What Farmers Can Teach Us About Finances
Dear Readers: In the fast-paced financial world we live in, with its focus on trading trends, online platforms and market movements, it's easy to get lost in the weeds and lose sight of the grounding principles of managing money that are essential to long-term success. So with spring in the air and buds on the vine, I thought it would be fun to focus on some of the financial lessons we can learn from the people who are more in touch with the land.
If you've had any experience on a farm, you'll know what I'm talking about. For instance, my father learned the reality of the phrase "don't put all your eggs in one basket" in his first business venture: literally selling eggs when he was a young teen in Sacramento. He had a firsthand understanding of this lesson by the time he got into investing! Read on for some other words of wisdom that get to the heart of smart money management, from those who work the land -- both folklore and a couple of well-known commentators. It might give you some new insights as well as a few smiles.
"Your Fences Need to be Horse-High, Pig-Tight and Bull-Strong."
To me, there's a pretty clear message here: Be prepared; set boundaries; and have all your safeguards in place. What does this mean for your finances? Right away, I think of the importance of setting goals and planning ahead to meet them, which also means creating a realistic budget that includes savings. A budget will help you set realistic financial boundaries so you know the space you have to work in. The next step is to fortify your space by having an emergency fund and the right insurance.
Want to make your financial fences even stronger? Create a financial plan. Don't make the mistake of thinking that's too esoteric or only for the wealthy. A financial plan can help you answer some very down-to-earth questions to help fortify everyday finances for you and your family.
"Every Path Has a Few Puddles."
You've probably made some good money choices and, like most everyone, made some mistakes. Financial "puddles" might be small things, like blowing your budget now and then, or bigger things, like falling behind on retirement savings. But whatever the size of the puddle, rather than getting discouraged, figure out a way to get around it. By changing a few financial habits, you can make a positive change. In fact, simple financial hacks like setting up automatic deductions from checking to savings, putting bills on autopay or creating a financial calendar can make it easy -- almost automatic -- to jump the financial puddles and keep going forward.
"If You Find Yourself in a Hole, the First Thing to Do Is Stop Digging."
Digging ourselves into a hole is a common metaphor for getting into too much debt. We know we need to stop, but the question is how. For a lot of folks, credit cards are a major cause of debt overload. The first step is to cut down on using them. Pick just one card and put the others away. As much as you can, commit to using cash or paying off credit card balances immediately. Then come up with a realistic repayment plan, focusing extra money on your highest-interest card. Consider transferring balances to a lower-interest card (watch for balance-transfer fees and grace periods!). Set up automatic payments. Debt in itself isn't bad, but you have to manage it wisely so it doesn't bury you.
"It Is Only the Farmer Who Faithfully Plants Seeds in the Spring Who Reaps a Harvest in the Autumn."