When Personal Finance Is Boring

If you’re a regular reader of The Simple Dollar, you’re probably not the person I’m writing about here. Instead, this article is probably appropriate for your brother or your sister or that friend of yours down the street.

All of us know someone in our lives that has all of the equipment they need to be a financial success. They have their wits about them, they’re earning a solid income, and yet still there’s something that’s keeping them from being a financial success – and that’s a fear of money management. They’d rather do almost anything than deal with or think about money issues. Not only is it boring to them, it’s often as scary as can be.

I can think of at least two people who are near and dear to me that fall into this category. One of them makes over $100K a year. The other one is the best Trivial Pursuit opponent I’ve ever played against. So I know quite well that a fear or a dislike of money management can occur even with the brightest people.

Five Tactics for People Who’d Rather Do ANYTHING Than Manage Their Money

1. Ask someone you trust for help.

If you’d rather do anything than take a serious look at your money, don’t do it alone. Ask for help. Start with your spouse, but if you’re unmarried, look at a close family member or a close friend that you deeply trust. Some characteristics to look for are: living below their means, a calm demeanor, and trustworthiness.

Open your entire financial situation to them and ask for help in setting up an easy-to-follow plan. Ask them if they’ll do it, then schedule an afternoon when they’ll help you with it. One good way to do this is to cap it off with a tasty dinner. A gift might also be appropriate if they help you set up such a plan.

If you don’t have someone in your immediate circle that seems appropriate to entrust with this, then check out the fifth item on this list.

2. Spend a little less.

This is one of the biggest keys to modern financial success. Cut back on your spending, just a little. Instead of stopping at the coffee shop every day, pick up a free cup at the office a few days a week. Cut back on your soda and instead drink a little water. Pull out your light bulbs and install some CFLs or LEDs, especially in places where you don’t need good, direct light (like in closets).

One of the biggest things that tends to trip up people is the idea of shopping for entertainment’s sake. If you tend to go shopping when you’re together with friends, find something else – anything else – to do. Shopping for entertainment is a brutally effective way to get behind financially – even if you don’t spend anything, you’re conditioning yourself to believe that you need stuff like this.

3. Make as much as you can automatic.

Make sure your bank has online bill pay, then make as many bill payments as you can automatic. Just enter your account number for each bill, the address to send it to, the amount you want to pay, and the date each month and the bill will be paid automatically.

This is a very valuable tactic to use. Not only does it save substantial time once you get it set up (time you no longer have to spend worrying about it), it also saves on stamps that you’d have to use for paying those bills. You also don’t have to make yourself remember when the bill is due, and you won’t miss that due date any more because the bill is being paid automatically before it’s due. For people who’d rather do anything than pay bills, this tactic’s a winner in every sense of the word.

4. Put your money in places where you can just forget about it until you need it – and do it automatically.

For most people who are afraid of personal finance management, it’s very hard to actually initiate a plan to save money. It’s much easier to just put it off and treat it as a “someday” thing.

Don’t. It’s incredibly easy to get started right now and have the whole thing done automatically. Then, in a few months, you’ll begin to have some real savings built up – and you didn’t have to sweat it a bit. Just sign up for a high-interest online savings account like ING Direct (which I like), E*Trade, HSBC Direct, or one of their competitors. Set up that savings account to automatically transfer a small amount each week from your checking account – say, $25 or $50. Then just walk away and forget about it, until something comes along when you need a wad of cash. Then check that balance – and smile. Your finances aren’t tricking you any more – you’re in control.

5. If you need investing help, get a fee-only financial advisor.

If you’ve got a substantial amount of money but don’t know what to do about investing it (or you don’t have anyone you know that you can trust with basic financial questions, a la tip #1), it’s well worth your while to talk to a financial advisor. Get a fee-only advisor – one that does not earn commissions on the investments they recommend. Call a few and ask them whether they’re fee-only or not. Investopedia has a solid guide for finding a good financial advisor.

So, in a nutshell, spend a little less, save a little more (and make it automatic), and ask for help. You don’t have to do this all yourself – there are people out there who can help you with your financial situation.

Feel free to read through the comments – I’m sure many regular Simple Dollar readers will have plenty of good advice.

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  1. Dave says:

    Definitely some great tips, but the #1 thing that is important is that the person needs to not only be aware of their financial situation, but also willing to take action to fix/improve it.

    A close friend of mine is in quite a deal of debt and she’s one of those ‘entertainment shoppers’ as you put it. The problem is that she refuses to change her (spending and saving) habits. She is working two part time jobs in college, each paying more than I make at my part time job, and I am milestones ahead of her because I save as much as I can and she spends more than she makes. Any advice on how to help her out? I know that it has to be her decision to change, and I don’t feel that it’s my place to tell her how to spend her money, but I hate to see a friend in financial despair because of something that they can control and change for the better.

  2. I actaully just wrote a piece about making savings automatic a few weeks ago. I think it provides a good benefit to Simple Dollar readers. The article can be found here:
    http://dividendmoney.com/automatic-savings-is-essential/

    I agree with Trent in that the average person would rather “set-it-and-forget-it” when it comes to savings. I like to manage my money and I still apprecaite the surpise when I look at my savings account after a few months of automatic contributions.

