Personal Finance is more personal than it is finance. In fact personal finance is 80-percent behavior and only 20-percent technical knowledge. This suggests that in order to win financially it’s more important to understand one’s behavior toward money than to understand the dynamics of how money works. Yet, those of us in the financial field spend 95-percent of our time discussing financial and mathematical concepts that will at best solve only 20 percent of the problem.


Having worked in finance my entire working career including personal finance, corporate finance and real estate finance, I certainly understand the financial and mathematical concepts of money. Nevertheless I’ve made mistakes when it comes to dealing with money. My mistakes were never because of having no financial game plan, spending out of control or having no savings. It was the result of misplaced priorities. As I counsel people on how to better manage their money, I’ve learned that misplaced priorities are the common denominator that causes many people to struggle and/or fail financially. Misplaced priorities are overlooked motivating forces that will ultimately have you wondering where oh where “did my money go.” Sadly, for most Americans of all social, educational, and economical backgrounds—the hard reality does not set in until we’re approaching retirement years.

If statistical data and scriptural references are accurate than most of us can be considered liars. Every survey that I’ve read regarding financial goals and priorities states that homeownership, financial security, planning for retirement and planning for one’s child education ranks at the top of the list. The scripture states, “For where your treasure is, there your heart will be also.” I interpret this to mean that if we were to analyze what we spend money on, we can begin to better understand our value system, our priorities, what’s really important to us. So if the aforementioned goals and priorities rank at the top of the list for most if not all American households, than why does 96 percent of Americans age 65 or older retire or die broke? Why does the average college student graduate from college owing about $20,000 in student loans and about $5,000 in credit card debt? Why does only 2 percent of Americans own their home independent of a mortgage? Why does 70 percent of Americans live paycheck to paycheck?

With so many things tugging at our money one’s initial reaction would be that there’s simply not enough money to cover day to day expenses, save for future goal and enjoy life. The typical household will earn well over $1 million during their working career. The average annual household income is roughly $41,000. The typical worker will work about 32 years. $40,000 over 32 years equals 1.3 million dollars excluding cost of living wage increases. With over $1 millions flowing through our hands over our working career one should be able to reach their goals that are deemed priority. Perhaps we misunderstood what our goals and priorities are—“for where your treasure is, there your heart will be also.” If we’ve neglected to properly prepare, plan, and carry out our financial goals and priorities, that’s indicative that there’s something that we’re doing with our money whether we realize it or not that we deem to be more important.

What happens to our retirement plan? Perhaps we’re driving it in the form of car payments that we cannot afford. What happens to our child’s college fund? Perhaps we’re living, sitting, and sleeping in it in the form of house and furniture payments that we cannot afford. If our house, furniture and car payments are more than we can afford, our only means to acquire the other things we want is to use loans and credit cards to obtain it. When we use credit to make various purchases, we’ll spend more than market value for the items purchased once you factor in finance charges and interest rates. No one will ever acquire financial security constantly paying up to 3-times the cost of the various items purchased in the name of interest.

If only we kept our spending consistent with what we proclaim to be our financial goals and objective, we can obtain financial security, fully fund our retirement and child’s education, and own our home free-and clear of a mortgage prior to retiring from work.

Although it’s true from a financial standpoint that in order to get your financial house in order we need to reconcile our net income with our expenses. I’ll submit that if you want to win financially we need to address the personal side of personal finances by reconciling our net income with our gross habits.

(Mortgage and Money Coach Damon Carr is the owner of ACE Financial. Damon can be reached at 412-856-1183.)

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