Updated on 10.28.08

Having a Money Revelation

Trent Hamm

Revelation by Schwarzerkater on Flickr!I’ve mentioned many times how my first child was a revelation to me when it comes to money issues.

It wasn’t that I didn’t know that I should be spending less money, I just never had the internal motivation to make good financial choices. When I realized what I had to gain from turning my decisions around – and what I had to lose by not turning the decisions around – it really lit a fire under me.

Recently, I received a comment from a reader named Aya:

its hard for a twenty-something like me, and probably others, to wrap my head around how exactly to budget and save for the future. The simple fact of the matter is that I don’t have a family to support or a house I’d like to buy, and not having been hit hard with that kind of reality prevents me from saving. The author writes, “the day I realized…,” and I wonder how that revelation comes about – if only it came sooner for many people.

When I read that statement, I see myself several years ago. I might know how to spend well, but it’s not an imperative. I don’t see any good reason to do it – and the day-to-day fun desires are much stronger.

In short, Aya hasn’t had that money revelation yet, and she doesn’t know where it might come from since she doesn’t yet have a family to inspire her (as I had).

How can a person find that revelation without a family? Here are some suggestions for finding your own revelation.

Look at your real numbers. Keep track of your spending for a month or two, then compare that to what you actually earn. The difference between the two is how much you’re actually earning (or losing). Now, run that out in advance for a few years and think about where that puts you. Will you be able to afford anything? Will you be bankrupt? If you’re spending more than you earn, you are quite simply heading into oblivion. Many people, though, haven’t been “slapped in the face” with the real numbers.

Look at your dreams. Where do you want to be in five years? In ten years? Take that dream and flesh it out in as much detail as you can. What would you really like to be doing? Now, every day, ask yourself what you’re doing to move yourself in that direction. You’ll often find that keeping your eye on the ball helps keep you from getting distracted by unnecessary spending.

Look at your feelings. If you’re asking serious questions about your money, that means that some element of your conscience is hinting to you that you need to make a change. Listen to that whisper. Focus in on where it’s coming from. Are you feeling guilt? Why do you feel guilt? Your conscience is telling you that there are some big negatives to the spending choices you’re making – defining those negatives and making them clear can be a true revelation.

Look at your causes. I can name at least three people very close to me who have committed their lives (at least at the moment) to social causes. In each case, their decision to commit themselves to something they truly care about was an epiphany in every aspect of their life. One of them works at a very personally challenging social work job and yet has still managed to almost fully fund her Roth IRA this year. Why? Funding that Roth IRA and learning how to live cheap makes it possible for her to continue to devote herself to that cause she deeply cares about.

What do these options have in common? They’re all about soul-searching.

Whenever you spend genuine, serious time figuring out what is truly important to you, what you really want to do in the future, and what your true situation currently is, you start to see which choices are good ones for you and which ones are bad ones – and that is the seed of any true revelation.

Good luck.

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  1. Trent, this is a very timely article. Your first two paragraphs of the solution really hit home in regard to starting my Internet business. I knew I needed something else to supplement my regular job and I knew in 5 years, I’d still be in the same place – except 5 years older – if I didn’t take any steps.

    I didn’t know one thing about webpage building, HTML, affiliate marketing, AdSense, you name it…but I learned along the way. It was slow, but it has been worth it.

  2. ross says:

    I too have no family to support and no desire to buy a house at this point in my life, but as my new years resolution this year I set a goal to save $XX,XXX (arbitrary amount – but something that would take some work to achieve) just to see if I could do it. It’s coming down to the wire and it’s gonna be close, but I think I’ll get there.

    I don’t know if making this “challenge” with myself constitutes a revelation, but it’s a start.

  3. DIY Joe says:

    My revelation started when I read Trent’s article on “Personal Finance Management on a bi-weekly schedule”. I credit that article for getting me started on really looking at where my money is going.
    Based on that article, I did a deep dive on our finances and discovered where the irregular expenses were killing us. (not sure if I am allowed to post links, but here is how I went through it: http://diyjoe.blogspot.com/2008/10/irregular-expenses.html)
    I’ve done a similar workup on my personal money and expenses and the results are not good.
    The immediate results are me making darned sure I eat breakfast at home and PLAN for lunch at work (either cheap frozen meals or leftovers) instead of dropping $6 – $8 dollars per meal I eat out.

  4. Lolita says:

    I think that one of the hardest things to see when you are “twenty-something” is what money can do for the long term. So many young people want to start out with a house better than their parents had but they forget that their parents started out without much in their pocket. So they buy up everything they can to make themselves feel like they look like they are doing a good job with money, but in reality, they are blowing it!

    Aya, eventually, those things(family, responsibility, etc.) will come to you and you may or may not have a supportive person in your life that will work with you on all money matters. Regardless of what life brings you, start tucking that money away now and do not let anyone or anything keep you from it. It is hard to see the future now, but retirement comes much quicker than you can imagine.

