The most important thing you can do to improve your personal finances is to get a grip on your finances. But it’s not easy, because there is so much conflicting advice, and what is good advice for someone in the US is often bad advice for someone in the UK or some other country.
This is very good advice, but I doubt the amount of stress you are talking about. If you are like me, you will probably get more of it by not doing it.
It is the best piece of financial advice I have ever read in any book or magazine, and it applies equally well to rich people and poor…and in my experience, makes for better financial decisions than just about anything else I’ve read.
A lot of people think that you should make sure that you have enough money to meet your basic needs. This is about right for the working poor, but it’s not what you need if you are doing well out of work — indeed, it can be counterproductive if you are earning more than you need.
People who are doing well out of work tend to have large debts, because they have been living above their means. This can be hard to see when they are in debt — I know people who will lose their homes if they start paying off their debts — but they still keep doing it.
Financial controllers are supposed to help you get your finances in order. They sit in an office, scrutinizing every penny you spend. No one has ever tried to explain how they do this, so we assume they have the power to see the future…
The reality is much more mundane. You can’t control your finances if you don’t know what’s in them. Most people don’t know how much money they have, or where it is, or what it’s invested in. Many of them don’t even know what their debts are, or if their debts are legally enforceable.
The main purpose of financial control is to use it. You can be in charge of your finances without doing much with them, by making sure you are in charge.
Even if you are not spending money, your money is still your money. If you’re not using your credit card to buy things, it’s yours. If you’re not taking advantage of the opportunities the stock market offers, it’s yours. If you’re not investing in index funds or mutual funds, it’s yours.
And if you aren’t spending any of the money you have earned over time, you are losing your ability to make decisions about how to use it wisely.
Financial controllers are not the same thing as accountants. Accountants are trained to do accounting, which is largely a technical job, and financial controllers are trained to do something more. Financial controllers are not necessarily accountants. They might be lawyers, psychologists, economists, or sociologists.
They are often involved in making decisions that affect the bottom line, but they are also interested in how the business works. They try to understand the big picture of what is going on, and how people’s work affects it. They try to find patterns in what happens when things go wrong.
Taxes: Taxes are one of the biggest problems with human civilization. Until recently, they were also the world’s biggest problem. There is no way to run a civilization without them, but taxes are an inefficient way to collect government revenue.
The first problem is that you need money before you can tax it. If everyone in town sends their kids to school tomorrow, you can’t tax them; you need money first. You also need money before you can spend it.
But if everyone saves for retirement instead of spending, then there is no tax revenue anyway, because there is no spending. The other problem is that the people who pay the taxes are not necessarily the ones who benefit from all this spending.
To make things worse, governments often find ways to make people pay more than they should be paying; this creates more problems than it solves.