  3. Kim says:

    @ Dave:

    Speaking from experience, there are some lessons you need to figure out on your own, and screwing up with money seems to be one of them. Not true of everyone, of course- some people are more on the ball than others- but it does seem to be one of those life things. You can tell her that you’re concerned for her, and tell her you’re willing to help if she wants help, but otherwise, it’s probably best to leave it go, unfortunately. She’ll figure it out when she’s ready to, and there’s not much anyone can do to hurry that along.

  4. Moneymonk says:

    I can also add

    “keep your income as high as possible and keep your debt as low as possible”

  5. tambo says:

    My brother and his wife both really good incomes , but they Can’t Quit Spending Money. They wear brand new clothes and have to have the latest gadgets and junk and take trips all of the time. That’s all fine and dandy, but they also keep getting their utilities shut off, have multiple car payments and mortgages, and have maxed out all of their cards. Shop, shop, shop, and spend, spend, spend. What’s worse is that once they get it, they don’t take care of it – for example, they’ll leave their lawnmowers out all winter then wonder why they won’t start in the spring. Ooop! Better head out and get a new one! The kids spill something on the sofa, no need to clean it, we can get a new one! Don’t fix something that’s on the fritz, get a new one and accessories to match. The new in-color is faded blue so we have to get comforters and curtains and pillows and towels…

    She works in accounting yet they can’t pay their bills. It’s not lack of knowledge or ability or skills, it’s the NEED to buy stuff and I don’t think that’s something that can be fixed without psychotherapy. Willpower can only go so far.

  6. Onaclov2000 says:

    Trent, I’m a little confused about the “a calm demeanor” statement. Can you expand why YOU feel that a calm demeanor would be the type of person you would recommend talking to?

  7. Ryan says:

    I think Trent was saying that it’s best to talk to someone who can help you, but also is patient and not overly emotional like say Jim Cramer. He might know how to fix your situation, but not if you’re scared off too soon.

  8. getagrip says:

    One suggestion for trying to help those who don’t seem to want to help themselves, is simply to ask, in a curious manner, why they’re doing what they’re doing. For example, “Seems kind of a waste to just get a new lawnmower. Why not get the lawnmower repaired rather than buy a new one?” or “Why get a new sofa if the kids are just going to spill things on it again? You could get it cleaned for now and get a really nice one when they’re older and less likely to make a mess?”

    If they start justifying the spending (no matter how ridiculas the justification), just shrug and let it go. Ask similar questions now and again when similar issues comes up, almost like your presenting an option they can consider, not like you’re judging them.

    Hopefully, this will start to get them thinking about what they’re spending before they automatically go out and spend it (which is the habit they’re likely in now). You could confront them directly, but they’ll likely never listen or fight you tooth and nail to stubbornly justify their attitude. As an option to consider, they may feel they have a choice and take it as their choice, rather than following your choice for them.

  9. Sam says:

    I’d like to chime in for comment 4. A “calm demeanor” is helpful when walking someone through the process of sorting out their finances. The reason for this is simple.

    The person receiving the help/advice is likely already stressed due to the situation itself. Many people go for the “I’ll deal with it later” approach, which is the most damaging choice to make, as they will likely never “deal with” the financial mess. Once they collect all their bills, bank statements, and credit reports, it is often very overwhelming. When you find out you have $100,000 in student loan debt and that it will take over 30 years (at $250 per month, for example) to pay off, that figure (hopefully) becomes very real, very quick. More damaging is thousands of dollars of credit card debt at 25% interest!

    Having a “calm demeanor” is useful, as the person helping sort all the finances can (in most cases) make sense of the situation in short order. Explaining the true situation and laying out a plan for reducing debt (or in some cases, moving the money from a 1-3% return on savings to a higher-yield investment) can create tension, as the person needing help may not understand or be willing to accept the recommendations. If someone with a short temper were to help this person, they would likely storm off, angry that the person in need ignored their help altogether. The person with a “calm demeanor” will likely be more accomodating and further explain their position/suggestions.

    This task is not for a person that simply “goes with the flow”.. some stern talking is occasionally required here, as the person requesting help may have thought the situation “as-is” was working. If the situation was working as it truly should, they likely would not have come to you for help in the first place (however, they may just want a second opinion that they are on the right track – if so, encouragement is definitely in order!)

  10. Kris says:

    I’m one of those people for whom personal finance is simultaneously boring and terrifying (and yet I’m a regular reader here). I have to say that getting a fee-only financial advisor was an excellent move–I dug myself out of the hole being underemployed in my early 20’s had helped me get into, and realized that I have zero idea what to do now that I have a positive net worth.

    My advisor picks out options I might be interested in, tells me in small words what’s good and bad about each of them, and helps me put together a plan. She’s fantastic for me, who tends to panic when dealing with numbers that represent money.

  11. Trent Trent says:

    Ryan nailed it. Talking to someone who isn’t calm in stressful situations isn’t going to help you deal with a situation that you yourself are nervous about. Jim Cramer going into “YOU’RE KILLING YOURSELF!” panic mode wouldn’t help an already nervous person get their situation straight.