  5. Robin S says:

    My own epiphany came when I realized that I wanted to spend the rest of my life with the woman who is now my wife. I realized that I would be unable to hide my spending from her if we were to have a solid relationship once we were married. That realization led to my creating (yet another) spreadsheet to keep track of my spending, and this time it stuck — because I knew that my failing to stick to the spreadsheet would adversely affect her.

    Up to that point, I had tried to do all of the things you mention here, Trent, but finding the self-discipline to keep my spending in check (or even to accurately record everything I spent) seemed to be beyond me.

    I realize this doesn’t help the questioner, since she was asking about her situation, where there is no family concern, but I find it interesting. How many of us who are (or were) lax in our spending get less so only because of how it affects someone we love, not because it affects ourselves?

  6. I had my own epiphany about 2 months ago. I’d been thinking of sorting out my finances for a while and then suddenly I decided to do something about it (whilst at the same time reducing work to 4 days a week).

    In fact since then, I have had more and bigger revelations since I have found more ways to save, less ways to spend and infinitely more ways to enjoy myself for less. It’s been truly mesmerising.

  7. Movingonup! says:

    The money revelation came to me when I realized I had nothing to show for years of debt.

  8. michelle says:

    My realization came when my grandfather died 2 years ago and left $5,000 to me. I know this is not a huge amount, but to a 23 year old who had no one to support I thought I should do something with the money that would make him proud. My grandfather was very into investing and the stock market, which had always scared me, so I did as much research as possible and opened a Roth IRA with the money. The research got addictive and I started reading more and more finance blogs and I realized I could have been saving much more over the years that I was just wasting. From that point on my spending habits have changed so much and I have been putting much more money away for the future. I still do not have a family to suppport or any other large goal in mind, but someday I will and when that day comes I will need the savings of quite a few years to achieve it. I will already have it saved to get whatever it is I want immediately.

  9. mary says:

    Aya, I understand your difficulty with exactly how and why to budget and save. It basically comes down to this–there are two ways to have more money: 1) earn more or 2) spend less. Budgeting is basically keeping track of how much money you earn and how much money you spend. Why keep track? You keep track in order to accumulate money. Why do you need to accumulate money? For several reasons: 1) to invest in securing your future, 2) to buy big ticket items, 3) for your emergency fund, etc. Most of us who have had the money revelation know that keeping track of your money is part and parcel with getting and keeping your life in order. Good luck!

  10. I think the best way to have a money revalation (and the way I had mine) is to simply get a notebook and write down EVERY SINGLE EXPENSE on a day to day basis. Usually, that’s enough of a shock to get people motivated to take control.

  11. Michelle says:

    Here is your motivation: You never know what you may long for in the future. The more you prepare now, the better able you will be when that opportunity comes along – whether it will be to start your business, stay home with your child(ren), retire early or travel the world. It just makes sense to do all you can now not to limit yourself in the future.

    Now, if only someone would have gave me that advice when I was twenty-something!

  12. Your Friendly Neighborhood Computer Guy says:

    It wasn’t until I started planning for my small business that I realized the trouble I was in financially with debt. I’m in my late 20’s, without a family or house, so hopefully I can get my finances on a good track before all of that stuff happens and start off on a good foundation.

  13. Nick says:

    I’m still a little young to have a revelation like the ones you speak of, but they’re good to keep in mind. One of the best ways to learn is by listening to the experience of others.

  14. Jen says:

    For me, the revelation came when we decided to buy our first home (at 25). I wanted to make sure that we could make the house payements and still be able to save for our retirement. For my husband, it happened when he was only 9. He started saving every penny he earned (from doing chores around the house) and he started a retirement fund when he was in high school. Apparently, when he was 9, his parents almost lost their home from a failed business they started and it really scared my husband, so he was always careful with money from that point on.

  15. Sistah Ant says:

    Though childless and single, I had my moment at 26 when I got tired of paying on my credit cards every month, and took a real look at the total amount of my debt. When I saw that it was more money than my annual salary, it was all the motivation I needed.

  16. michael says:

    I never had a revelation. But common sense told me that if I wanted to really enjoy being a 40-, 50-, and 60-year-old, I’d have to do a little saving in my 20s and 30s. Investing soon became a lucrative hobby.

  17. L says:

    Like Michael- I never had a revelation, I simply knew that I had to ensure that my money was managed and that saving now (in my twenties) would greatly improve my chances at early retirement.

  18. Ryan McLean says:

    Interesting article. It seems like this person will have to see the “great revelation” of budgeting. But I they will soon, with the American economy failing.

