Words of wisdom for your budget, success, less stress, and less conflict

As a mediator and conflict specialist with a background in business valuation, I have a unique perspective in this field. Today, I want to share with you a book that has recently come to my attention, The Simple Path to Wealth by J.L. Collins, and how it can also help reduce stress and conflict with yourself and others.

Simpler Path to Wealth

What is wealth? I appreciate the upfront commentary of two people who grew up together, one becoming a billionaire and the other a Buddhist monk. The wealthy person asks the monk how he can be happy eating beans and rice, and the monk asks the wealthy person why he cannot be satisfied eating beans and rice.

Wealth encompasses much more than just money.

Wealth in a more holistic measure includes your health, knowledge, time, relationships, and passions. What matters to you, and who and what do you care about?

In his book, JL Collins suggests three major emphases related to money.

Collins suggests spending less than you earn, avoiding debt, and investing in index funds for the long term.

Whatever your income is, please step away from marketing influences and ego, and instead decide what you need. Live a frugal lifestyle. The more you have, the more you have to worry about. Instead, explore what it means to own that next thing and what that entails in terms of financial, time, and energy costs. Then decide if that is something you want. Second, avoid debt. See if you can save and buy for cash. If you have to use credit cards, pay them off each month. If and when you buy a house, you don’t have to buy the maximum you can afford and be “house poor”. Instead, determine how much home you need and can afford while continuing to save. Finally, when you invest in index funds of stocks and bonds, keep a reserve of cash. These simple, simplified thoughts are expanded upon in his book. I recommend you check it out.

All budgets are moral budgets

All budgets are a moral choice -- whether your budget, your community's budget, your state budget, the national budget, the budget of any not-for-profit, or any other budget. You control your budget. Your budget reflects your priorities – the importance you give to each item. So, what is most important to you?

First, you need to attend to your basic needs. What must you pay for food, water, clothing, transportation, shelter, taxes, and other necessities?

What do you need versus what do you desire for your ego and the prestige you desire? Whatever your income, you must learn to live within that amount. Collins suggests that the amount is approximately 50% of one's earnings.

Collins suggests you save up to 50% of what you earn.

If you save 50% of what you earn, then you have 50% for charity, higher goods and services, and expenses. His recommendation is to maximize savings. Some believe they should set aside 10% for charity. You must decide. With all the problems in the world, our country, your state, and your community, where should you spend your money and on what? How to spend 50% is your call.

Avoid debt as much as possible and pay off your debts with the money you earn each month.

Do not have any high-interest credit cards at all. Avoid debt. How much better would you feel if you drive a paid-off car that was paid for with cash because you had saved for it, versus a high monthly car payment on a car that depreciates by 20% the moment you drive it off the new car lot? When considering buying a house, think about how much house you truly need, rather than what you can possibly afford, and work to pay it off as soon as possible. Perhaps pay off any loan you must take on with an extra monthly payment every year to lower the principal, or begin with a 15-year rather than a 30-year loan.

When investing, consider index funds offered by a firm like Vanguard, which has very low costs compared to other firms with higher transaction costs.

Collins suggests a mix of stocks and bonds, along with a reserve of cash. These are long-term investments. Warren Buffett suggests allocating 90% to stocks with Vanguard and 10% to US Treasury bills.[i] Another model is called the 110 model[ii]. With this model, subtract your age from 110 to determine the suggested stock amount. So, if you are 30, subtract 30 from 110, and up to 80% of your investments could be in stock indexes such as the S&P 500. The other 20% could be invested in bonds. This is your longer-term goal. However, you want to make sure you have sufficient cash for emergencies. Suppose you are just starting to target yourself for up to 6 months' income in cash. Once accumulated as a cushion, consider investing in an 80% to 20% stock-to-bond ratio for a 30-year-old, but always keep at least 5% in cash as your portfolio grows. Talk with a financial advisor for a more extensive analysis of your situation.

Suppose you have addressed the financial concerns by spending less, avoiding debt, and maximizing savings and investments. That decision is a significant element. However, recall that wealth encompasses your health, knowledge, time, relationships, and passions. What matters to you and the people and issues that you care about? With these other factors in mind, it is essential to maintain a balance in your life.

Take a look at where you spend your time each week

Keep track for a week and then step back to see if that's where you want to spend your time. You don’t need to wait until the New Year to make changes. Start making them on Sunday morning – the first day of the week. Or Monday. Or start making changes on the first day of a new month. You can always start fresh by turning a new page on your daily routines. 

As you explore where you have actually been spending your time and where you actually want to spend it, you can stop, start over, or continue doing what you are doing. Avoid trying to make drastic changes that you can’t continue. According to James Clear, author of Atomic Habits, start with small changes and gradually implement the changes you want to make to follow through. Success with small changes gives you strength and confidence to make some additional small changes that incrementally lead to bigger and bigger advances.

When you do make even small changes, you will feel more in control of your time and your life, you will have a more established and more settled routine, and you will gain the joy and satisfaction from seeing progress going forward. These mental dividends will result in less stress to you and your household. If you have less stress, you will begin to reduce conflict with people around you as you have less to worry about.

If you would like to learn more about my publications on collaboration, conflict resolution, or enhancing your servant leadership skills, which focus on leading by serving and understanding the needs of your team members, please feel free to reach out. You can find my books on conflict resolution and servant leadership for sale at the following link: https://www.birchgrovepublishing.com/