  12. Onaclov2000 says:

    Cool, I was interested in opinions about this, sometimes I wonder if a good kick in the butt would knock people to their senses, which is why I had to ask!

    Thank you all for your response to my question.

  13. Katie says:

    My favorite quote from Thomas Jefferson:

    “I am a great believer in luck and I find the harder I work the more I have of it.”

  14. Scott says:

    Making financial decisions automatic can be helpful in so many ways. I really enjoy online banking and automatic investing for 529 college accounts. I totally agree that it takes the stress and worry out of these decisions. I wish more in life could be automated. Wonderful post! I digg it:)

  15. It is important to talk to a fee-only financial advisor. Here are a few more things to consider when selecting and advisor:

    –Do they have a fiduciary responsibility? This means they have a legal obligation to put your needs ahead of their own.

    –How much experience do they have? How long have they been managing money?

    –What is their track record? They need to show you their own track record, which would be a composite of the results of their previous clients’ investments. Any adviser who refuses to show you at least a five year track record of their performance should be crosses off your list.

    –Do they get paid on commissions? Is so, it is not good to work with them. As mentioned above, it is important to select a fee-only advisor.

    –Will they charge a surrender fee? If there is a surrender charge then that means there was a commission. If there is a commission then you are not dealing with a fiduciary adviser. You should be free to move your money out of an investment if you are dissatisfied. This means you should never own a product with a surrender charge.

    We recently wrote an article about this. If you would like to read the whole article visit http://www.moneymanagerslive.com/paragonwealthmanagement/2008/05/are-you-happy-w.html.

  16. Try the link without the period at the end in my comment above.

  17. Michelle says:

    I think this is a great start for people just getting around to being conscious of their financial life, but in the end, the real difference-maker is taking on the responsibilities of their money.

    Good points, though Trent. I heart this site because you really do give advice to people on various levels of the financial spectrum :), whether its reminding people who have made it out of the hole where they came from, or helping people who are dealing with some heavy burdens.

  18. Lynne says:

    I have enjoyed reading the comments.I have automatic deductions from my paycheck to 2 different credit unions. I also for years bought savings bonds, which were purchased and deducted from my bank account with absolutely no effort by me. I set it up and sat back and watched my pile of bonds stack up. Because the money is deducted automatically, I never missed it.

  19. The advice is great, but what’s missing is advice on how to approach these people in the first place. My experience is that if someone doesn’t want to think about managing their money, they’re not naturally going to ask for help doing it – they’ll just ignore the problem or keep putting it off. Additionally, if you do offer to help, it’s likely that you’ll be rejected. Much of the time (in my experience) the response is along the lines of “whatever, I can handle it” or “yeah yeah, I’ll do it later,” when really, nothing is getting handled or done.

    How do you approach the friend/spouse/family member without being a snooty know-it-all? Is there a non-confrontational, non-intervention-ish, nice, friendly way to say “please let me help you” and actually get them to listen?

    I suppose at a certain point (unless you have shared finances, like in a marriage with a joint bank account) you have to just say “it’s your money, do what you want” — but it’s hard to step back and watch someone make bad financial choices when the good choices can be so simple (like setting up automatic transfers into a high-interest savings account)!

  20. Another Marie says:

    I have some acquaintances who fit this profile. But I have a good friend with a different problem. She doesn’t know and doesn’t want to know anything about her family’s finances. If she wants to spend money that isn’t part of the normal weekly routine, she asks his permission and abides by his decision. She doesn’t know anything about their accounts or budget, anything about retirement or college savings or taxes or insurance.

    He wants to brief her. (He’d be thrilled if she actually helped maked decisions, but he’d settle for at least knowing what they had where and why.) She refuses to listen.

    Her mother was mentally ill and she has talked about watching her mother blow 2 weeks worth of grocery money on clothing and toys for the kids while she (age 10) tried to talk her into buying them some food to eat. I’m sure that contributes, but she did live on her own in high school (after her mom was committed) and college so she can handle money. She just doesn’t want to.

    I went through all your old book reviews and linked to the reviews of the two or three I thought would be best for her. She didn’t click through. I forward her articles from the Wall Street Journal (one or two a week) that I think are both interesting and relevant to her. She never comments on the financial ones, just the religious, political, health, and educational ones.

    Any suggestions?

  21. EngineerMom says:

    @Another Marie – if the family is in good financial shape, and the husband is keeping the relevant financial information in an accessible place (names of financial institutions, account numbers and access information, keeping her as a co-owner on the house, etc.) so that she could access it in an emergency, there isn’t anything specifically wrong with their family situation.

    What is important is to make sure she could access and deal with financial information if her husband became incapacitated for some reason. That could mean something as simple as him creating a sort of “how-to” document, telling her where it is, and making sure she has access to it. If she is that resistant to knowing the details of the family’s financial workings, no amount of “convincing” is going to work. Make sure the basics are covered and she can handle an emergency, and let it go. Some people are just not interested.

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