Financial Success

So, the other day I was asked the following question:

What savings and/or investment strategy have you applied that has been a success? 

My answer came fast, Pay Yourself First: 

There are three steps to make Pay Yourself First (PYF) work. 

Step 1 is to create a budget to prove what surplus cash COULD be available at the end of the month. For me, this budget is reasonable but should also favor semi-aggressive savings. This is why I don’t like super itemized budgets that cover such things as wrapping paper costs each month. While I am a control freak and generally like lots of detail, I can’t handle that level of budgetary detail in my finances. 

Step 2, once a budget has been created and you know how much money you should have at the end of the month this amount is set up as an auto-draft at the beginning of the month. Again, personalities play a big part in the success of a specific type of financial practice. For example, I don’t like moving money from my savings account back into the checking account. So if there is a purchase above a budgeted amount that has to be transferred back into the checking account.

Step 3, after $1,000 has been accumulated in the savings account any additional funds can be transferred off into higher interest earning accounts to develop wealth.

Do your Grades reflect the average of your five closes friends?

Ask your five closest friends what grades they have (or GPA) - as if that's not an awkward conversation - and divide that by five. Is it pretty close to your own?

The "Law of Averages" states that we are very similar to the five people we spend most of our time with. If your not happy with the results of your five closest friends grades, and your not thrilled with our own grades, to put it bluntly, you may want to look for some better friends.

Personally, I had some less-than-stellar friends my Freshman, Sophomore, and the first half of my Junior years of high school. There is precious little time for homework and class projects when your out pretending to be the next Baja 5,000 Trophy Truck winner. My friends grades were suffering, my grades were suffering and I was barley on track to graduate. Then, I joined a couple of clubs, and that introduced me to a new type of friend. I'm still friends with many of these individuals today. They invited me to things like SAT test prep courses, compared SAT scores when we took the first test, and encouraged me to practice and re-take the test. My grades rose and while there was still a lot of damage to my overall GPA, I made some honor-roll's and such during the remaining semesters. These things saved me money in college and really worked to get me off to a good start as I moved to being an adult.

As adults the "Law of Averages" still plays a role, only now its finances. Take the bank account balance of your five closest friends and average that and it will be very close to the balance in your own account.

- Moral of the Story? If you want a healthy bank account balance, have five close friends with large bank account balances. Want better grades...

Good hunting!