems to be potentially less money in our pockets at the end of the day.

A book I read a few years ago, whose title I did not care for but found the information it held to be very insightful, was called “The Millionaire Next Door,” by Thomas J. Stanley and Stanley D. Danko. What is interesting is that the three most important words utilized by these millionaires are “frugal, frugal, frugal.” They count every penny, clip every coupon that might save them even a small amount of money, and use their savings toward paying down any debt they have. If we were to do even a fraction of the ideas presented in this book, we would find savings, and extra money, continually throughout our lives.

Another very good book on money management is “All Your Worth,” by Elizabeth Warren and Amelia Warren Tyagi. This mother/daughter team suggests that we bring our “must have” spending down to fifty percent of our income, use 30 percent for “wants” and 20 percent for savings. Now there is no question that this plan requires tremendous self-discipline, as well as some pretty big changes if a person or family was truly to adopt their arguments.

The yield if a person, or family, is sincerely willing to explore and assimilate the changes these two books suggest, is a much more sound financial footing that provides stability and accountability in the present and for years to come.

The requirement? Self-control. Essentially, it comes down to this simple change of mind and practice. But how does a person or family learn to have self-control in an era of unlimited everything?

We can begin by having the difficult conversation that perhaps spending has gotten out of control and the goals the family has set for itself will not, or cannot, be met if it continues on its current course. That is a hard conversation, no doubt about it, because money often has such an emotional tie for us. We don’t want to be told we can’t have something, we think we deserve whatever it is we want, and everyone else has it, so therefore we should, too.

It is important to know that this difficult discussion, loaded with emotional trip-wires, may cause us to stumble. So acknowledge them as you begin to talk and try to be in an emotionally stable state so you will be more open to comments and suggestions from other family members. Make a pact to keep all comments logical and kind, as saying something hurtful or unwarranted will potentially offend someone and shut down the discussion, which will be counter-productive.

Begin by deciding where you would like to be financially at the end of 2013 and then decide the steps you will need to take each month to make that a reality. Then back it up to each week, and finally to each day. Making your goals as tangible and clear as you can will help you attain much better results in the long term.

An added benefit of all this is that our children will have a first-hand experience with a more conservative approach to managing their own financial decisions in the future. What a gift to give them for the new year and for life.

Soucheray is a Woodbury resident and a licensed family therapist

Tags: opinion, woodbury, updates