Modern Obstacles to Money Management

Have you ever noticed how personal money management has a feel of dieting to it? Not only is there the challenge of knowing what method will work for you, but more significantly, what method will bring a long-term, sustainable, satisfying lifestyle change for you.

Like diets, you would think that with all the abundance of available information from books, online resources, print articles, radio and TV specials to experts, specialized services, classes and counselors it would be a no-brainer to effectively lose weight and manage our personal finances. So what gives? Why is it so hard to manage money? Could it be related to the current pace of our lives?

Think about the following modern obstacles and consider how they may apply in your life:

1) Choice Overload

“Would you like boiled ham, honey ham, or Italian ham? American cheese, Swiss cheese or Provolone? Rye, wheat, or white bread? Should you pay off your debt or put more money in savings? Buy a no load or load mutual fund? Which mutual fund? Will this cell phone service offer better reception in buildings than the other service”?

Even though these many options are designed to make you happier, this ongoing daily accumulation of the most mundane choices eventually causes such confusion there is no brain power left for the more important financial decisions. Have you ever been so overwhelmed you just picked anything to get the decision over with? And if so, what did this decision cost you in terms of money, disappointment, frustration or time?

2. Lifestyle Overload

Can you think of the last time you had an evening or weekend when you had nothing to do? If you are like many, your life is probably filled with family, work, community, chauffeuring the kids, doing load after load of laundry, catching up on emails, watching your son’s soccer game o grabbing fast food And, it’s very likely you were on the phone during much of this activity.

So just when do you squeeze in the time pay bills, research major financial decisions, compare prices, record and evaluate your spending, prioritize your financial needs, or take time to discuss financial matters with your spouse and family? Many times the expensive late fees, and bounced check fees are not about lack of money or money skills, but instead, due to lack of time to pay the bills, deposit the paychecks, or get financially organized.

3. Marketing Overload

It’s hard to maintain a simple, manageable life when there is a daily bombardment from TV sitcoms, commercials, celebrities, movies, computer games, web sites, and magazines influencing spending in every facet of our lives. To feel trendy we’re told how to dress, style our hair, feed our pets, furnish our homes, travel, play as well as how to invest our money.

Even if you are able to “keep up with the Jones”, are you able to keep up with the payments? Notice how much energy goes into putting on the brakes for your children and/or yourself every time you are in the mall or computer store and see the exact model of something viewed earlier on your TV or computer and suddenly you just have to have it. After all, how can you pass up that tempting convenient, fabulous product for yourself, child, home, vehicle or pet? Yet, if you weren’t aware of this product, you probably would not even feel like you were “missing out” if you didn’t have it. Also, your monthly budget would not be disrupted by this unplanned expense.

4. Basic Necessities Overload

Basic living necessities are no longer basic. Can you imagine the days when you didn’t have cell phones (okay, your parents and grandparents can), basic cable, and Internet connections? Now, can you imagine even functioning in your job or family life without many of the above services? And how much are all those “basic necessities” adding to the other fixed costs in your monthly spending plan?

When you wonder why you can’t seem to get ahead or make ends meet often the problem is the increased volume of fixed expenses. Managing your money effectively may mean choosing to cut back on more of the discretionary spending to keep the expenses from spilling over onto the credit cards.

Now What?

So how does all the above-mentioned overload create obstacles to money management? More time and energy continues to seep out as you agonize over choices, hectic schedules, and unsatisfied wants instead of spreading over to important financial decisions, productive planning and implementation of a workable spending plan.

There is no lack of information and help for getting out of debt and creating a spending plan. What could be lacking is the time or energy to evaluate the plethora of information and determine what system would work best for your particular situation and then get started.

And the solution? You probably really know inside what is best for you, so below are a few suggestions to help you get started.

1. Stop and Regroup

Which activities, responsibilities, decisions and stuff can you let go of or pass on to someone else, to free up more time to manage your money on a regular basis? What things “really” matter to you and your family? Where do you want to be financially 3 months from now? How about a year or 5 years from now? Prioritize your financial goals and create a plan to achieve those goals.

2. Not all systems work

Many money management systems do already exist, however, few are easy to use or easy to understand. Even fewer provide the comprehensive steps involved for financial success. A successful financial plan must include 4 steps to create what is called the “success cycle”. The steps in the success cycle are: 1) plan, 2) track, 3)compare, and 4) adjust.

First you need to get a financial plan tailored to you needs. Great some short and long term goals and create a framework for making better financial decisions. Second you need to find a way to track what you spend. Either a manual or electronic tracking system will work if it allows for all 4 steps in the success cycle. Third, compare your actual finances to your plan. Where did you succeed? Where did you fall short? And lastly, adjust your finances and your spending to achieve your future goals.

3. Manual or Electronic?
There are hundreds of books on managing your personal finances. To simplify your decision, go with a workbook that already has monthly forms set up. The better books will help you get organized, simplify the money management process and save you thousands of dollars in the long run. Find a workbook that helps you manage your periodic expenses, monthly bills and track where the daily money is going. One book I would recommend that provides all these features is my workbook, The Budget Kit .

If you think an electronic solution is for you, pick one that supports each of the four steps of the success cycle and get started. A computer based personal finance system can save you hours of work and provides a wide array of features and benefits. I found a great online budgeting system called Mvelopes Personal. Mvelopes not only allows you to track every aspect of your finances it will actually download all your online transactions from your bank, credit union or credit card. In just a few minutes a day you can easily keep up with your finances and get the information you need to make good spending decisions.

4. Simplify and Streamline

Have a weekly family “board meeting” with your children and/or spouse. Discuss financial issues so more decisions are made ahead of time, rather than impulsively in a store. Create space and time for staying current on a regular basis with managing your money.

Reduce your number of accounts. Eliminate paying bills by check. Instead, arrange for automatic withdrawal from your bank for monthly bills, pay bills online, or automatically charge monthly bills to your credit card if you are building up the miles. Remember to pay off the credit card bill in full each month.

Again, there are numerous systems for online bill payment. Find a comprehensive money management system that offers online bill payment, one place to keep all your financial account records and balances, a way to effortlessly record all cashless transactions, and to immediately see how much money is left in each of your spending categories. Mvelopes Personal includes a bill pay service that makes it easy to setup and automatically pay all your bills.

Take a moment to step back, look at your life, and make decisions that are proactive and rational instead of reactive and emotional. Getting a solid financial plan and sticking to it will allow you to reap the rewards of being in complete control of your money. Remember, the cost of financial peace of mind can be priceless.