“In reaffirming the greatness of our nation, we understand that greatness is never given. It must be earned. Our journey has never been one of shortcuts or settling for less. It has not been the path for the faint-hearted — for those who prefer leisure over work, or seek only the pleasures of riches and fame. Rather, it has been the risk-takers, the doers, the makers of things — some celebrated but more often men and women obscure in their labor, who have carried us up the long, rugged path towards prosperity and freedom.”
-- Excerpt from President Barack Obama’s inaugural address
These words have specific poignancy at this point in our nation’s history. Now more than ever we, citizens of the United States, need two things: a financial reality check and words of encouragement.
First, the reality-check. Much has been written these past several weeks of the current economic challenges. It would appear the new favorite past-time of financial pundits is predicting just how long it will be before our economy returns to “normal”. Although I haven’t checked, I suspect Las Vegas book-makers have established odds on the date the economy finally moves off life-support and begins to grow again.
But what exactly is the “normal” that the experts keep referring to? After all, look where that got us – unprecedented home foreclosures, mountains of credit card debt, a negative savings rate and alarming rates of financial illiteracy. Whatever their “normal” is, I’m quite sure I don’t want to go back any time soon.
On that note, I have one reality-check recommendation for President Obama and the new Congress – pass and fund legislation that requires every high school student in America to take a personal finance course. Don’t wait for the states to pass it one-by-one. Do it in one fell swoop. We will all (youth, adults, communities, non-profits and corporations) be so much better for it. Youth today must know the fundamentals of basic money management. And if it plays out as I believe it will, they will pull their parents along for the ride – the financial literacy ride that is.
Next, a few words of encouragement. I’ve chatted with several people since last fall who’ve told me they haven’t drastically altered their spending habits. How, you may ask, is that possible? Because most said they were already living within their means – a goal that is attainable if you link your values (e.g. your money philosophy) to your 2009 money plan.
Everyone agrees we are in uncharted economic waters. But living under a rock and hoping things change for the better will likely yield more of the same – fear and anxiety. The best medicine for this economic environment is to rebalance our money habits, to make sure they adequately reflect our values – not those of the hyper-consumer culture, and then to go on about our business of sharing, saving and spending. Only then will we be able to change course for a brighter economic future.
While it may take some time to find your new “normal”, when you do, it will likely yield very positive results – both for you and our country.
One Share Save Spend Idea:
Charting a course for the new “normal” can and will be a very positive step forward. Even though it might mean letting go of some old money habits (e.g. living beyond your means) my hope is that you will find it to be a very cathartic experience.
Here are a few things to consider as you draft your new plan:
1. Use the Money In, Money Out® worksheet to track your monthly income and expenses.
2. Establish an emergency fund (goal: 3 – 6 months of expenses). This will minimize your anxiety and maximize your options in the event of a job transition.
3. Create a plan for paying down/off any high interest credit card debt.
4. Thoughtfully consider if you are saving and sharing enough of your money. While it’s important to shore-up your balance sheet, it’s also important to share with those who are struggling to survive.
5. Stay the course. The best strategy for maintaining the new “normal” is to track your monthly progress.
Money Talks: One question for teaching about money
When it comes to money, what one thing would you like to do more of in 2009?
Gotta Have It Now WOW!
Only 36% of high school students correctly answered the following question: “Retirement income paid by a company is called a pension.”
Source: 2008 National JumpStart Survey of High School Students
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