  19. Simply stated, money sense comes with age. Young people tend to spend unwisely. As we grow older, we realize more and try to save more. And of course, there will always be exception to the rules.
    A Dawn

  20. The money revelation comes to me whenever I get some money after a difficult period. A simple comparison often helps.
    Thanks for the website, Trent.

  21. glenn says:

    Sometimes people learn young. My sixteen year old daughter had a moment today wanting a dog. Before I said yes, I made her make out a budget. Paying for a dog has its untimely vet bills that must be saved for and quarterly and annual costs. She is looking for a job a little bit in earnest tomorrow so she can start a savings and budget for the pup.

  22. Amber says:

    My revelation came when I was reading a book and the topic of gluttony came up. I realized that buying things and wanting things was just not the person I was meant to be. It is a constant struggle to keep an even bigger picture in mind than a down payment or other finachial goal; it is a spiritual goal. The closer I get the happier I am.

  23. Lynette says:

    I had my revelation when I moved out of home when I was 17. I had to learn how to cut down on luxuries so I could afford food to eat!

    I picked up a money management book a few months after I moved out and that really helped me understand how to budget.

    It makes me cringe thinking back on how much money I spent on clothes, make up and alcohol.

    Oh well… at least I am on the right track now!

  24. SP says:

    I don’t think money sense really comes with age. It is correlated, but there are plenty of people in their 30s, 40s, 50s who don’t get it, and plenty in their 20s who do.

    I had no real revelation either. I started getting “real” paychecks after college and realized, wow, I had no idea what I should do with “all that money”. I still had college tastes, couldn’t fathom spending it all, and knew that wasn’t the best answer.

    So, I started learning about it. I can hardly believe two years ago I didn’t know what a Roth IRA was, or how to contribute to one.

  25. Carmen says:

    No revelation here either. Apart from a couple of recent years as a family on a (thankfully rising) single income, I/we have always spent less than we earnt.

    As a teenager with a weekend job, I saved some of it to go to university/college. I also managed to save for a 6 week holiday adventure upon graduating. I’m hoping my children don’t leave education with a pile of debt. I think that is often a big trigger for many to over spend; because they start their working lives in an unhealthy state financially, which personally I would find overwhelming. Admittedly I am fully aware this is hard to avoid with spiralling education costs.

  26. Deborah Johnson says:

    Trent, this is a great article. I became interested in improving my finances about a year ago, but I just recently had a “money revelation” when I realized I’d like to teach and write full-time, and my debt was going to hold me back unless I got serious.

    Thanks for such a great blog.

    Deborah Johnson
    A Writer’s Voice: http://litchick73.blogspot.com/

  27. Catherine says:

    Our moment of revelation came when we reviewed our mortgage after seven years in our house. We are in the UK, and house prices here are insane. We realised that over seven years, we had made payments on our 25 year mortgage of the equivalent of $80,000, but we had only reduced the total balance of our mortgage by $23,000. Ouch.

    We thought we were being pretty responsible financially – no consumer debt, we’d paid off both our student loans, were making good pension provision and were just enjoying the rest. We felt we deserved to enjoy our good salaries after 10 years of enforced frugality whilst we went through university and entry level jobs. But really, we were letting an awful lot of money just slip through our fingers. We weren’t in debt (other than the mortgage) but we weren’t saving much either.

    Six months ago, we started afresh financially. Since then, we’ve paid $25,000 off the capital of our mortgage – money that we otherwise would have frittered away. We are now on track to own our house outright in 18 months, instead of dawdling along paying a mortgage for another 18 years and paying thousands in unnecessary interest.

    I wish we’d started earlier, but at least we’ve turned it around now.

  28. This is a great post that’s pertinent to whatever it is you want to do in life. I think about this stuff all the time because, honestly, writing is a game of confidence and practice. I keep thinking to myself: “will having a kid finally motivate me to get my butt into gear and write more, like it has so many others?” What will it take? You try to will yourself or psyche yourself into it but it’s not the same. All you can hope for is to be open to it when it finally does come.

  29. Kevin says:

    My revalation came about 5 years ago when my first wife and I decided to divorce. We were in credit card debt, had a double mortgage on the house and 2 car loans. We were making good money but living paycheck to paycheck. After splitting everything up upon separation, I realized I was 28 and had almost nothing to show for 5 years of working, other than a small 401(k) balance. This was my time for a fresh start, both emotionally and financially. I took my half of the proceeds from the house sale, paid off my first small credit card balance and worked my butt off for the next year paying off the rest. After that I focused on my car loan, which I paid off a year early.

    I lived in a 1 bedroom apartment during this time after being used to living in a nice 3br, 2bath, 1500 sq ft home. I still drive that paid off car. Since then I have gotten remarried, paid off another car for the wife in 2 1/2 years and been able to save quite a bit for our next home.

  30. Jen says:

    No single revelation, really, just a lifelong fear of nursing homes. My goal is to never have to reside in one. (I’m 26.)

