Personal finance is personal
16 September, 2016
A recent Esquire article described the lifestyle choices of four men, illustrating the theory that personal finance really is personal.
Under the headline 4 Men with 4 Very Different Incomes Open Up about the Lives They Can Afford, the article detailed the financial lives of four men earning different incomes, with one father living "on the poverty line" and a CEO earning $US1 million a year.
Each was asked the same questions about how much money they earn, what their budgets look like, how happy they are and what they want but can't afford. The different responses humanised the problems people face with their finances.
Everyone worries about their finances; the worries just change depending on how much money you have.
The millionaire CEO said he worries about money "maybe once a week. I've been broke before. I've refinanced my house to pay my employees. I've been through all that — that was me worried. Now, because I'm able to forecast and plan my money better, there's not as much worry."
The 48-year-old concierge earning $US53,000 per year with a student loan said he didn't worry and "money is not something I stress over". But he is conscious he doesn't own a house or a car, and can't afford either. While he'd like to retire at 60, he knows he'll likely have to work for longer.
The bar worker earning $US7 an hour plus tips worries about money: "Always. Living like this is hard to do". He acknowledged that, because he hadn't paid old bills and fines, his debt had grown. He now has new bills; money keeps him up at night, worrying about how he'll ever get on top of it.
In the same week, another story was published by a successful author who has written for TV shows and critically acclaimed books.
In his piece in The Atlantic magazine, Neal Gabler wrote that at one stage he owned homes in Brooklyn and the Hamptons. Now he and his family have "learned to live a no-frills existence. We shop sales. We forgo house and car repairs. We count pennies".
It wasn't a single poor decision that caused Gabler's financial issues. Neither was it a single factor that determined the success or otherwise of the four men interviewed by Esquire.
A myriad of factors affect a person's or family's finances. Our financial lives are influenced by good luck, bad luck, hard work, bad choices, our education and understanding of money, our lifestyle choices, our family's attitudes to money; the list goes on.
As one financial adviser said: "Personal finance is more personal than finance".
Just as there is no single issue causing financial problems, there's no single solution either.
There are, however, some universal actions each of us can take to make our personal financial journey a little better.
The first is to talk about money. The saying 'a problem shared is a problem halved' really does have merit when it comes to finance.
Paying attention to our money habits and catching the bad habits early can limit the damage before it takes hold — and having a plan is always going to be better than simply accepting our fate.
Financial planning blends personal and financial factors. The financial part — the numbers, charts, projections and allocations — is relatively easy.
The personal part, less so.