12 Lessons on Life and Money

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In the last edition of RGVision, you received Part 1 of the 12 Lessons on Life and Money series, the first three lessons: 1. If money can fix it, it is not a problem; 2. Understand the difference between needs and wants; 3. Nothing is free. Those concepts largely dealt with healthy attitudes about money. In this edition, we are defining what money represents, how your work can produce money joyfully, and how to begin accumulating your nest egg through the discipline of budgeting.

  1. Money = Labor x Time

My parents helped me make the connection between the cost of my wants in terms of how many hours I had to work to pay for them. As a kid, this realization helped me exercise some self-discipline when I recognized that the newest Nikes would take days of my labor in order to wear them home. I started to weigh just how important some purchases were relative to my time. Even small daily expenses add up for us adults. After all, going to Starbucks each day for your Venti Vanilla Bean Crème Frappuccino for a year will total about $1,825. By my rough calculations and accounting for taxes, even with a well-paid six-figure salary of $100,000 (at about $40 per hour), an employee will have to sacrifice about 60 hours’ worth of work every year to afford this daily luxury.

I enjoy Starbucks as much as any of their customers, and certainly don’t want to pick on this great American company, but it is necessary to relate your effort to your expenses in order to make truly informed buying decisions. Once you know what your good or service equates to in terms of your hours of labor, you can decide if it is worth it. Do you want to work for a week-and-a-half for that little cup of joy? How about working an entire year for that status symbol luxury car? The obvious next question is how much later in your career will you have to keep working since those dollars were not deposited into an account that could have increased your nest egg faster to reach a critical mass?

  1. Life is too short to work. Get paid for your effort.

Mark Twain said, “Find a job you enjoy doing, and you will never have to work a day in your life.”  I believe my parents had this quote in mind when they offered up some attitude advice and career counseling. My dad said that he enjoyed every job he ever had, except one: a poultry farm. It wasn’t that the dirty work was beneath him or that he was afraid to sweat. It was the crazy manager who told him to clean the tin roof during a lightning storm that made him quit without giving the customary two weeks’ notice.

You likely will spend almost half of your conscious life at work. So find joy in what you do. If it is a joyless job, then one of two things need to change — the job, or you. I have found that with almost anything I have done, a positive attitude made time pass faster and helped me in receiving better duties or opportunities.

One thing I discovered about myself is that I prefer to get paid for my effort. I believe it was an entrepreneurial spirit my parents instilled in me through subconscious training. They typically paid me for jobs completed, not hours on the clock. It instilled a sense of accomplishment and drove me to work more efficiently. Too many jobs have their employees clock in and clock out without any recognition of a job well done. Today, I encourage my kids to find jobs that reward their effort.

As a teenager, I was drawn to opportunities where my pay was tied to my productivity. While pushing a lawnmower, if I moved a little faster and mowed more lawns, then I would collect more money. When waiting tables, if I was more efficient and friendly, I could serve more tables and earn more tips. Yes, it can be a bit more challenging to find an employer with performance-based pay in some career fields, yet even in traditional salaried fields you can find bonus opportunities. As an example, I am on the board of a school that gives performance bonuses to their teachers when their students demonstrate measurable academic growth beyond expectations. I believe a large part of my career satisfaction has to do with two things: helping people and almost a direct correlation of my effort and compensation. I challenge you to make your work hours more meaningful by choosing your career and your employer carefully.

  1. Build a budget. Be accountable.

In my opinion, this generation’s greatest advocate for budgeting is debt-free disciple Dave Ramsey. He has helped more people pay off debt and discover financial freedom than any one person alive. He boiled down budgeting to a simple statement: “A budget is simply telling your money where to go.” My parents were serious about their budget. They did not allow unnecessary wants to knock their financial plan off course. They also stuck to their budget by being accountable to each other. From the beginning and still today, they have stuck to an agreement of no purchases greater than $500 without consulting each other first. That’s accountability.

They maintained their spending budget for years at a time, reviewing every so often and making adjustments to be sure it was achievable. Even as their income would increase, they spent at the same levels and saved more. They knew that there was no limit to what could be spent, observing so often the more people make, the more they spent. After their paychecks withheld for taxes and 401k, a fixed amount was deposited to a checking account to be spent and everything else was automatically deposited into a capital account for investments to grow the nest egg. That’s discipline.

© 2018 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC © 2018 Raymond James Financial Services, Inc., member FINRA/SIPC Investment products are: not deposits, not FDIC/NCUA insured, not insured by any government agency, not bank guaranteed, subject to risk and may lose value. 17-WorthWhile-0028 CW 11/18

COMING UP

In the next issue of RGVision, accounting for risks and planning for rewards through investments.