  31. LisaB says:

    One of my favourite things about your advice is the part about your dreams. So much money advice focuses on trying to avoid something (debt, financial ruin, not enough retirement money). For some younger folks, there may be greater appeal in thinking about what you want to achieve and how sound money management will help get you there.

    What helped me also was calculating how much interest I was paying on my student loan and credit cards. This is money I’m giving to a financial institution for the “privilege” of using money that, at least for the cards, I didn’t need. Seriously, I’m still paying off tires on a car I don’t even own anymore, clothes I don’t have anymore, books I didn’t even read. That was revelation for me! Not again!

    It amazed me what little money I’m living on as a full time grad student. Try a spending diet for a couple of months and see how little you can live on. It might open your eyes.

  32. doctor S says:

    I am in the midst of a money revelation. The love of my life wants to get married but when we crunch numbers together we get very worried. I have cut my spending significantly and things are looking up, but never in my life did I realize how much it costs to start a life together and begin a family. Great comments.

  33. plonkee says:

    Aah, but I think the problem is that not everyone can see what they want to do in 5 years time. Especially if they are young. So many things could change that it seems almost pointless to speculate.

    Not all of us have big dreams at any given point in our lives.

  34. Anne says:

    I agree with comments 2, 24, and 31 and consider myself quite lucky to be in that position.

    I’m 26, just out of school, and have no idea what I want to do next year let alone in 5 years. But my paycheck still seems like an amazing luxury over my stipend and I’m extremely competitive with myself so I’ve set arbitrary savings goals and am making it a game.

    I guess the quasi-revelation is that I don’t want to make my future self miserable. I’d like to be a position to act if/when I find something I’d love to do.

  35. bethh says:

    I’m still having this problem, sort of!

    I’ve been great about saving for retirement (though only got to start at 27, as I didn’t have access to retirement accounts before then). I’ve routinely put in 15% for the last ten years, and even with all of the horrific-ness of late, I now have a year’s salary in my retirement accounts. I’m shooting for 2 years’ worth before I hit 40, but.. we’ll see.

    I’ve also paid off my credit card & car loans, and am closing in on paying off my master’s degree. I also have a reasonable emergency fund, and could live on unemployment if I needed to.

    Those are the good things. The bad is, I’m in my late 30s and haven’t saved anything toward buying a home. I’ve been a coastal city dweller since I got out of college, and I’ve only seen prices go from ridiculous to outrageous, so it’s never felt achievable. But, I totally relate to not being motivated by life’s circumstances. I’m right now saving for travel/school loan payoff, but still not saving for a house downpayment. Will I? Should I? We’ll see.

  36. Maureen says:

    I think that education is always an investment that you won’t regret. It always feels a lot more satisfying bettering yourself through recreational activities instead of changing your appearance for others. I think Aya is in a good position to find inspiration as she is asking for help. So many people my age don’t think to ask.

  37. Kate says:

    Something that will shock you into saving is looking at the time value of money. Get (or Google) one of those tables that will let you know how much money you’ll have in 5, 10, 20 or whatever years from now, at different interest rates. If that isn’t a wake up call, nothing is!

  38. MMO gold says:

    Wow, I feel bad for Aya. When she feels the money revelation she’ll feel a bit “duped”.

  39. BM says:

    One thing a “twenty-something” could try is to learn from other peoples mistakes, especially “thirty-somethings” and “forty-somethings”. Twenty-somethings should avoid DEBT like Plague, especially if you already have student loans. From my own experience I can tell that DEBT will hold you back, debt will put your life on hold. It will be impossible to plan and even dream about the future when in excessive debt. Excessive Debt will make it impossible to leave a job with not-so-great coworkers and an abusive boss because you need the job to pay off all the debt. Excessive Debt will make you anxious and fearful of life. It will cause you to crawl back into your comfort zones. You will be paralyzed with fear and will be very difficult to take risks with your life, relationships and career. You may have to delay having children when you are in debt. You will have to delay retirement planning. Compound Interest does wonders when you start saving for retirement in twenties compared to starting in thirties. Above all the peace of mind you get when not in debt is something I just cannot explain in words.

  40. Battra92 says:

    I can’t say I ever really had an epiphany in regards to money. I always knew what I should do but for some reason I just never did.

    In college I had the time (with a couple extra years) to worry about student loans and such and was able to work and keep a good bank account balance while buying all sorts of anime and video games. Then after getting a new job I bought a car as mine crapped the bed.

    So I finally did get to it and started the 401K a few months ago. I’m 26 now so better late than never, right?

    Still, there are days when I see myself as a single guy with almost no bills (my rent is super cheap as it’s from family) and my debt will be paid off in less than a year provided nothing else happens.

    Still, I do wonder about my long term goals. What do I really want in life. At 26 I feel I should know these things but I still have my doubts, ya know.

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