Money is a Stewardship

I am not obsessed about money. This might sound a little strange coming from a guy who calls himself Cheapwad and blogs about personal finance. My wife might even disagree with me because I do expend some amount of effort worrying about our family finances. But the fact of the matter is that I care about money for one main reason: I believe money is a stewardship.

An obsession is all-consuming. It's a hunger that cannot be satisfied. My grey matter doesn't view money in that light. Rather, I think of money in terms of making the best use of what I've been given. Any money I receive becomes a responsibility. My greatest desire is to be wise in the spending and saving and investing and sharing of that responsibility. It doesn't matter if the amount is large or small, I feel the same sense of duty.

By viewing money in this way, I combat the temptation to ever think that money or financial security equates to happiness. One doesn't have to look very far to see celebrities, athletes, or even close friends and relatives that have plenty of cash, nice homes and cars, fine jewelry, etc. but are not happy. Those people face challenges just like everyone else. If I can avoid that temptation, then my primary pursuit in life will always be happiness. I won't be distracted and begin to pursue the almighty dollar and sacrifice everything else that is so much more important...especially family.

Would it be nice to have a lot of money? Sure. Would it be great to be financially independent? Of course. But, having a million dollars in the bank will not solve all my problems. It won't make me a better husband or father, a better son or brother. It won't make me kinder, gentler, or more thoughtful. Money (or the lack thereof) does not define who I am. My thoughts and actions are guided by my character, which is a much better indicator of success in this life. And it is my character that will help me be a wise steward.

It's Not What You Earn, It's What You Save

Is it true that it's what you save that matters? I believe so. I know several persons that make a lot of money, but are literally living paycheck to paycheck. On top of that they have no security basket or retirement basket to speak of.

I also know individuals that make less than $40K per year, yet are building quite a nest egg for themselves.

What's the difference? Debt has a lot to do with it. Where debt is involved, it is difficult to pay that down and build any sort of savings.

What else? Disciplined spending. Money wasted on eating out, travel, entertainment, and gift giving might be better tucked away in a money market account earning a little interest. I'm not saying that eating out every once in awhile isn't a fun thing to do, but it can be costly.

Suppose I go out for lunch every afternoon at work. If my average meal costs $7, I'm spending $35 a week on food. That's over $1800 a year on work lunches! Where I come from, that's a lot of money. And it gets better...

Let's say that I am a 25 year-old young professional. If I were to invest that $1820 from my first year on the job in something that returns 8% annually, I'd have over $36K when I retire. And that's just from the first year.

Now let's suppose I save that lunch money every day of my working life. How does over $471K sound to you?

Again, I don't think this means one should eat ham sandwiches from home every day, but there is something to be said for identifying the money leaks in your buckets and plugging some of the holes.

What's In My Wallet?

I'm a huge advocate of avoiding debt if at all possible. That doesn't mean that I'm anti-credit card. I just think it's important to pay off the entire balance every month. That being the case, it literally pays to find a card that will work to your advantage.

After a couple of weeks of research, I chose the Citi Diamond Preferred Rewards card.

Citi Diamond Preferred Rewards

Reasons I chose this card:
1. No annual fee
2. Citi has some great identity theft solutions
3. 5,000 free bonus points after your first purchase
4. 5 points for every $1 spent on purchases at supermarkets, drugstores, and gas stations
5. 1 point for every $1 spent on all other purchases
6. Trade points for merchandise, restaurants, travel, etc.

No annual fee is number one. With so many options, there's really no need to pay for the privilege of using a credit card. The ability to choose my own rewards was also a huge plus. Baby might need a new pair of shoes, but daddy might want a fancy, new digital camera or a home theater system!

I think it's important to reiterate that paying off your balance every month is one of the keys to financial security. If you aren't in a position to do that right now, then that is a worthy goal for 2006.